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Explorer

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  1. My wife and I had a 100% mortgage from the GLC in 1970. Yes councils were lending money to newly weds then. We wanted to buy rather than rent, and this, coupled with a new job and moving to a cheaper area in the East Midlands (the council were happy for us to leave and reduce the local population) enabled us to buy a brand new detatched house for just £4100. We bought and sold over the years until finally we owned a farmhouse and several acres of land in Devon. The rises over the last forty years or so, ssignificantly outweighed the falls, and so enabled us to trade down for our retirement home without any mortgage. Over this period, we have seen two big price rises, two big price crashes, and still came out winning at the end of it. Was it luck? No, just good judgement and a willingness to sell at the right time at the right price and move despite all the disruption. So back to the point of this thread. Is this guy right or wrong? He is right to say that 100% mortgages are a great help to first time buyers, but wrong to say that 125% mortgages are even better, when they are patently not. I would never have sought out anything that put me into negative equity from day one, even if it was offered to me on a silver platter.
  2. Quite frankly, FP, I couldn't give a toss what you believe!!
  3. I was brought up in a lower working class family where borrowing was totally taboo. Everything we wanted had to be saved up for, by necessity in those days(apart from the local Christmas loan club that gave us a few seasonal quid to buy our meagre presents). The thought of borrowing on the never never was alien to me. When I first got married a cheap home in London was around £5000 (in 1969) and there was no way I was ever going to buy a house outright, and mortgages were like hen's teeth. Eventually we managed to get a GLC (Greater London Council) mortgage specifically for newly weds only, and got on the rung, so what is my point? The point is that without a borrowing facility, the economy would not work. It drives the entire system and I learned that lesson very quickly. In our life to date, there have been periods where we have borrowed heavily, and periods when our borrowing has been low, without that flexible borrowing our ability to move jobs and housing along with it, would have been curtailed severely, and the standard of living that we now enjoy would not have been available to us. Borrowing can be both a joy and a curse, but the key is to plan and manage your borrowings sensibly and responsibly. Those that get in difficulties have not done that, but they should not be held up as reasons not to borrow, whether the borrower be the domestic buyer, or a bank or building society borrowing in the sub prime market. The central banks in the story above, know that without a ready supply of cash in the system it could severely damage the economies . Their action will be the lubricant that will keep the system moving and keep us all in jobs and in our houses, in the medium term. It seems that this site is dominated by those who want and seek the failure of the system, and seemingly have been hurt or disadvantaged by it, one way or another.
  4. Now read this FP: http://news.bbc.co.uk/1/hi/business/7140771.stm Hot off the BBC News Website tonight!
  5. I wasn't actually going to reply in detail to FP's reposte, but on reflection... So what! This is a board about a house price crash isn't it. By a crash surely we mean at least a 20% DROP, as it was in the nineties. Perhaps, but I was talking historically and traditionally. You are simply predicting that effect will stick. Your guess is no better than mine! I did, and managed to re-mortgage last year and avoid three rate hikes by taking out a six year fixed at 5.29%. The poor will always be with us, FP. A drop in the ocean compared to the nineties! Hard luck though if you are one of the drips! See above post on that breathtaking patronising comment.
  6. "QUOTE (Explorer @ Dec 11 2007, 07:51 AM) * Now I could be absolutely and totally wrong My god, he's got it." ...and so could you, and you seem to have missed that point entirely. Oh what does it feel like to think you are right all the time, but then I suspect that you haven't, as many before you haven't. See you in the New Year for a return, but don't let this thread die, I think it may be needed again. Happy house-hunting!
  7. Slumpmonkey said: "You're just hoping that it is different this time (like all people with a vested interest in high house prices)" I have no VI in HIGH house prices, only a steady and sustainable upward trend. I admit for the reasons stated above, if a crash, like that in the nineties did happen, it would be hurtful to me and my family. However, I have always been interested in the housing market and studied it very closely. I have made assumptions like many on this board and the tabloids in the past, that prices were going to experience a sustained tumble on at least three occasions over the last ten years. For that reason, I avoided purchasing certain properties, caution ruling every time, and every time, I have lost out, and watched others do very well indeed. The government itself announced yesterday, that in October, house prices actually ROSE, admittedly by only a fraction of one percentage point, but this certainly contradicts the recent Halifax reported downward trend from September to end November. What does this mean? It means that would be buyers, under the current scenario, are being cautious, like I was, and are waiting for a definitive trend to emerge. This has not yet happened! This is the time of the year also when people do take stock, it is the season of the year and this will take precedent until the New Year breaks. I predict that there will be two more interest rate cuts by the end of March '08. Northern Rock will have been sold off and re-structured by then, and this will fade permanently from the headlines. The weather will be improving and buyer's minds will be returning to the market opportunities once again. Those coming off fixed rates, will be able to re-negotiate better deals with an eventual and expected bank rate of just 4% by the summer, so the forecasted adverse impact of this will be dampened, thanks to Mervyn King's timely strategy. There will be no negative equity like the nineties and repossessions will remain well below the levels then, that led to the scandal of cheap property auctions. Now I could be absolutely and totally wrong, but my guess is as good as the rest on this board. It is just another potentially realistic scenario for consideration, that perhaps addresses the balance of this debate.
  8. I also said the following: "Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going." It is nothing to do with whether or not I actually live in a house, it is the experience and feel of the market that is important. We all have to live somewhere, I assume you too live in a house or flat, whether you "own it" with a mortgage or not, or pay rent, or live with your parents etc. Contrary to what has been said above, the BTL purchases have actually kept the market going. The FTBs have been priced out of the market long before the BTLs started buying in earnest. Again, I can call on the feedback my wife gave me direct from the new build market. Affordable homes is the short term answer, but planning red tape and a ridiculous imbalance on where you can and can't build, is holding up progress in this area. Any commodity where supply exceeds demand will increase in value, or should I say price, as there are some on this board who think houses are poor value. By the way, gold is not a commodity, it is a refuge currency alternative for investors in times of war and crisis, and does not follow the same rules.
  9. If they hang on in, yes of course. As sure as eggs is eggs, house prices will rise again, even if there is a blip next year, they always do, just like the stock market. Those who have invested since 1993 and have hung on, still have an excellent an valuable asset on their hands. As long as you are young enough to wait a few more years, next year's potential blip will be just a small hiccup in the scheme of property values. Like all investments there is an element of gambling, except that housing, whether you live in it or use it as an investment, is still the best risk going. You know it makes sense!
  10. Firstly, Slumpmonkey, my wife does not have a portfolio of property, she only sells property to others. However, through her contacts we were able to buy, on one occasion, low and sell high, hence my comment above. If you had read the post properly, you will see that it was the NHS nurse that had the portfolio. My point about 1992, that led to your comment about the date of your birth, was to emphasis the fact that I was there at the time and trying to sell a house in the middle of a recession. There is no substitute for first-hand experience, and you must understand that it is irritating when someone else, too young to have been through it, tries to re-write history and say it wasn't like that then. I live in the county of Devon by the way. As for a VI. My wife has sold houses through good times and bad. She gets paid regardless, because house builders always need to build and always need to sell, albeit the commission takes a knock in the bad times. Those already with their own house, fully owned or mortgaged up to the hilt, like me, of course do have a VI. I am relying on my house retaining sufficient equity to trade down when I retire to pay off my £122,000 interest only mortgage. We have a nice old thatched country cottage in a pretty Devon village, that will be hard to leave, but leave we must. The house is essentially part of our pension fund, as it is with thousands of other couples who could lose out big time if there is another crash late in life. This is the problem of getting old, you just simply run out of earning time. If you are a FTB, then you have my sympathy, but as I said above, the only way things are going to be eased for this category of buyer is for a massive programme of house building the like of which this country has never seen before. Do I care about FTBs? Of course I do, my son and daughter are such a case, unfortunately I do not have the means, approaching retirement to help them financially. However, I have a patch of land at the back of our garden which I submitted to the council as land for affordable homes. I would have borrowed the money to build four two-bed dwellings, selling at around £135k to local young couples, one would have been allocated to my daughter and grandson. The council rejected it, despite our village being a high needs area. The government, both local and national, have it within their means to solve the problem, the only thing lacking is the will!
  11. I get first hand info from my wife, what do you get, second hand stuff, no contest.! I do not misinterpret facts. The facts as I am able to get, have enabled me to make a bit of dosh on the new housing market. I was there in '92, what were you doing? Teething? There are those that observe and comment, and there are those that do! Which one are you my friend?
  12. We are thinking of abroad too, possibly France or Crete. There is one thing however, stopping us, my aging mother-in-law. She suffers from emphysema and needs our regular help and presence. In all consciousness, we cannot abandon her as long as she needs our help and company. We are of the generation where we are helping our grown up kids too, and our parents at the same time, and are stuck firmly in the middle. House mobility isn't always about price, but we do tend to get hung up on it, don't we?
  13. I have looked back at the last crash which was at its height in 1992, and checked out the relevant statistics, it is not hard to do. Unemployment rose steeply from an already high base in 1990, reaching a peak in 1993, and then steadily falling after that until the present day. That puts the nineties house price crash right in the middle of the highest unemployment levels. Now, I was selling my house in 1992 to pay off the bank following the collapse of my business due to John Major's recession, and consequently, I was out of work. I bought the house three years earlier and paid £120,000 for it. I spent nearly £60,000 on renovations and improvements, but I could only sell it for what I paid, so effectively I lost over £60,000 right smack in the middle of the crash. I remained unemployed for another six months. QED, methinks
  14. Yep, and the high riskers won't get a mortgage! Take out that category, and what do you have left? Still a demand way over supply in the UK, and against the background of high employment, it will make damn all difference to upward price trends. For prices to fall permanently to affordable levels, that is for the vulnerable FTB category, we need a massive programme of house building, the like of which the UK has never seen before. Unfortunately, it won't happen, as the political will and resources are not available, at least for the foreseeable future.
  15. They have been selling beach huts for more than £200k in the West Country, so a shoebox at the same price, looks good value. Prices in the spring won't move from £200k to £500k, why should you ever think that? Not everyone needs a 100% mortgage, especially would be BTLs. They buy more than one property at a time, sometimes three or four (yes, and for shoe boxes), and get up to 15% discount in cashback from the developer which pays the deposit for the 85% mortgage. My wife who works for a large developer has several customers who work this way. One of them is a nurse in the NHS, and she has twenty properties in her portfolio. No matter how much we all think the market is ridiculous and poor value, it is the reality. If you want better value, then as you imply, you can move to another part of the country (there are a few left) where prices are relatively lower. That is what we have done over the last thirty five years or so, and it works. Just to put things in context, when we bought our first house way back in 1970, mortgages were very much harder to come by than they are today, even harder than the current sub-prime squeeze environment. Despite that fact, our house value still doubled in three years.
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