House prices..

HangTime said:
"In the three years to 2007, 71% of first-time buyers' mortgages were made on a capital and interest repayment basis compared to only 17% in the three years to 1989,"

Obviously this only refers to FTB, but I can't imagine that interest-only mortgages are more common amongst homemovers.
Click to expand...

Presumably a lot of the 83% who took interest only mortgages in the three years to 1989 were on endowment mortgages as these were common then.

I would be more interested to see the proportion of first time buyers who took interest only mortgages with no repayment vehicle in place for both time periods.
 
HangTime said:
As for the interest-only mortgages, as I've previously mentioned in this thread, repayment mortgages are far more common nowadays than during the last crash:

"In the three years to 2007, 71% of first-time buyers' mortgages were made on a capital and interest repayment basis compared to only 17% in the three years to 1989,"
Click to expand...
And as previously mentioned in the thread, this is because endowment mortgages were far more popular then, not because people were taking out interest-only mortgages.

Note that interest-only mortgages only start looking attractive with low interest rates. Suppose you borrow 100K at 5% over 25 years. Interest only is 5000 a year, repayment is about 7000 a year, so you pay an extra 2000, or 40%. Now suppose you borrow at 12% (as in 1989). Interest only is 12K, repayment is about 12700, so you pay an extra 700, or 6%.

So in 1989 there was really no point in going interest only - it gained you virtually nothing.
 
How many of the quarter of a million people apparently in negative equity are trying to sell their house at the moment?
 
Dolph said:
How many of the quarter of a million people apparently in negative equity are trying to sell their house at the moment?
Click to expand...

Even if they're not trying to sell their house they will be pushed onto their bank's SVR if they need to remortgage though.
 
Dolph said:
How many of the quarter of a million people apparently in negative equity are trying to sell their house at the moment?
Click to expand...

I reckon most of them will try to ride it out and not sell.... but when it comes to renewing their mortgage deal, (assuming house prices go down in their region) they will find their LTV percentage will have shot up somewhat, so it could prove expensive, making it hard to get a good deal - probably having to stay with their current lender on SVR?

That sort of situation might push people into having to sell? I'm no expert, just my thoughts.
 
_44699734_hou_price_29_05_226.gif


Pretty damning graph from the BBC. This is with March - June supposedly being the strongest period for the housing market each year.
 
bradford and bingley in big trouble now - their shares will be worthless soon - its all so predictable its laughable - even funnier are the experts on the news 'nobody saw this coming' - idiots.
 
aardvark said:
bradford and bingley in big trouble now - their shares will be worthless soon - its all so predictable its laughable - even funnier are the experts on the news 'nobody saw this coming' - idiots.
Click to expand...


are you saying you knew about the problems with packaging and sale of debt that is the cause of the problems when no one else did? Or are you going to claim the problem is down to something else?
 
carpmaster said:
No - why would I? It's superfluous to my post. If you want to spend time finding graphs that you think are missing and posting them then please feel free to do it yourself.
Click to expand...
Not that I don't think prices are going to have a large fall this year, but I do think that graph is somewhat misleading.

If you look at the graph, you'd be imagining prices have plummeted over the last 16 months. In fact, the average price in Jan 2007 was £173225, the average in May 08 was £173583, which is slightly higher.

I could do my own graphs, but the honest truth is that I think we really need to see another couple of months figures before we really know how bad things are going to be.
 
hello, many, many people have seen this coming for a long time, it just is a lot worse because of this sub-prime stuff.
 
carpmaster said:
I find it hard to believe the quoted figures for interest only versus repayment mortgages, but anything is possible. Can you post a source for these?
Click to expand...

http://news.bbc.co.uk/1/hi/business/7405357.stm

Regarding the NE thing, It'd be interesting to see historic data (to judge whether 250k is a lot in relative terms). But the problem does seem to be more wide-spread than I initially thought - Morgan Stanley are predicting 1.2 million homes to experience NE, while the Lib Dems are suggesting more along the lines of 3 million(!!): http://www.thisismoney.co.uk/mortgages/article.html?in_article_id=440526&in_page_id=8 . I find it hard to believe that 25% of homeowners will hit negative equity but there you go.

DaveF said:
And as previously mentioned in the thread, this is because endowment mortgages were far more popular then, not because people were taking out interest-only mortgages.
Click to expand...

Sure. But the fact remains that in recent years, over 70% of FTB have repayment mortgages
 
DaveF said:
Not that I don't think prices are going to have a large fall this year, but I do think that graph is somewhat misleading.

If you look at the graph, you'd be imagining prices have plummeted over the last 16 months. In fact, the average price in Jan 2007 was £173225, the average in May 08 was £173583, which is slightly higher.
Click to expand...

It's not really 'misleading' unless people make false assumptions e.g. it represents absolute house prices, rather than changes in them. It definitely indicates a downward trend but as always when looking at house prices I feel a medium term view (at the very least) is required, as most people keep their houses for longer than 18 months. Houses are not a commodity which can be easily traded, in fact even once a sale is agreed it can take months for the transaction to be complete.

The irony is that people spend much of their lives complaining about how expensive things are, and yet when house prices start to fall everyone starts getting worried. I'm a homeowner but the falls don't bother me, sure my assets are diminishing, but equally it means that the cost of buying a new house is falling too. Whether my house is worth £100k or £200k has no bearing on my ability to repay the mortgage unless I decide to sell it. And the only reason I would sell it, would be if we move to a better house - hence a (universal) 50% crash would be fantastic for me.
 
Exactly, finally a common sense view.

As a hopeful first time buyer in 2 years the downturn is a welcome relief. And as you've already mentioned, your home losing value isn't too much of a problem providing you can afford to pay the mortgage.
 
HangTime said:
It's not really 'misleading' unless people make false assumptions e.g. it represents absolute house prices, rather than changes in them. It definitely indicates a downward trend but as always when looking at house prices I feel a medium term view (at the very least) is required, as most people keep their houses for longer than 18 months. Houses are not a commodity which can be easily traded, in fact even once a sale is agreed it can take months for the transaction to be complete.

The irony is that people spend much of their lives complaining about how expensive things are, and yet when house prices start to fall everyone starts getting worried. I'm a homeowner but the falls don't bother me, sure my assets are diminishing, but equally it means that the cost of buying a new house is falling too. Whether my house is worth £100k or £200k has no bearing on my ability to repay the mortgage unless I decide to sell it. And the only reason I would sell it, would be if we move to a better house - hence a (universal) 50% crash would be fantastic for me.
Click to expand...
Spot on! Thats what I keep telling people. yeah my hopuse kight not be worth as much, but so is everyone elses!
 
Dolph said:
are you saying you knew about the problems with packaging and sale of debt that is the cause of the problems when no one else did?
Click to expand...

everybody who actually read real financial articles knew this 2 years ago. The credit crunch was well known by the time i found out about it in January of last year - it was also widely known at that point that the 3 major players that would be affected in the UK would be northern rock, Bradford and bingley and alliance and Leicester - none of this is news and the so called 'experts' should know about this long before i found out.
 
Solari said:
After reading this article

http://www.findaproperty.com/displaystory.aspx?edid=00&salerent=0&storyid=22074

I must say I laughed. The stuff spouted by all the vested interests gang are bordering on comical now :)
Click to expand...

The thing that gets me is that people see growth of 8% a year as normal for houses.
When wages were going up by 8% a year, then maybe, but if wages keep on rising at 3-4% a year as we are seeing now house price growth of anything about this is unsustainable in the long term.
If wages grow at 3.5% p.a. and houses increase at 8% p.a. then after 20 years house prices will have outpaced wage increases by over 200%.
That is not something that can continue indefinitely, but yet is something that people seem to see as normal these days.
 
Solari said:
After reading this article

http://www.findaproperty.com/displaystory.aspx?edid=00&salerent=0&storyid=22074

I must say I laughed. The stuff spouted by all the vested interests gang are bordering on comical now :)
Click to expand...

It's totally detached from reality. I can never work out if they really are that stupid and genuinely believe it, or whether they are just attempting to talk up the market to lure the last of the thick "shrewd investors" into parting with their cash in exchange for bankruptcy.
 
You must log in or register to reply here.
Back
Top Bottom