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House Price Crash Forum

Chief Wiggum

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About Chief Wiggum

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  1. Banks base the mortgages relative to the value of LIBOR rather than the BOE baserate.
  2. what do you do when property is not selling and people are finding it hard to get mortgages. i) Take on more similar properties at the same price (that is not selling)? ii) Convince potential buyers that this month we have seen the bottom of the crash. And then the same next month, And the month after that... iii) Go bust iv) All the above. v) Convince the seller they need to drop the price so they can sell and you can get your commission. Really, I just don't understand this tactic. Please someone explain the logic to me?
  3. I meant lost on me in the sense that I don't think doing more of what got us into this mess is going to get us out. Once rates got to 2%, any further decreases have had a minimal effect and, if anything, a negative effect. Dropping rates too far weakens the currency to a point where investors pull out their sterling deposits from banks causing them to have a capital shortfall and banks to restrict lending. Long-term LIBOR looks to be pretty low so I think borrowing between banks will resume in the not too distant future. However, all it will take is a few more huge write-downs and it will trigger it all over again.
  4. A real worry is that the average person is going to find himself unemployed.
  5. When it goes up it will be a gradual thing to avoid the economy being torn apart. However, a rise would help out all the savers and encourage investment back into the country. The idea that interest rates are dropped so low to encourage spending is lost on me - i.e. spend your way out of recession. Everything is pointing to housing being priced too high. When even the banks are downgraded by rating agencies on the basis that their assets (in property) are over valued something has to give. Higher interest rates would cause some people to lose their property but, harsh as it sounds, that was their choice. Prices would drop to an acceptable rate rather than being in this limbo where people have silly asking prices because many are just greedy. Higher interest rates are inevitable. Just wait until after the next election...
  6. Generally: Taxes increase to cover spending deficit Interest rates increase to combat inflation
  7. Finally a use for my Zimbabwean dollars... UK property market, here I come.
  8. You are right when you say it is an average of banks reporting their borrowing/lending (LIBOR/LIBID). However, LIBOR is used as a rate. Look at interest rate swaps - Settlements for each set of cashflows will be priced using a LIBOR rate for GBP denominated IRSs.
  9. Banks can only borrow from the Bank of England for very short term (Only overnight I believe) at the BOE rate. For other borrowing they typically do it on the money markets and the rate used for that is LIBOR. The LIBOR spread(s) is much higher at the moment (And was even higher a few months back). The reason for this is due to fear of the borrowing bank not being able to pay back for one reason or the other. The cost of this is then passed onto us.
  10. Now did you know that or just read the comments at the end? The latter methinks Not that the point is any less valid though.
  11. The only problem with this is that the regions are so big that they are indicative rather than representative. For instance Greater London covers such a vast area that it is almost useless except to point that there has been a drop. I would use this in conjuction with (recent/historic) Land Registry prices to provide a more accurate picture for a given area.
  12. I'll admit that is pretty impressive. I feel like we have hi-jacked this thread though so sorry to the OP.
  13. How many banks actually do 20 year mortgages? And in those cases what is the LTV/rate I think 5/10 is realistic. We will have to agree to disagree on that one.
  14. It depends if that higher rate on the smaller amount would be enough for me to miss payments and lose my house. Each case is going to be different. I think we agree to some extent but there are so many different scenarios...
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