Tuesday, Jul 13, 2010
Here comes the next phase of the UK housing bust
MoneyWeek: Here comes the next phase of the UK housing bust
Right now, sellers are flooding into Britain's property market. But buyers are becoming ever scarcer. And with the regulators getting tough on the mortgage market, the housing bust is about to pick up speed.
Posted by damien @ 11:56 AM (2347 views) Add Comment
21 Comments
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1. quiet guy said...
"A staggering near-50% of the home loans doled out between 2007 and the start of 2010 "did not require proof of earnings," reports the FT this morning."
That's polite speak for mass fraud. I hope these lairs get the wrecked credit record and eviction notices they so richly deserve.
2. str 2007 said...
Has anyone got any info on Self Cert re-sets.
IE are all these loans reverting back to what % above base after their initial fixed period ?
I asume that these Self Cert loans won't be able to get 'normal' mortgages now and so will be on whatever the resets were.
Maybe Jack C has some info.
from the article
''Even more worryingly, the watchdog also found that 46% of households who had taken a mortgage out between 2005 and 2008 "either had no money left or had a shortfall after mortgage payments and living costs were deducted from their income."
Recaptcha : newt money = maybe that should be nowt money
3. mark said...
STR2007
I had a quote on self cert 2006 the monthly cost for interest only was approx 1500 a month, the reset after the fixed period we were informed by broker at time would take it to approx 2100 a month after 3 years assuming the rates stayed at 2006 levels, made no financial sense at time for the property. cant remember exact figures now, too many days have passed
we got out of market end of 2006, for the first 12 months we thought OMG what did we do? prices were still on the up, then bang it all went pear shaped, best move we ever made. although the taxes we paid were rather too much on the sale of properties.
4. smugdog said...
Here it comes again!
I hope it's not going to be a bad as the last two years.
Wow, what a ball!
Muahahahahahaha indeed.
Do 'Carry On'.
5. mark wadsworth said...
STR2007, be careful of misinterpreting that 46% figure. As The Grauniad explains:
"The proposals were drawn up following detailed analysis of past lending decisions, looking at the causes of arrears and repossession since 2005. The FSA found that 46% of households either had no money left, or had a shortfall after mortgage payments and living costs were deducted from their income..."
In other words, it was 46% of borrowers in arrears who over-borrowed and not 46% of all borrowers (if you ask me, anybody who bought in the last five years overborrowed, but that is another story).
Anyways, let's see what Jack C has to say.
6. titaniccaptain said...
I believe Jack C is away on hols from my last conversation with him....but that never stopped the die hard HPCer lol
7. str 2007 said...
Hi Mark
I had kind of picked that up howver the statement.
"The proposals were drawn up following detailed analysis of past lending decisions, looking at the causes of arrears and repossession since 2005. The FSA found that 46% of households either had no money left, or had a shortfall after mortgage payments and living costs were deducted from their income..."
Implies that 54% of people repossessed had money left after mortgage payments and living costs - which begs the question why were they being repossessed.
Or maybe they chose not to pay their mortgage in which case surely they fall into the first category.
Maybe I'm missing something, but surely 100% of people repossessed had a shortfall of money after mortgage and expenses hence they couldn't pay all their mortgage hence they fell into arrears and hence were repossessed.
I'm clearly not qualified for a job at the FSA, they clearly deserve all their salaries for being so intelligent..
recaptcha : mukden applicants (yes they may well have been).
8. mark wadsworth said...
STR, that is a mystery to me as well (if I were Toyah, it would be a mythtery, of courthe) having read a few different articles they say that 40% overborrowed, 10% lost their jobs... and what about the other 50%...?
A statistically insignificant number will have died and a few will have got divorced and be incapable of agreeing who is supposed to be paying the mortgage, but heck.
9. mark said...
who is Toyah? i am too young..lol
10. doomwatch said...
Stepek and/or his pal Ferguson trot this stuff out every 2 months or so. A stopped clock
is right twice a day too.
11. str 2007 said...
MW
What makes me laugh (furious) is that the FSA were paid to oversee things didn't get out of hand.
Now they're being paid to make more than obvious (and frankly innacurate) statements about why someone was repossessed.
(She must be grey by now, maybe still orange, you never know)
Talking of which I'm going to see the Damned live on Friday night (had the first punk hit before the sex pistols for you youngsters)
Wonder if Dave Vanian now has a Single Sided Badger Wig.
Wonder if Toyahs cuffs and collar ever matched - ah the wonders of the universe.
12. uncle tom said...
I find it slightly comic to see PWC saying that it might take until 2020 for houses to recover their highs after adjusting for inflation..
er.. sorry PWC, but can't you get it into your tiny minds that in real terms, houses are NEVER likely to regain their former highs - they have spiked to a level that even the dumbest accountant should be able to work out is wholly unsustainable, and there is no credible scenario that will see them return to such highs in our lifetimes.
But of course, those overpaid bean counters have got a graph with a trend line, and if you extend that trend line then, hey presto! - you get all-time highs again..
..it's just that they are too thick to work out that the trend line is meaningless..
13. enuii said...
str2007; Toyahs cousin was my Art teacher in sixth form and she had off-ginger sort of strawberry-blonde ones that matched.
14. 51ck-6-51x said...
Mark, Mark W, STR2007,
RE: 46%
Here is the consultation paper itself.
Section 2.6 reads:
"""
We used a representative sample of 9,000 households holding a mortgage from the LCF/EFS covering the period 2005 to 2008, to calculate how much money borrowers had after mortgage payments and living costs were deducted from their income. As illustrated in Exhibit 2.1 our calculations indicate that 46% of these households had either no money or had a shortfall. For some people this situation could be temporary, but for others it may be a more persistent issue. The proportion of borrowers with a shortfall varied by income group, but while the lower income borrowers were affected the most, a significant minority of the households in the higher income groups also had a shortfall, as shown in Exhibit 2.1.
"""
* LCF/EFS = Living Costs & Food / Expenditure & Food Survey
So the statistic is 46% of all mortgages from 2005 to 2008, nowt to do with repossessions.
15. 51ck-6-51x said...
^^ Note MoneyWeek's article (another post today) wrongly states it is 46% of all mortgages taken out between 2005 & 2008.
16. 51ck-6-51x said...
^^ hah, I'm so wrong, that is this article.
17. str 2007 said...
enuii
Were you supposed to be finding that out with your tutor ?
666
Interesting.
all mortgages, these must be the 46% that didn't reset to 1% or less above base.
Seriously though instead of dropping base rates through the floor they should've allowed an Interest Only period for strugglers and if they already were interest only then I'm sorry but you know the rules (your home is at risk if you don't keep up the rapayments (or interest payments at least)).
So they've worked outthe poorest families overstretched themselves more - pure genius.
Worth their weight in Gold these people, migh give them a call toorrow and see if they've got any jobs going.
18. str 2007 said...
Best spell check my CV first.
19. enuii said...
Sit on the front row and drop your pencil enough times and you soon find out ;-)
20. Rental John said...
The HPC house price graph is about to drop off a cliff!
Number of buyers, number of mortgage approvals....following it down.....
21. mark wadsworth said...
666, I stand corrected. Thanks for extra research.