Thousands facing negative equity

Dan:_4

m00m00 wrote: »

the vast majority of people who took out 100%+ loans took them out on short term fixed rates. Negative equity is therefore likely to be a very big deal for them in the next 12-18 months

I hope they are not planning on selling in the next few years.

brit1234

esbo wrote: »

People who think prices will drop 50% are living in cloud cuckoo land.

Say most flats in London are over £200,000 (outer boroughs) and average salary is £30,000 (male & female ave). Lending conditions for example from Lloyds TSB to the CO-OP will lend about £100,000 -120,000 at the moment and getting tighter. So you are going to have to get a £80,000 say deposit to get a bottom price property.

Now if no one can get the money to buy these flats then the prices will fall to what people can afford. Hence property is 50% overvalued and likely to fall 40-50% especially as lending gets tighter and interest rate increases on the way.

For those saying it is not possible can you give your reasons? Are they more emotionally based than factually based?

Dan:_4

brit1234 wrote: »

Say most flats in London are over £200,000 (outer boroughs) and average salary is £30,000 (male & female ave). Lending conditions for example from Lloyds TSB to the CO-OP will lend about £100,000 -120,000 at the moment and getting tighter. So you are going to have to get a £80,000 say deposit to get a bottom price property.

If you buy with partner/wife then the amount you can borrow will be much more. Most pople have joint mortgages and the day's of the single bread winner are over.

brit1234 wrote: »

Now if no one can get the money to buy these flats then the prices will fall to what people can afford. Hence property is 50% overvalued and likely to fall 40-50% especially as lending gets tighter and interest rate increases on the way.

For those saying it is not possible can you give your reasons? Are they more emotionally based than factually based?

What are your reasons to assume a 50% fall apart from hoping that interest rates will rise?

m00m00

Dan: wrote: »

I hope they are not planning on selling in the next few years.

or trying to remortgage onto another fixed rate deal

although the way fixes have been going in terms of rates and arrangement fees, in many cases SVR won't seem that bad at all

Noot_2

It did say on Sky News that this 23,000 figure, was out of a total mortgage figure of 12million. This means 0.19% are now in Negative Equity. Not exactly a high figure....

Dan:_4

m00m00 wrote: »

or trying to remortgage onto another fixed rate deal

although the way fixes have been going in terms of rates and arrangement fees, in many cases SVR won't seem that bad at all

Yes, Im seriously considering going on SVR when my current fixed rate ends next year.

WTF?_2

esbo wrote: »

People who think prices will drop 50% are living in cloud cuckoo land.

Yeah - prices can double in a few years purely because of ready availability of cheap, no questions asked credit but no way are they going to fall back once that credit is taken away.

Why, any fule nose when you pull away the support, whatever it was holding up stays suspended :rotfl:

Poppy9

Falling house prices will not necessarily mean that people can now afford a better house.

If you already have a house to sell you will get less for it and even though the differential to move up the housing market is lower getting a mortgage is more difficult.

If you are a first time buyer you will also find that the amount you can borrow now is less than you could borrow 6 months ago.

When I bought my first house in 1986 banks were much more stringent in how much we could borrow. It was 2.5 times the main salary plus 1 of the other. At the time OH and I were both on about 5k pa. so we could borrow £17500 plus we had to have a 10% deposit. If the same rules were re-introduced a £30k salary would only let your borrow £105k plus you would need a £10k deposit.

Dan:_4

!!!!!!? wrote: »

Yeah - prices can double in a few years purely because of ready availability of cheap, no questions asked credit but no way are they going to fall back once that credit is taken away.

The Credit Crunch will not last forever.

dopester

Dan: wrote: »

The Credit Crunch will not last forever.

Maybe, but it's barely even started yet. Previous credit-crunches in history have lasted decades.