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Fings Wot Can Affect The Market - Chap 17

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Youngish person had flat on market for many months without success despite some drops in asking price. He has now become detached from employment.

He has taken the flat off the market for the following reason. Were he to sell now, he would not be able to get a mortgage on the next property.

He's quite well heeled so there is no crisis for the time being but it got me thinking.

There must be lots of people who have lost their jobs who will be receiving state assistance with their mortgages. My (old) thinking was 'sell the house' and downsize to reduce the mortgage outgoings. My logic was wrong. Unless there is sufficient equity to buy a smaller place outright, a move is out of the question because of the unavailability of a mortgage.

This chimes with Mrs Rinoa Sibley von Mackintosh's perception that houses are being pulled because people won't accept lower prices - just that isn't the reason at all in these cases.

p-o-p

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In the end, I suppose it comes down to whether people think they can weather the storm or not. If they can cover the repayments for the expected period of unemployment, then they will probably try to. However, if they can't get work, time will eventually run out and a more desperate sale may be required.

Under current rules, that's only if the mortgage exceeds £200k(?), or your lifestyle is extravagent. Otherwise the taxpayer picks up the tab.

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He has taken the flat off the market for the following reason. Were he to sell now, he would not be able to get a mortgage on the next property.

Zigackly.

Now extrapolate. The threat of unemployment affects a lot more people than the reality. That's a lot of people who risk losing their benefits if they have a savings pile rather than a house when it hits.

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What happens when these people run out of money to pay the mortgage though? Assuming there is some tax payer assistance, they would have some breathing space, but ultimately selling up and moving to rented accommodation may be the only option. The money from the sale would pay for a lot of rent while looking for that new job.

In the end, I suppose it comes down to whether people think they can weather the storm or not. If they can cover the repayments for the expected period of unemployment, then they will probably try to. However, if they can't get work, time will eventually run out and a more desperate sale may be required.

Ultimately, if you can't afford to keep the house, it has to go. I think most would try to tough it out and hope for the best whenever possible though.

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Were he to sell now, he would not be able to get a mortgage on the next property.

So one bid and one offer (with bid > offer) are both removed from the market...

Net effect on market is?

Edited by ParticleMan

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Taxpayer bails out homeowner, thus adding public money to the market.

what all 2 of them? :lol:

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what all 2 of them? :lol:

Isn't that the new be-seen-to-do-something scheme where the lender joins the taxpayer in the bailout?

Of course that's a drop in the ocean compared to the taxpayer just paying the housing benefit under basically the old rules, as is presumably the case with the person mentioned by the OP here!

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Isn't that the new be-seen-to-do-something scheme where the lender joins the taxpayer in the bailout?

Of course that's a drop in the ocean compared to the taxpayer just paying the housing benefit under basically the old rules, as is presumably the case with the person mentioned by the OP here!

Not with the new figures - it used to be capped at 100K

p-o-p

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also the waiting period has been cut so if someone can keep going on their interest payments for 13 weeks they get 'government help'. Add to this, help with council tax etc and you can see the attraction of keeping the house even if you lose your job. Thing is, they are actually losing money with house prices falling but this is not day to day money being paid out - it is paper money after all. ;)

edited to add - that the interest payment help is fixed at a level that does not reflect the current BoE base rate so they can pocket the difference (I think).

Edited by olliegog

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