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House Price Crash Forum

Jiji

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About Jiji

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  1. A fixed rate mortgage can be a good idea, sure, but not necessarily. Assuming you have reverted to the Nationwide's 2.5% BMR. which all current mortgagees in the UK will do, unlike new mortgagees who will ultimately revert to a rate roughly equivalent to most other lenders, 4% or so for now, that 2.5% is pretty much impossible to get for anyone in any new remortgaging situation, even if you have 50% equity or whatever. It's a true bargain in the current climate, no, really. So, to give up this, for what? If you have to pay £1-2000 fees in admin, which is basically a tax on stupidity all so you can get a rate of 5-6% or whatever for two years, then that is pretty obviously not a good deal, since the Natiuonwide would have to hit 8% in two years to make it vaguely approachably some kind of financially astute move. And a five year fix? If the Nationwide BMR is gonna get that high, then Britain will have already fallen into economic Armageddon many months before. I think he/she is maybe right.
  2. Travelled and lived in Asia for ten years and returned to live in London in 1996. Was in Tokyo for their version of the credit crunch/popping of the bubble and completely didn't notice it, too busy having adventures in that amazing city, it seems. All my life always tried to avoid reading newspapers, watching TV, cos it didn't seem to add any beauty to my life, so blissfully unaware of all the stuff I now ingest and rely on these days on HPC. Rented in central London for seven years dirt cheap due to luckily finding a benign and wealthy landlady, but forced to leave in 2003 cos she wanted to sell the flat as part of her retirement plans. OK, fair enough. So suddenly forced to consider, after 20 odd years of blissful and ignorant hedonism where to live and how, and for the first time ever went to find out what the options were and was genuintely shocked when I learned about home ownership and what it involved. After a casual glance at what purported to be economic reality in 2003, it seemed like some kind of insane, unsustainable bubble to me, and I crossed my fingers and told the wife I'd just have to be lucky again and find another benign landlady to rent from. But parents intervened, after I'd outlined the facts and that we had no choice in the rent/buy question as we were already, even with two healthy salaries, priced out of the housing market in London, and they offered 20K money towards a deposit if we wanted to buy a flat. So we did, actually rather lovely ex-council 2 bed in the East End, all we could afford, but a bit of a culture shock afer Marylebone, including the wife getting stoned by some loveable local children in the first week! But, even as an economic newbie, I thought at the time, it was a huge risk, as the bubble was in full effect, although, of course, nobody seemed to be really noticing it, and I only went through with it cos of the wife's desire for a "nest" after years of transience and then renting. After paying an insanely low rent of £433pm, went to £900 mortgage on a Nationwide 5-year tracker, which I only wish they'd offered for ten years and luckily sort of, the bubble didn't burst in 2003, but in 2007, so our home is probably "worth" what we paid for it five years ago, and if we want to leave, we are not gonna be trapped by debt. I've paid off a fair bit of the mortgage, and am happy to live here a few more years before returning to Japan to live out my dotage in a country that has an exaggerated if outdated respect for the elderly. So, cutting through all the dullish waffle and detail, the answer is yes. But it wasn't through any cleverness or prescience, more the fact that I'd avoided economics/the real world for so long that when I actually applied my brain to it, the fact that I was kiind of fresh and had no preconceptions made it all the more apparent that something was deeply wrong.
  3. "Like the mighty hand of God, waters will rise up and separate this sinful, sinful state from our country."
  4. If you are not weighed down with snobbery, then sunny Limehouse has decent 2-bed ex-council flats, 78 square metres over 2 floors on the canal between Mile End and Limehouse, or just off Narrow Street, well under 200K. Zone 2. 10/15 min walk to C Wharf. Much better value.
  5. Which is roughly what happened to our hero Mark Kolesnikow, I reckon, though the article didn't actually ask this rather obvious and most pertinent question. He'd chosen his apartment from the plans, raced up there with his own special EA guide only to find out, surprise, it was one of the 360K ones, not the 260K ones, at which point he realised he'd been had, luckily didn't give in to the EA-creaeted fake frenzy, did the bedroom/goat arithmetic and refused to hand over his deposit on the spot. Well done, Mark. Sort of.
  6. I don't have the advert to hand, but I seem to remember that it was totally misleading. Classic misleading sales claim trick to fool the gullible, arithmetically-unaware punter. Something like... "2-bed apartments valued at UP TO 430K now reduced to prices from 260K!!!" OK, so actually tiny 2-bed flats @ 320K all the way up to penthousey-slightly-less-tiny 2-bed flats @430K reduced to 260K and 360K respectively. So not even 50% at all. More like 20-30%, which considering the astronomical overvaluation in the first instance means you are still being ripped off. Point is they are still massively overvalued in an area which must have the largeset number of slave-box completions in London in the last two years, and still loads in the pipeline for this year and next. I feel sorry for any honest folk who are being misled and risk financial ruin by continued media misreporting of the property bubble collapse.
  7. To answer the original question... Basically, most people really still believe that house prices are simply taking a temporary hit due to some freakish global economic downturn that will be fixed by next year probably and it's maybe just a few years before things get back to "normal" and house prices continue their inexorable climb to the sky. The fact that the entire global economic system has exploded in everyone's faces is just too mindboggling, since "capitalism won" and it's the "end of history" and "aren't we clever/rich" etc Those who are pretending/hoping that their precious property investment is not now actually a huge millstone which may well drag them to their doom have many allies to bolster their denial. 1) The media. The denial of the property bubble bursting is easier to maintain for most as the media continue to talk about "recovery" as meaning going back to bubble peaks rather than the property situation before the bubble started inflating. This is, at best, irresponsible journalism. 2) Other idiots. Herd mentality, the same mental condition that helped create the bubble in the first place. There are many other idiots in denial to give one strength. 3) Straws to be clutched at... The FTSE bouncing back 25%(??) in three months or so maybe also gives false hope... "If my house can just bounce back up 25% before the end of the year..." 4)...
  8. They have to believe it's not a huge property bubble bursting, just a temporary setback to property prices caused by other bank-related stuff that is being fixed or has been fixed, or actually is pretending to be fixed... I reckon embarrassment plays a part in the denial. Imagine boasting at a dinner party two years ago about how your property bought for 200K is now worth 300K, you've MEWed up to 250K to get the Porsche and you intend to sell for 400K in another few years, making a 200k "profit" and continue forever onward and upward on the housing ladder and how canny and successful you have been. Fast forward to 2009. Your house is now worth less than what you still owe thanks to the MEW, in your head you're still gonna sell it for 400k though, and if you sell it for 200K now, your dinner party friends are gonna realise what a total misguided loser you have been all along.
  9. The idea that a "pension pot" is desirable is not necessarily that mainstream an idea. Like most folk, I refuse to give over my shiny coins to men in suits promising me riches at some later date, they, unlike me, assuming the world carries on an even keel. A pension is just savings, with theoretical added value which you cannot access till a fixed date in the future. Not too bright if you invest in that? Meanwhile you can approach old age with all sorts of different strategies...
  10. In the next 12/24 months, all those who bought into the housing price bubble in the UK, putting a huge bet on property using borrowed money, especially those who MEWd' in the last 5 years, are gonna be significantly crucified. Shifting from a bubble-style mortgage, where the lender didn't care about making money, just grabbing market share, onto, at best, their lender's SVR, still a theoretically bearable 2.50-6.00% should not be crippling... but it will be for folk who expected to get another "great" deal. When this filters through, there will be massive HPC, and then... probably nothing much will happen.
  11. http://www.easier.com/view/Finance/Mortgag...cle-249119.html So SVRs average 4.2, bearable for now, but up to 5.99. Interesting to see if these rates head north when the BOE rate changes...
  12. Which is sort of what I'm saying... If she had a Nationwide mortgage deal that had just finished, she'd have automatically got the Nationwide BMR of 2.5% as an existing customer, negative equity or not, cos that's part of the agreementl, that you revert to this rate after the initial deal is over. If you want to remortgage however, then 2-3 years ago you were laughing, with a myriad of generous options as lenders were fighting for market share rather than profit, but now you are well and truly fecked unless you virtually own the property already. All deals available are very unfavourable, nowhere near the BOE rate of 0.5%, and often now require huge "administrative" and other fees. But even if she's with a less generous building society, can't she just automatically lapse to their SVR? And all basic SVRs for existing customers are still under 5% or so...aren't they?
  13. Lazy reporting? She either goes onto her lender's SVR, like eveyone else when your tracker/fixed finishes and that could be anything from 2.55 Nationwide up to 5% or so?? Surely, each BS has just one SVR, it doesn't move around according to your perceived equity. OR you remortgage, which is where you now get hit with no good deals whatsoever and punitive interest rates for anyone with less than 20% equity or so? Maybe the mortgage advisor was just trying to get her to buy a new mortgage, (admin fee 1.5K or so) and glossed over the basic SVR option?
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