Thursday, Jan 11, 2007
RICS Warns Over Repossessions
BBC News: Warning over home repossessions
I guess they don't want any more rate rises. Surprise surprise. From the article: "Home repossessions could become more common if UK interest rates keep rising, the Royal Institution of Chartered Surveyors (RICS) has warned."
Posted by rich @ 05:03 PM (154 views) Add Comment
16 Comments
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1. Chillilizard said...
I read in the Evening Standard that this quarter point rise results in an extra £37 per month repayment on a mortgage at 250000. Hardly what I would call 'cause to worry'.
2. enuii said...
Home repossessions are already on the up, if you know a Court Officer ask him how busy he is ! In my neck of the wood in the Northwest they are about 30% higher than this time last year.
3. Mjchum said...
Chillilizard,
Agreed. Rates will have to rise way above this to have any real impact. This will be old news by the weekend. Rates will however continue to rise, I believe IR's at 8% base will have the same effect now as 15.5% did in 1991 due to capital debt size. I remember the old chap paying 21% on I think £750k in 1991, homeless by 1992.
HPC will happen. But not yet. End 2008 I reckon at the earliest. Mind you thats not that far away. It will be driven more by companies folding and rising unemployment. Friend of mines wife had her manager come up to her only two days ago to tell her that as of right now she will be taking a 20% pay cut! No warning, no notice. The company was not a particularly small one!
4. geed said...
Chilli…It will be the cumulative effect of 3 rate raises in short succession that will affect sentiment and not necessarily the tangible fiscal cost. Many home owners may well be able to afford the increases in borrowing costs up to this point but they will surely be wondering if this trend will continue. It is also the fact that the BoE is becoming increasingly less predictable, this does not bode well for future home buyers and those who have been unsure which was the market will go.
There are also other mechanisms at play. If 50% of a streets homeowners can't afford to pay their mortgages and are forced to sell - as far as the value of "your" home is concerned - it becomes irrelevant whether the other 50% of home owners can afford to keep repaying the mortgage or not. The value of the street will decline and the people who could afford the repayments and were not really directly affected by the interest rate rises now are indirectly affected. They may now sell to move to a better area to save their investment, or may sell to cut their losses, in effect a forced sale due to the rate rises and turning sentiment. All of a sudden the market is flooded and we all know what happens then....
In some ways a surprise 0.25% increase will have a greater effect than a predicted 0.5% increase. I like surprises!
5. paul said...
Typical narrow minded, self interested bias from the BBC.
There's no stories about "First Time Buyers Celebrate Possible End to Ridiculous House Prices".
Journalist graduate twats.
6. harold said...
I make a .25% rise on a loan of £250,000 to be an extra £52.08/month. (250,000/400)/12(months). Am I wrong about this?
7. paolo88888 said...
No Harold, I get the same.
8. george monsoon said...
I think this will hit those who fixed their mortgage low, a couple of years ago..
a couple of % on top of all the other dept, could be catastrophic for some people.
This is sad, but needed.
9. talking rot said...
I feel sorry for the families who will be affected but .... Yipheeeeeeee.
I might be able to afford that soggy card-board box under the embankment afterall.
10. monty said...
The Metro repeated that bit of dodgy maths this morning. £37 increase for a £250k mortgage and £16 for £100k. Que?
11. Chillilizard said...
Silly me... trusting the journalists to do their maths properly. If their arithmetic is anything like their logic, I should have guessed. £52 pounds per month has a much more psycological impact. That's half a hundred quid!!!!
And they repeated it in the Metro this morning. Bloody hell, reading the metro this morning was just like reading yesterday's news. And they didn't even bother to check their facts.
12. harold said...
How odd, £37 increase for a £250k mortgage and £16 for £100k - these ratios don't even agree with each other. Perhaps we should email them and ask them how they 'calculated' their figures.
13. monty said...
Aha. Sold2rent1 reminded me on another thread of those quaint 20th artifacts - the repayment mortgage. Remember them? Doing the numbers gets £37 and £15 monthly increases for £250k and £100k 25 year mortgages.
14. harold said...
Okay, I get it now.
15. Bobbym said...
it was reported in the standard as £37 increase on a mortgage of £200k - not £250k!
Right ??
16. inflation is eating my savings said...
I don't believe this will have much effect- we need 7-8%. Can someone make us join the ERM again?