Whether this turn into a full house price crash depends on the banks - at the moment they're quite content to perpetuate this credit cruch, increasing their own profit margins at the expense of their customers. If they stop offering cheap mortgages to people with existing mortgages and now lower LTV's then quite frankly people will default on their mortgages. This decreases house prices even further, meaning more people won't have enough equity in their houses to get a deal, and so on. The banks will suffer from this as their assets (i.e. loans) are not worth what they are secured against (houses). It's in their own hands, but given the greed and short-termist attitudes of the city, I doubt they'll do the right thing.
House prices..
- Thread starter fendi
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You'll know better than me, but isn't this in part due to seasonal fluctuations in the housing market, i.e. fewer people moving house in the winter/xmas time, whereas things are now starting to rev up ready for the traditional sales period?
thats correct, but the start of the year has / was a lot slower and quieter than normal. normally after easter things do pick up and this has happened again. Although like you have said that is the normal trend, people still seem to think that everything is going to blow up, and its really bad time to buy etc. yet its busier than this time last year.
people can belive what they read in the papers and on tv, but in reality that is all ********
Why? The labour market is very sound (falling unemployment and employment at record levels), it's not like there are thousands (net) of homeowners losing their jobs every week. Cost of living is rising slightly due to utility/fuel bills, but nothing too over the top as yet.
Meanwhile interest rates are still reasonably low, so even if 'cheap' remortgages are no longer available, there will still be 'reasonable' remortgages available.
According to Halifax's figures, 70% of their new mortgage customers have AT LEAST a 25% deposit. So assuming their data tallies with the rest of the industry, barring a serious crash most people are safe from the spectre of negative equity, especially when you consider the fact (well... speculation on my part!) that most people have repayment mortgages, so (assuming static valuation), LTV is dropping all the while due to payments.
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Soldato
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Soldato
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It's not any busier around here.....
Funnily enough - a friend has just sold his Remax franchise, as he was no longer selling enough properties for it to be viable. And another estate agent here has laid off dozens of employees.
And this from our local paper....
"Charlie Gallagher, who has more than 30 years experience in the property business,estimates that currently 1,500 properties are on the market for resale in Derry, more than twice what you'd normally expect.
"People still want to sell their houses," he said, "but if the supply is big and demand is small, prices have to come back to meet that. Some people are not accepting that prices are having to change and saying they want to keep their house on the market. People have to be realistic."
"This is a time for great concern," said Mr. Gallagher, "house prices need to be corrected with money readily available for borrowing."
Earlier this week Mike Smyth from the University of Ulster predicted the housing market in Northern Ireland could see falling prices for the next three years.
Charlie Gallagher from Oakland Property Services said the international credit squeeze, the suspension of co-ownership and a lack of first time buyers could see the market grind to a halt.
Funnily enough - a friend has just sold his Remax franchise, as he was no longer selling enough properties for it to be viable. And another estate agent here has laid off dozens of employees.
And this from our local paper....
"Charlie Gallagher, who has more than 30 years experience in the property business,estimates that currently 1,500 properties are on the market for resale in Derry, more than twice what you'd normally expect.
"People still want to sell their houses," he said, "but if the supply is big and demand is small, prices have to come back to meet that. Some people are not accepting that prices are having to change and saying they want to keep their house on the market. People have to be realistic."
"This is a time for great concern," said Mr. Gallagher, "house prices need to be corrected with money readily available for borrowing."
Earlier this week Mike Smyth from the University of Ulster predicted the housing market in Northern Ireland could see falling prices for the next three years.
Charlie Gallagher from Oakland Property Services said the international credit squeeze, the suspension of co-ownership and a lack of first time buyers could see the market grind to a halt.
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If you take me as an example, at the end of my fixed rate (5.19%) in 2009, if I can't get a new fixed rate mortgage then I go on the Standard Variable Rate which is currently 7.34%, which increases my monthly repayment by something like £300. I can't afford that and I only borrowed 4 times my salary - people out there have borrowed 5 times!
If I lose my job and can't get another paying a similar salary then it's game over man. No way I can keep up the repayments, time to walk away and implement my exit strategy (from the UK).
Then you should have planned your borrowing strategy more wisely. Four times is ludicrous, let alone five.
No it isn't, you can't make a statement about whether a multiplier is ludicrous because it's not that simple, as the amount of money required to live comfortably is pretty fixed, so with higher earnings you can afford a higher mulitpiler. Things like council tax, water, electricity etc don't increase depending on how much you earn.
Mortgaging £100k on £25k isn't unreasonable in the slightest, mortgaging £60k on £15k is a lot more risky.
And that assumes you'll get no pay rises since taking out your mortgage.
His mistake was not getting a tracker for when his fixed period expires...
that depends completely on the situation...
four times can be perfectly reasonable, especially for people with the potential of growth (graduates etc)
Is now the wrong time to be wanting to buy a first house?
Not if you dont need to borrow lol
It's not ludicrous at all. It's perfectly reasonable since I can easily meet the current repayments, and will be able to meet repayments given a modest rise in interest rates - I made a reasonable assumption at the time that interest rates wouldn't rise by more than 2% in 2 years. I still think that's a reasonable assumption. The problem is that I assumed I'd always be able to get a mortgage below the SVR rate, which again was a reasonable assumption at the time given that no-one predicted the credit crunch. I still think I'll be able to get a mortgage next year though.
I wonder how many people could afford an extra £300 on their mortgage overnight?
I have no sympathy for anyone that bought recently, and the news of these falls is music to my ears. I can't wait to pick up a cheap house in a couple of years...
You do realise if there is a crash, it won't be in isolation. If there is still the money and demand to buy, prices won't drop that far before everyone jumps in. The only way there will be significant falls is if people cannot afford to move or buy, that would most likely include you
I have no sympathy for anyone that bought recently, the writing has been on the wall for a couple of years now at least. News of these falls is music to my ears; I can't wait to pick up a cheap house in a couple of years...
news = media = a lot of lies
As I said earlier, if cheap remortgage deals aren't available, then 'reasonable' ones probably are. I suspect getting something under 7.34% shouldn't be too difficult in 2009. Just because cheap fixed rates aren't available, it doesn't mean to say that a reasonable tracker or similar won't be available. Only this year I switched to a tracker which is currently well under 6%, and that was a free valuation/fees product for remortgages.
I'm tempted to agree with Dolph on the above point; by my rough calculations, if a interest rate increase from 5.19% to 7.34% means a £300 increase in monthly mortgage repayments, he must have a fairly hefty mortgage debt outstanding (£200k+). This implies that he must be on a high salary (£50k+) and thus a 4x salary mortgage isn't necessarily ludicrous. Remember that other bills are (relatively) static, so for example doubling your net income more than doubles your "spare" income.
I could, but then we don't have any dependents at the moment.
Given the option I'd also rather live in a nicer area and pay more money for a decent house, so ideally we're seeking to move this year. The crash isn't coming fast enough unfortunately
I'm tempted to agree with Dolph on the above point; by my rough calculations, if a interest rate increase from 5.19% to 7.34% means a £300 increase in monthly mortgage repayments, he must have a fairly hefty mortgage debt outstanding (£200k+). This implies that he must be on a high salary (£50k+) and thus a 4x salary mortgage isn't necessarily ludicrous. Remember that other bills are (relatively) static, so for example doubling your net income more than doubles your "spare" income.
I could, but then we don't have any dependents at the moment.
Given the option I'd also rather live in a nicer area and pay more money for a decent house, so ideally we're seeking to move this year. The crash isn't coming fast enough unfortunately
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Well, given that this is OcUK, probably the same people who think everyone should keep large ringfenced backup funds for everything that could go wrong such as cars, appliances, home issues and so on and thinks that the average person has (or should have) £30-40k tucked away for any eventuallity...
The problem is this forum has an awful lot of people with very little experience of the real world as opposed to theory. It's nice to be able to plan for every possible thing, never use credit facilities and have a huge buffer in your monthly wage packet, it's just entirely unrealistic with it.
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if i got a mortgage thats 4x what i earn that wouldnt even get me a holiday unit to let out
lol
I'm sure you made all the appropriate calculations, I just think 4,5 times your salary is a silly figure to go for. I know why people do, I just wouldn't myself.