BBC - Negative Equity, have your say.

mr.broderick

Paul_N wrote: »

You forget !!!!!! has you on ignore Brodders.

On a separate note, this thread reminds me of someone I know who's very lax with his money management. Has a home, has kids, has MEWed to buy a new car and new kitchen, is on IO mortgage, spends as it comes in and probably couldn't last a month if he lost his job without extending his mortgage to release more cash. He often says to me, no point hording money, you could be dead tomorrow. To which I reply, yes, but you probably won't be. He's feeling the pinch now.

Yes a house is a home, but somethings are worth waiting for.

No Paul he wants me to think he has me on ignore but believe me he reads my posts, i feel putting people on ignore is like putting your hands over your ears when someone who doesn't agree with what you are saying says so. He's weak and a bit of a little boy but i like to read his little comments that appear after the link on every new thread he posts.

mr.broderick

Paul_N wrote: »

You forget !!!!!! has you on ignore Brodders.

On a separate note, this thread reminds me of someone I know who's very lax with his money management. Has a home, has kids, has MEWed to buy a new car and new kitchen, is on IO mortgage, spends as it comes in and probably couldn't last a month if he lost his job without extending his mortgage to release more cash. He often says to me, no point hording money, you could be dead tomorrow. To which I reply, yes, but you probably won't be. He's feeling the pinch now.

Yes a house is a home, but somethings are worth waiting for.

How long you going to wait paul?

Paul_N_4

mr.broderick wrote: »

How long you going to wait paul?

Wait for what? Doubt I'll even buy another home if that's what you mean. Have bigger aspirations in life than being a property 'investor'. Much bigger returns about, especially now. But if I was to make a move, I'd be keeping an eye on rental yields.

How about you?

ianmr65

westy69 wrote: »

my house is now worth 150K i dont need to move there are no real signs of a recession, how does negative equity affect me? i agree it does affect some people but its not the worst thing in the world surely as long as you can still afford to pay your mortgage its not a major problem (albeit far from ideal).

So oil nudging $150 a barrel.
The dollar on the floor.
Gold at it's highest for years.
Heating, petrol and food prices rocketing.
The Pound at it's lowest against the euro - like ever!!
The ECB about to raise intrest rates.
The BoE is unable to cut rates to stimulate the economy, or raise them, to ease the inflation problem
The banks, builders, retail and property stocks in freefall. Banks teetering on the edge of insolvancy.
The US unemployement figures rocketing up
The UK unemployment figures creeping up
The UK Housing market in it's fastest rate of fall since records began
The CPI is at 5%, rpi at 7%, and 'real' inflation even higher.
The UK Ecomomy effectivly stalling - Zero growth currently

On what basis do you think then, that there are no real signs of a recession?
What are you expecting a Big Sign on Big Ben:

WE ARE IN RECESSION

The BoE and fed are just praying recession does not turn into a slump.

Anyone who is at risk of Neg Equity needs to be very very aware, of the consequences, and the vastly increased risk of losing there homes, and severly restricted ability to move, or sell.

As the paper wealth the once had in their property simply does not exist anymore. And is not likely to come back for about 7-10 years, if ever!!

Pobby

Methinks that some of my fellow posters here are 20/ 30 somethings that don`t remember, or indeed were unaffected by the downturn of the early 90s. I can promise you that from where I am sitting it is far from hypothetical.

It was down right nasty. I witnessed a lot of anguish. I saw people mentally breaking down. Families torn apart. I saw young teenage girls begging in the street. Once prosperous shopping areas boarded up.

I have always made my point clear. This crazy hpi is beyond any form of reality. It`s a ponzi scheme that is rapidly starting to fall apart.

We all know what has projected this relentless rise in property, which imho, should have been allowed to deflate in 2002, it`s stupid ``creative`` finance.It`s people loosing the plot where it comes to a sound relationship with money. Greed, I want it now, oh I could just go on and on.

However be warned. The early 90`s is not somewhere I would like to revisit but sadly it looks like we will and I, for one, am terrified that it may well be worse!

dannyboycey

iyiarz wrote: »

!!!!!! are you on about ? Unless they ACTUALY need to move, this will effect none of them.

You're forgetting about a large proportion of people who have not been moving, but instead, using their property as a cash machine. They periodically withdraw chunks of equity to pay for goods, holidays or to pay off other debts such as credit cards and loans. Without this money, they are up the proverbial creek. The cash machine has now run out of money!

dannyboycey

The notion that negative equity doesn't affect those who don't plan on moving is frankly rubbish. If the price of your house dropped, but all other things remained equal, then I can see how people might think this. But they don't. House prices do not operate in a vacuum - at the same time your house is dropping, interest rates will be rising, the cost of utilities has shot up dramatically, inflation has gone up, unemployment is on the rise, the UK is in recession, there is a global credit crisis, fuel and food costs have rocketed..... need I go on?

So, the few hundred quid you have 'spare' each month suddenly has to go a lot further, perhaps it has been wiped out altogether. Essentially, your mortgage payments have risen, irrespective of the numeric value that's written on your statement. You are paying over the odds for something, whilst everything around you is getting dearer, and your wages stay pretty much the same.

To say it doesn't affect you if you're not moving shows an inability to grasp the bigger picture. Things aren't black and white - this crisis will affect everyone, rich and poor, mortgage or no mortgage.

Snooze

dannyboycey wrote: »

The notion that negative equity doesn't affect those who don't plan on moving is frankly rubbish. If the price of your house dropped, but all other things remained equal, then I can see how people might think this. But they don't. House prices do not operate in a vacuum - at the same time your house is dropping, interest rates will be rising, the cost of utilities has shot up dramatically, inflation has gone up, unemployment is on the rise, the UK is in recession, there is a global credit crisis, fuel and food costs have rocketed..... need I go on?

So, the few hundred quid you have 'spare' each month suddenly has to go a lot further, perhaps it has been wiped out altogether. Essentially, your mortgage payments have risen, irrespective of the numeric value that's written on your statement. You are paying over the odds for something, whilst everything around you is getting dearer, and your wages stay pretty much the same.

To say it doesn't affect you if you're not moving shows an inability to grasp the bigger picture. Things aren't black and white - this crisis will affect everyone, rich and poor, mortgage or no mortgage.

Danny, I said the exact same thing yesterday in reply to a post, but worded differently.

Rob

dudleyboy

Pobby wrote: »

Methinks that some of my fellow posters here are 20/ 30 somethings that don`t remember, or indeed were unaffected by the downturn of the early 90s. I can promise you that from where I am sitting it is far from hypothetical.

It was down right nasty. I witnessed a lot of anguish. I saw people mentally breaking down. Families torn apart.

I think you're right, Pobby, but I have to say, I don't think it's the 20/30 somethings.

It's true that the early 1990s are a somewhat distant memory, and perhaps many people's parents shielded their children from the financial struggles, hardships and pressures they were facing, but I was very much aware of it seeing my own family torn apart, seeing the stress of financial hardship, the parents of friends mentally breaking down and falling victim to alcoholism and depression.

In fact, it was a rotten period of my life and while I try not to remember it, I'll never forget it, which is one of the reasons I never bought into the hedonistic, excessive, "no more boom and bust" attitude and sentiments of the last decade.

Perhaps I was fortunate to have chosen to study business and economics as one of my GCSEs at the age of 14: learning about economic booms and busts, learning how and why the UK had been kicked out of the ERM and the housing market crashed, all while it was actually happening. It taught me a lot first-hand at a very early age and it's one of the reasons I've been bearish, rather than bullish, over the past few years, during my 20s, with regards to the housing market and the economy.

It actually seems to be those on this board who are in their late 20s / early 30s, and those who are in their late 50s / early 60s (their parents generation), who tend to talk the most sense... and it seems to be those who are now in their late 30s / early 40s (like the Phil and Kirstie's of this country), who've benefited the most during the past decade, and who are about to have an uncomfortable reality check.

I'm certainly no expert (despite that GCSE! ) but I think this country is at the start of a recession, let alone heading for one, and I'm not going to wait until the text book definition is announced on the news before I believe it. In fact, I'd go a step further, stick my neck out, and say the UK is heading for a depression.

While Wikipedia isn't the most reliable source on the web, it'll do for the purposes of this posting:

http://en.wikipedia.org/wiki/Depression_%28economics%29

"In economics, a depression is a term commonly used for a sustained downturn in the economy. It is more severe than a recession (which is seen as a normal downturn in the business cycle). Considered a rare but extreme form of recession, the start of a depression is characterized by unusual increases in unemployment, restriction of credit, shrinking output and investment, price deflation and/or hyperinflation, numerous bankruptcies, reduced amounts of trade and commerce, as well as violent currency devaluations."

How many of those can we begin to tick off?

PasturesNew

At the end of the 70s there was even a band called UB40 with Top 10 hits, where the UB40 was the form you filled in at the dole office - and their hit "One in Ten" was about 10% unemployment.

Hear it on Youtube: http://uk.youtube.com/watch?v=c9g0L3L5oeA

(chorus)
I am the one in ten
A number on a list
I am the one in ten
Even though I don`t exist
Nobody knows me
Even though i`m always there
A statistic, a reminder
Of a world that doesn`t care

My arms enfold the dole queue
Malnutrition dulls my hair
My eyes are black and lifeless
With an underprivileged stare
I`m the beggar on the corner
Will no-one spare a dime?
I`m the child that never learns to read
`cause no-one spared the time

(chorus)
I am the one in ten .... etc

I`m the murderer and the victim
The licence with the gun
I`m a sad and bruised old lady
In an ally in a slum
I`m a middle aged businessman
With chronic heart disease
I`m another teenaged suicide
In a street that has no trees

(chorus)
I am the one in ten .... etc

I`m a starving third world mother
A refugee without a home
I`m a house wife hooked on valium
I`m a pensioner alone
I`m a cancer ridden spectre
Covering the earth
I`m another hungry baby
I`m an accident of birth.

(chorus)
I am the one in ten .... etc

In the 90s, we had the TV Spitting Image programme song based on Madness' "Our House": http://uk.youtube.com/watch?v=2t8YTvdYXws

I wonder which pop stars of today will turn out a doom and gloom/recession song.