madasafrog
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Posts posted by madasafrog
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I have been watching this credit bubble since 2002 and have always said it will end in tears, and so it has although many have not realised it yet.
Imagine the dosh you would have in the bank now if you had bought then and sold earlier this year?
This is the problem with trying to second guess any market
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"This model does rely on a steady housing market and to a degree, interest rates remaining relatively stable." ....the problem with this 'model' is that it is a wish list and life ain't like that.....ask Rabbie.........!.....
Your 100% correct in that. I am just trying to explain the logic in why it can be a good decision to make. Either way its a gamble.
I recommended to someone close to me that they do exactly this about a year ago. They even went for a 100% mortgage. He and his girlfriend were trying to save for a deposit but the house prices were rising quicker than they could save. At the rate they were going, they were going to outpriced completely for many years.
They managed to buy a repo house for a good price (£90K) in a decent area (if you can say that for the west mids). They just needed to spend £5k over time to put the house right and they would have a house worth £20K more then they paid. This was a 100% mortgage on IO. After their first year they were able to remortgage on a lower interest rate with a 90% and go onto a standard repayment.
As they were so early on in their careers, their own salaries had increased much more than the interest rates effected their mortgage and were also able to go onto a standard repayment.
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House purchases are in the majority reliant on credit.... and in the current situation they rely on credit at irresponsible 4,5,6,even 7 times earnings... I think thats not going to be very easy to find in the coming week, months, years which will make interest rate level irrelevant!
Currently, lenders do work more on affordability rather than income multipliers. That being said, i doubt that there will be that many people that will be so far out on a limb to have gone 6-7 times earnings. Seems a bit fanciful.
Even if there are, i believe that the numbers will be so low to have any impact on the market. I believe that the BTL landlords that have made poor investments on the wrong properties and have over exposed themselves, will be the people that will make some distinct impact on house prices falling, and even then i believe that the price falls will be very localised. More of a slight correction.
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If your a young person and trying to get on the housing ladder then i think IO is a sound move.
Eg. You are early on in your career and your earnings are lower than they will be in the next couple of years. Take an IO mortgage and it will give you a chance to use the extra money to equip your home.
As your mortgage may fixed over a 1-2 year period, by the time of your mortgage renewal, your salary will have risen, your equity may have risen also so your Loan to Value ratio will have improved. This results in you being able to get a better interest rate resulting in extra money towards repayment, together with increased wages will result in a standard repayment mortgage being manageable and still giving you the same disposable income.
This model does rely on a steady housing market and to a degree, interest rates remaining relatively stable.
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One of the commentators on Newsnight said the market turmoil would be good for the housing market - the MPC won't be able to raise interest rates now!
Its a valid point. If they dont raise rates and if there is even a drop, it may avoid a declines in house prices. Too many factors playing a part, the main one being sentiment. I believe its still too early to say whats going to happen. The DOW has recovered from earlier losses on the day and maybe this will spark a rally on the global markets on Friday.
I will put my hands up and say that i am no expert but it seems that for every bit of evidence that supports a fall in house prices, there is evidence to support a rise. For every pundit talking down the markets, there are others talking it up as a great opportunity.
I am no economist but i take a big interest as i run a small business and have a family to support. I keep an eye on the economy to help my decisions on how i plan my coming years. At the moment, i am very much on the fence on what will happen over the following months and years.
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Cheers for the tip off
First words "are we on the edge of a global recession?"
Bit dramatic but thats their job i guess. Lets see what their take is
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I hope as many greedy financiers lose out as possible but sadly, so many others will suffer. I'm currently working with a company that has been bought up by what I consider to be a few cowboys who have raised massive debt to buy up around a dozen companies in the space of 2 years. If their credit lines are stopped our cashflow will go negative and company will be no more...
This is the tragedy. Companies that are sound and profitable could be hit by external forces that cause them to fail. If this is the case and it leads to unemployment, then there will be a risk to house prices.
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It does make you think about the rainfall we have had this last couple of months. Can you imagine the effect it would have had on the country if it fell during the winter and mainly as snow!!!!!. It would certainly be a lot worse than what we have had so far. We are pretty lucky it fell during the summer IMO
BTW, how long before they announce a hose pipe ban down south?
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No, not a troll, just a homeowner who hopes and doesn't believe there will be a HPC. Been reading the forum reguarly, and not convinced by anything I have read so far that any crash is imminent.
You will find this sort of reaction on this board. If you dont believe in a complete house price crash you will be burnt as a heretic.
I view the board as there are quite a few people with interesting theories and back them up with good economic data. Then there are others that are feverish fanatics foaming at the mouth because they missed the boat on capital growth by not buying their own home. Its a good board if you can ignore the beasts that have been crying wolf since 2001.
Just be careful not to say that there wont be a crash or you will hear the cries of "TROLL TROLL".
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The part of Wolverhampton I live in houses cost half a million – just up the road they cost more! A one bedroom flat sells for over £100k.
I am from this area too. Prices are still on the rise.
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Wednesday 1st August 2007
Unfortunately in recent weeks, several owners of property portal websites that we have previously linked to have requested that we remove their listings from our site for copyright reasons. We have of course complied with their requests when asked, but we were disappointed in their decisions as we had previously felt that they would be more than happy to receive the free leads from the traffic we were driving to their sites.
Instead, we have replaced all the listings with a new batch which can be seen on the site today. Unfortunately we are unable to provide direct links or photographs anymore. Estate Agents: If you see a house listed on this site and you would like your contact details to be shown alongside it for potential buyers to contact you, let us know using the contact us form.
We are disappointed to have to do this as we do feel that it detracts from the site, however due to the requests and threats of legal actions from several property portal websites we feel it is the only way that we can continue to operate the site.
Thursday 21st June 2007
Shame. Hopefully things will pick up again soon. It is a good service to the EA's for them to shift their properties. Hopefully they will wake up and smell the coffee
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Don't forget Iran selling oil in Euros or Bird Flu.
I heard about this some time back. Any more news on it?
I cant see it happening. The US would go to war before allowing Iran destroy its economy
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The mortgage companies have different LTV for different rates. If you want a 100% mortgage then the rate is going to be higher. If you want a really low rate, then the bank will want a lower LTV to reduce its risk. This is common knowledge
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How much do you think house prices will fall in the next 12 months?
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I don't think that's allowed. It's like if you were a car sales man and you buy a car which costs 15K and retails at 30K. You aren't allowed to sell it to yourself for 10 pounds and your business make a 14990 loss on the deal.
Your property company renting a house to yourself at less than market value, would be considered something like drawings.
You would also be taxed as "benefit in kind", the same way you would with a company car.
There is also another taxation loophole closed whereby if the house was owned by someone else and they let you live there rent free, "benefit in kind" still steps in and you get taxed on it. Eg, market rent is £500 per month = £6,000 per year. They will tax you at 22% of the £6,000 = £1320 tax bill
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Come on..30k a year...imagine the kind of holidays you can have every year with that kind of money..
I have a static caravan in Barmouth (no gypsy jokes please), and the rent/rates/insurance etc costs you over £3k per year. Then roll in the depreciation on the van of over £3k per year, you are looking at at least £650 per year for a tin box by the sea. For the same money, you may as well buy a holiday cottage. Even if it is on interest only, after a few years, you will at least get some kind of return on it. With the caravan which costs over £20-£30k, after 10 years, it is worth less than a thousand quid.
The kids are old enough to go abroad now and they also love centre parcs, so flogging the van so we can put the van costs of £6k+ per year to holidays that are a bit more fun than a caravan in Wales. Wales is a lovely place but it gets so boring very quickly as there is not a lot to do there.
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NEWS FLASH (from the horse's mouth):
Rightmove threatened Propertysnake with legal action. That's why all rightmove properties have been removed.
Legal action? On what basis I wander? Its information that is in the public domain already. Not as if the site is grabbing confidential information. I think that rightmove are just brandishing their swords
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Read the post a quoted. The comments made by the poster are both ridiculous and inflammatory.
What part? Have seen many trolls before on other forums and they just lurk and post pointless crap just to ruffle feathers.
BTW, didn't know that he had more than one account. That IS against general forum protocol so fully with you there.
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OK, I agree this charlie is a troll.
AWOOGA
Seems a bit harsh. He is just offering another viewpoint. Has not been insulting or ill mannered in the posts i saw.
Its important that there should be a balanced viewpoint on the evidence that presented on this website. People may be looking here for guidance so its important that posts here reflect peoples different opinions, even if it disagrees with your own.
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Don't the sellers just name their price rather than having it valued?
Some sellers may do but I think the vast majority depend on the EA to give a valuation and also the EA will write the sales literature for the property including all measurements, features and benefits.
If people are to use this Tesco service, it is vital for them to at least get an accurate survey and valuation done prior to just dropping an advert onto the website. How would they feel if they found out that they had done their own valuation and undervalued it by £20K? It would be the most expensive £199 they had ever spent.
I believe that there is a place for the Tesco service but i dont think it will revolutionise the industry.
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For £199, who does the valuation of the house you are selling and who does the marketing material?
There was a previous thread on this subject and people were predicting that high streets were going to be filled with EA offices that had closed.
Pretty mental forecast i think
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Thank god for that. Im still in a state of shock over the idea that it costs £500k to get a decent detached in Wolverhampton!
Thats for a good 4 bed in a good area. 3 beds are more commonplace and a lot cheaper. You can get decent 3 bed detached in OK area for under £200k. Good area will be £250k+
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So are you assuming then that all FTB are of a certain generation and status? What about those with families who can't start with a flat or a small house?? This is affecting people who should have moved up the ladder by now but haven't even been able to get on at the bottom end never mind the 'have it now generation'. That is why promises of new build flats are not going to help the increasing swathes of the population who are priced out...
Well surely its their decision to start a family before starting to get on the property ladder. People shouldn't moan about not being able to afford a house if they have started a family and then find that they cant compete with other FTB who have got dual incomes and no kids to provide for.
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So this place on Bearnett Drive went up about 50% in 6 months? Bloody Nora!!
This is a bit of an exception rather than the rule. Sounds like a developer has done the house up and or extended it.
Mirror: Stock Crashes, Subprime Meltdown, Credit Crunch
in House prices and the economy
Posted
The problem with trying to predict the housing market is previous trends cant be relied upon to predict future values. There are too many factors that affect the price of houses. Relying on previous trends is all too easy but also a bit short sighted.
Economics is more of a theory than a science. I dont think any of us can truly say whether house prices will fall or rise over the next few years. All we can do is have an educated guess.
I am still on the fence. One day i feel there is going to be a crash then the next day i look at other evidence that proves there will be a continued rise.
Its a tough one and a gamble whichever way you decide.