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About Drayal

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  1. Between homes waiting until the market returns to sensible pre madness prices but worried about cash sum for purchase in building society / bank. I read last year that the FSA couldn't afford to compensate people with money in a bank / building soc 25th on the list (in other words a small one). Every day I read that we need another trillion for something or other whilst the figures related to GDP at billions seem small in comparison and I know that the UK have not even begun to see the effect of millions of 125% LTV and 7 x's income etc., the defaulting of which in the US led to global meltdown. So where on earth does one put ones money? Getting interest on income feels like the least of my concerns right now with interest rates down close to zero anyway, just keeping it safe until I buy feels like more of an issue for me right now. Can one put it in a bank vault or something and be covered by insurance if it gets stolen? I wish I could just give it to my conveyancing solicitor to keep safe until I make a purchase but I don't suppose he would know where to put it to keep it safe either. I do not feel in ANY RUSH right now to buy a property with house prices down 20% and predicted to go at least another 15% if not more, but I do not want to lose the money I want to buy a home with towards the end of the year either. ANY IDEAS. National Savings Income Bonds were always a safe bet but I assume if the government goes broke (and we know the US or IMF can't afford to bail us out), I assume the treasury goes broke too. Is the Co-op Bank truly any safer than any other bank / building society? Any feedback would be really appreciated. I am not into put my money into gold or something I just want somewhere simple and safe...we are in our 60s with no pension ...we were forced to move recently and just want to have a home again but loath to buy right now
  2. 90% falls its hard to say how much prices will fall but I have read that US property prices only inflated 78% and are down 40% and falling , and people unable to keep up mortgage payments (not just subprime), broke the global economy. UK prices inflated 190% in 10 years, a rise that should have taken 40 years in line with wages. 10 short years ago a property worth £250000 (a very ordinary 3 bed family home in Dorset VERY ordinary), was referred to as being worth "a quarter of a million" that is when the very ordinary house was worth £80000. So who is really to say where this market will go with no overseas investment of 750 billion (2007) to support the UK mortgage market, and loan to incomes of 3.5 or less.
  3. BOE & FSA confirmed last week that mortgage lending in the future will be regulated almost certainly on the loan to income ratio as it provides a better formula for affordability and it stood the test of time prior to the madness that allowed house prices to go up 190% in 10 years. Clearly if property prices are now going to get in line with wages (and who could have EVER thought they didn't need to lending at 6x's + income . {Of course it made a lot of people very wealthy the 190% increase, those that bought and sold etc.}), then property prices are going to fall if an average wage is considered to be £24000. ( If you do a search through the pages of the blog this week there was another article on loan to income and a link to a website showing average earnings. ) So really there is no question that house prices WILL FALL or even by how much, the UK I believe borrowed something like 6 billion in 2001 from overseas to finance the mortgage market and a staggering 750 billion in 2007 !! NO WONDER IT BROKE THE BANKS. It should have taken 40 years for house prices to reach the 2007 peak, in line with income, so it is going to be a LONG LONG time before house prices will see those levels. So RECOVERY really means property prices returning to the levels they should have been at if we had continued to lend sensibly AND of course dealing as a country with 1 1/2 million or more repossesions, as someone has already said if interest rates go back up 3.5 income is the most people can afford and millions took out mortgages at 4.5 and up to 7 x's income with 125% LTV who will be stuck on the lenders svr at the end of their fixed rate deal! It is going to be terrible for so many families who can't afford their mortgage and they remain liable even after their house is sold by the lender for about 50% of its value, THAT IS CRIMINAL, and needs addressing. So well done not getting caught up in the nightmare of negative equity but it is not something the UK can afford to pretend is not happening and the sooner we start to hear about loan to income on a regular basis, and IT IS HAPPENING finally, the sooner the UK will face up to 35% + drops and starting to deal with the fallout.
  4. Did you see that todays news re 17% drops in house prices etc said that "property loan to income was more affordable than it had been in 6 years" . Doesn't this confirm that RECOVERY means returning to where we were before the 190% inflation in house prices in the last 10 years? How can it mean otherwise? Mortgages have to have some kind of relationship to earnings and I believe we are about to return to the 3.25 median for loan to income not some vague "affordability" notion that has seen 5 million people thrust into negative equity and a million or more repossesions on the cards
  5. I posted this thread and have been very interested to read what everyone has said. Of course there are going to be sellers holding out for the highest price these are difficult times. On the one hand buyers do not want to find themselves with property worth 20% less or more the minute they move in, but sellers do not want to find themselves selling at 25% off and unable to find anyone else to drop 25% for them to buy. The reason I posted this thread was because Rightmove and Savills have both said that the property market begins to move with 25% reduction on 2007 prices. Even with a 25 % reduction on 2007 prices are I am concerned about entering a market that now has to fall in line with loan to income ratios of about 3.25 one wage or 2.5 two whichever is the greater, prices have a LONG WAY TO GO. However, I do feel the most important point, and one that I keep stressing is that RECOVERY does not mean we will see a return to 2007 prices ( this could take 40 years in line with wages), but that the market is back to where it would have been if it had not been for irresponsible lending. lending that will never return, the global banks full of FUNNY money are broke. I think EVERYONE is in agreement that 190% property price increases in 10 years SHOULD NEVER HAVE BEEN ALLOWED TO HAPPEN, now we all have to adjust and its difficult for buyers to keep hearing that house prices have fallen 17% and are due to fall 35% or more and to be confronted by sellers hanging on to the end, but of course a natural thing for anyone to want to do. However, I sense the DENIAL phase IS coming to an end. Losing a purse with a few pounds in can be awful, feeling one has lost tens of thousands is awful, but anyone who is not in negative equity of tens of thousands or worst still losing ones home unable to pay a 125% LTV mortgage, can at least feel that NOT ALL IS LOST. I wish you ALL the best of everything whether you are selling or wanting to buy, these are difficult times but I am sure that we are on the way to better times, NO NOT A RETURN TO 2007, but a return to sensible affordable prices that will not break anyone's bank and will offer people are chance to house themselves and their families.
  6. I am newish on here and I am wondering why nobody replied to this, there were a lot of q's regarding house prices etc yesterday. Did you look at the thread 40% off prices? There were others yesterday too. Have you looked at the allaboutmy property. com (I think it is it is the map they use on Rightmove you can put in a road or postcode and it tells you sold prices in 2008, 2007, 2006 of properties in that road). From my perspective, and we are in a difficult position needing a property (currently staying with reluctant family), if I was to buy anything it would have to be 25% off 2007 peak because I feel we would still be having to consider that that is likely to drop at least another 10% and I would HATE to buy and find that I had lost £20000 + within a few months. ITS TOUGH . I keep telling myself at least I am not one of the 5 million in negative equity (yet) but we also are not young and have the benefit of cash, but we are worried to death we could lose that in the banks. So difficult. You have to think "how will I feel if this property is worth £100000 or less next year or the year after.
  7. WHAT EVER? WON'T BE SELLING EVER? To be honest if you really need to get what you can get because things ARE NOT GOING TO GET ANY BETTER for a long long time. Read some of the other threads re wage - multiples etc., house prices are coming down down down and that is not wishful thinking but based on FACTS. The UK could not afford to support house prices going up 190% , sensible lending is back and back to stay, unless you want to stay where you are forever, even if you are going to end up with negative on a sale, I CAN'T SEE IT GETTING ANY BETTER for a long long while. Just do your sums on 3.25 loan to income to see just how much prices are going to have to fall. BAD NEWS I know, but 5 million people and rising will be in the same boat.
  8. There is an archived link to a Motley Fool article saying to offer 40% less than the asking price. In the past few weeks Savills and the Director (?) I think of Rightmove (might be archived) have both said that property prices need to come down and spoke of 25% off 2007 prices. SO WHAT PRICE ARE HOUSES SELLING FOR? Has ANYONE out there offered 25% off and had it accepted? In Dorset Rightmove seem to have added 10% to 2007 prices or more, what is your experience of this? The POINT is that getting 25% off a 2007 price is NOT PICKING UP A BARGAIN when you consider that house prices could fall to 35% or even 40 or 50% off peak price. 25% off a 2007 price is simply sensible buying the kind of buying we will see more and more of if people STOP listening to reports that say THIS IS THE BEST TIME TO BUY. Personally I do not think it makes sense to buy even at 25% off if you can afford to wait but some people HAVE to move and PEOPLE THAT HAVE TO BUY CAN REALLY INFLUENCE THE MARKET RIGHT NOW IF THEY SIMPLY OFFER 25% OFF THE 2007 PRICE. A further 10 to 20% drop which will be sustained for some time to come, (house prices are not going to go back up for a long long time and then only in line with wages), means as I say that a property at 25% off IS NOT A BARGAIN.....you are still going to see another £20000 wiped off that price in a year. So what is YOUR experience of getting out there and offering 40% off? AND HOW MANY ARE TRYING THIS? It has to influence the market if A LOT OF PEOPLE GO OUT AND OFFER 40% LESS THAN THE ASKING eventually those statistics will start feeding into the reporting. I am VERY SORRY FOR ANYONE THAT HAS BOUGHT IN THE PAST FEW YEARS, really really sorry, my heart genuinely goes out to you BUT sadly responsible lending HAS to be here to stay now.
  9. If Northern Rock ARE lending at 3.5 why didn't we hear about the loan to income ratios last week when we all were bombarded with THE ROCK IS BACK giving 90% loans to first time buyers. WHY AREN'T THE PRESS doing their sums instead of bombarding us with HOUSING MARKET ON THE WAY TO RECOVERY headlines. As has already been said in the other replies an income of £30000gives you a mortgage of £105000 THAT IS WHAT IS GOING TO DEFINE THE FUTURE OF THE HOUSING MARKET. This should NOT be leading to people despairing that "they will never get on the housing ladder" HOUSE PRICES WILL HAVE TO FALL IN LINE WITH INCOMES, lenders are not leaving First Time Buyers out in the cold, REJOICE all of those who have not been left with even £10000 negative equity, plenty will carry tens of thousands of negative equity for a long long time. JUST KEEP SAVING what you can YOUR TIME WILL COME and sooner than you think
  10. Lord Turner FSA said last week, look on archive news blogs, that mortgage regulation linked to loan to income made more sense than simply LTV. I believe the median is 3.25 one wage and 80% two or some say 2.5 two if it is higher than 3.5 one. I can't see how this is NOT going to happen, and it will not mean people will not be able to borrow enough because of course HOUSE PRICES WILL HAVE TO FALL IN LINE WITH INCOME. Strange idea I know, to only lend what people can truly afford long term but it worked really well for the UK up until the past few years when the WHOLE WORLD WENT MAD! OF COURSE HOUSE PRICES ARE GOING TO HAVE TO FALL at least 40% or wages have to go up and that is NOT going to happen. The Bank of England and the FSA and the government of course have all said THE END OF 6x's income, and we always revert to the median in recessions. But this is MORE than a recession, the 190% inflation in house prices in 10 years in the UK broke the banks. As I keep saying on this website, US house prices only inflated 75% and their subprime broke the global banks. UK has not even begun to see how many of the 5 million + who are fastly heading into negative equity are going to default on payments but they are already HIGH and RISING. The UK cannot afford to support an inflated housing bubble, the crash is going to be tough but there is no way to avoid it. I believe we had to borrow 750 billion from overseas to finance the mortgage market in 2007 nobody wants to invest in the UK property market now, not even investors, see News Blog Scottish Widows etc yesterday. THE SOONER WE HEAR ABOUT WAGE MULTIPLES THE QUICKER EVERYONE WILL START TO GET THE PICTURE, that is that RECOVERY means going back to where we were a decade ago with sensible lending, but house prices are not going shoot up, they have a long way to fall and will in future ONLY go up in line with wages.
  11. I feel like RANTING too.....about the spin that is being put on reports related to house prices and mortgage lending. I feel the BBC and ITV and all the Radio stations should FORCE EVERYONE to sit down and write 100 times a day. 1. Lending currently is NOT the problem with regards mortgages. ( Lenders are currently lending to those that can afford it. The past 5 years of irresponsible lending people and BANKS could not afford it. ) 2. First Time Buyers are NOT currently losing out. (They only have to wait a little while to be in a MUCH better position than they have been in for years.) 3. The FSA / BOE and the government have confirmed that mortgage lending is now returning to where it was just a few short years ago before the MADNESS. 85% minimum LTV and 3.25 loan to income or 2.5 two incomes. (This is how it has ALWAYS been for decades prior to the madness, 2.5 one income for a long long time , a working women's salary did not come into the equation). 4. House prices are NOT going to go back to 2007 prices for a long long time. NOBODY could afford a 190% increase in property prices in 10 years, such a rise should have taken 40 years in line with wages. It is going to take the UK 30 years to repay the debt incurred by the MORTGAGE MADNESS. 5. Property prices are now going to have to go back to having some relation to wages . (And that relationship, as already stated is the 3.25 loan to income. So do your sums as to HOW much house prices are going to HAVE to come down .) THE UK CANNOT AFFORD CURRENT INFLATED PROPERTY PRICES TRYING TO DO SO BROKE THE BANKS . WE ARE NOT GOING TO RETURN TO HOW IT WAS EVER. HOUSE PRICES WILL GO BACK UP BUT ONLY IN LINE WITH INCOMES SO SLOWLY VERY VERY SLOWLY. When I say this to people or blog it, people say "the government will never let it happen". BUT IT HAS HAPPENED IT IS HAPPENING NOBODY CAN STOP IT WE CAN'T AFFORD TO. Yes a LOT OF PEOPLE are going to be in negative equity , life is going to be TOUGH for millions BUT WE ARE NOT GOING BACK TO HOW IT HAS BEEN nobody can afford it. It would seem we are all still very much in the DENIAL phase but it is HUGELY irresponsible for ANYONE to say things are going to be otherwise, that things are going to return soon to where they were IT CAN'T HAPPEN IT WON'T HAPPEN NOBODY CAN AFFORD FOR IT TO HAPPEN, the past 2 years confirms this.
  12. I agree it is all worrying and upsetting but perhaps not quite as worrying and upsetting as being one of the 5 million borrowers about to go into negative equity and perhaps lose their home unable to afford a svr. It is so hard to read Rightmoves boss saying that offering 25% less than a 2007 price helps houses sell only to read that apparently houses are selling like hotcakes to people looking for a good investment and people from overseas "making the most of sterling being weak". How can there be such conflicting news around house prices? I guess most of it is spin but it's sadly spin that makes people rush out and feel they HAVE TO BUY OR LOSE OUT..... If ONLY someone would start to report on a regular basis that the government /BOE and FSA have all said that lenders MUST return to the median loan to incomes of 3.25 one income or 2.5 two with the FSA speaking of minimum 15% deposits and regulation on loan to income to ensure history can never repeat itself. And if they then suggest people do their sums it would become obvious very quickly just how much house prices are going to have to fall failing incomes going up 40%! And NO house prices will not rise quickly in the future because the UK and indeed Europe cannot afford to subsidise the UK's inflated housing bubble. There was an article on the 2nd February http://www.independent.co.uk/money/mortgag...st-1523110.html that said house prices would drop quickly another 25% this year taking peak to trough to 40% if mortgage approvals did not go up to 55000 a month, I believe figures today showed they dropped in January .....and with 3.25 loan to income I can't see any of the current measures at Northern Rock etc making any difference, £40000 income equals what x's 3.25? The figures speak for themselves.
  13. Can anyone explain why repossessed property is auctioned for a song ? Why would the government allow property that has already lost at least 15% to be sold at auction for 50% of its value? If there is such a huge surge of interest by people out looking for a bargain in the normal market, so much so that the property people are telling us they are getting multiple offers, then why aren't repossessed homes sold through the normal channels? Surely if these homes were advertised at 20% from peak they would be snapped up if we are to believe the government / agents current spin! Currently the biggest lenders to the 125% LTV 6 x's income groups are now state owned or virtually state owned. People who have their homes repossessed end up owing the mortgage companies the balance of any loan not paid after a house has been sold (at an auction for 50% of its value could be tens of thousands. ) They also then have to find a roof for their families so end up in the rented sector presumably on rent allowance . So rather than sell repossessed homes for 50% of their value why doesn't the government sell the house through the usual channels if estate agents are currently realising 88% of the asking price , rather than leaving families losing their homes owing tens of thousands they have no hope of paying, (so those debts will fall on the tax payer as the billions of US sub prime is currently doing) ? In other words rather than allowing US style property auctions to flog these properties to investors and landlords for a song why isn't the government attempting to claim back some of its losses by either selling for as much as they can through the normal channels, or taking over half the payments to enable the family to stay in their home thereby not losng the whole ammount of the mortgage because the people cannot afford to pay and not having to pay housing benefit for a million or so people who can't afford to pay outstanding mortgage debt let alone the rent for a home for their families. At least this way it would not all be loss, perhaps the government could raise some of the money needed to finance this from cutting banking salaries / and pensions, but it is not so much a case of raising money to finance this but not losing any chance of recouping any of this money by repossessed properties being sold to investors currently charged no capital gains tax .
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