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Mentioned this in another post, but we used to call them the Negative Equity Brigade - the NEBs - in the early to mid 1990s. There were loads of them. Since about 2001 they have dried up.

My recollection of cases I dealt with is that it took on average about 3 - 5 years after purchase before owner occupiers threw in the towel and quit their homes for private rented accommodation or social housing. Subsequently mortgage companies sold the properties perhaps taking another 18 months for sale and completion. There was then a pause of about a year before they tracked the original borrower down and asked for repayment of the outstanding balance.

I remember these incredulous factory workers and taxi drivers coming in with letters from arms length collection agencies asking for repayment of £12,000 and the like.

It was a long process and will be a long process again. But you know what they say......I've seen it before. The NEBs will return.

By the way - NEBs were replaced by homeless familes. Work that one out.

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Mentioned this in another post, but we used to call them the Negative Equity Brigade - the NEBs - in the early to mid 1990s. There were loads of them. Since about 2001 they have dried up.

My recollection of cases I dealt with is that it took on average about 3 - 5 years after purchase before owner occupiers threw in the towel and quit their homes for private rented accommodation or social housing. Subsequently mortgage companies sold the properties perhaps taking another 18 months for sale and completion. There was then a pause of about a year before they tracked the original borrower down and asked for repayment of the outstanding balance.

I remember these incredulous factory workers and taxi drivers coming in with letters from arms length collection agencies asking for repayment of £12,000 and the like.

It was a long process and will be a long process again. But you know what they say......I've seen it before. The NEBs will return.

By the way - NEBs were replaced by homeless familes. Work that one out.

Thanks for posting a bit of NEB history, I remember so called 'very sensible people' finding themselves with £20K+ NE.

I was not a homeowner at the time of the last HPC, so I was shocked at a tv doc around 99/2000 interviewing a guy who had bought an off-plan small flat (near docklands I think) for £185K at the height & had to sell it for £95K. He kept saying 'if only I had not gone into that sales office that day..if only' like a recurring nightmare he was having.

That doc really brought it home to me how bad the massive NE was for some. I also employed a guy who had run away to London from £30K NE in Swindon house that had been repo'd around 1993.

The amount of NE coming this time looks more frightening. I guess the red-neck bulls would call regulars to this forum 'a bunch of Nebber lovers' in the sense of it being a predictable 'hoped for' indicator part of the crash.

Edited by Saving For a Space Ship

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The sad cases will be those people who have their only property repossessed.

The funny cases will be the BTL brigade who get their BTL properties repossessed, sold cheapily and a charge placed against their primary property for the shortfall. You will then have the entertainment of two mortgage companies trying to extract their loan equity from the house as quickly and quietly as possible,

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This works both ways.

You only have "notional" mortgage equity to withdraw.

The house is used to secure a debt.

Until you sell the house the ability to repay is not realised.

Similarily negative equity is a state of mind.

If you are living in a house with no intention of moving then the value of the house is irrelevant. Whether or not you remortgaged is immaterial - if you can keep up the payments then it doesnt matter what the "value" of the house is.

Some of the "north korean" types on this site would have you believe that a HPC can happen in isolation from the rest of the economy - it cant and it wont.

These people think that they can buy into the market at lower prices once a HPC occurs. This is naive beyond belief and it also shows that they too have nothing but the market in mind.

These things are states of mind, points of view.

The market got out of hand because people perceived it to be something it wasnt and everyone suffered. The same will happen on the way down.

I see no benefit to a HPC for FTBs/LLs/BTLs there was none the last time.

But...maybe the uber-bears think "its different this time".

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Some of the "north korean" types on this site would have you believe that a HPC can happen in isolation from the rest of the economy - it cant and it wont.

These people think that they can buy into the market at lower prices once a HPC occurs. This is naive beyond belief and it also shows that they too have nothing but the market in mind.

Don't consider myself a north korean type. Actually what is a north korean type?

I think most uberbears don't think the HPC will be in isolation. There is quite a lot of general doom and gloom about the UK economy.

But, if you have the cash, what's to stop you buying in once a HPC occurs? Why is this naive beyond belief? Enlighten me!

frugalista

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Interesting post, Needle. "Some ... on this site would have you believe that a HPC can happen in isolation from the rest of the economy - it can't and it won't".

Well maybe, but does it not seem strange to you that the housing market went up in excess of 100% over a decade when the economy grew by maybe 3% p.a.? If a HP boom can go up out of proportion to the rest of the economy who's to say that that the reverse can't happen? And anyway, can you find any serious economic commentator who thinks all's rosy in the UK economy? Surely the truth is that the housing market is sliding slowly backwards and so is the economy too.

"I see no benefit to a HPC for FTBs .... there was none last time."

Wasn't there? I FTBd in London in 1994 at the bottom of the last crash. I'd have had to pay a lot more for my house five years previously. In what way did I not benefit?

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i think its possible that houses CAN crash and not affect the general economy of daily living.

people will still have to eat and drive, heat and wear clothes. life goes on.

i dont think it has to bring the economy down with it, though it should first slow down the lending and this will have a result on the high st, though i think the main hit of that is happening right now. once prices slide people will accept it as it a paper loss. its not the pound in the pocket that being crunched.

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Similarily negative equity is a state of mind.

If you are living in a house with no intention of moving then the value of the house is irrelevant. Whether or not you remortgaged is immaterial - if you can keep up the payments then it doesnt matter what the "value" of the house is.

So if your house falls 50k you aren't really £100k worse off? You better tell the people who think they made £100k when houses were going up! In fact I think you should have told them BEFORE they spent it all on either more property or lifestyle.

Some of the "north korean" types on this site would have you believe that a HPC can happen in isolation from the rest of the economy - it cant and it wont.

Depends what you mean by isolation. Will it have an effect: of course. Will the economic effect feel the same to workers as it does to property investors? For the majority probably not. Losing your job is not the same as losing £100k AND your job. Indeed, how did most people feel about the 2000-2003 stock market crash? Probably better off in truth! At least they didn't have 16 year old millionaires stuffed in their fac eevery day.

As you say th eprice of a house is only real when you come to sell, so the likelihood of OOs acting like they've lost 100k on their house, even when they have is remote, as most won't be selling.

These people think that they can buy into the market at lower prices once a HPC occurs. This is naive beyond belief and it also shows that they too have nothing but the market in mind.

If I have the money to buy the dips, who's gonna stop me? You? Why am I naive? Because I believe my bank statement? Do tell!

These things are states of mind, points of view.

The market got out of hand because people perceived it to be something it wasnt and everyone suffered. The same will happen on the way down.

I see no benefit to a HPC for FTBs/LLs/BTLs there was none the last time.

But...maybe the uber-bears think "its different this time".

Sentiment is a state of mind, but your mortgage is all too real. As Mervin King says: "House prices are a matter of opinion, but debt is real."

Edited by Sledgehead

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Surely the fundemental difference between negative and positive equity is the ability to borrow at the lowest interest rates.

If you wanted to start a business the bank usually like some sort of contribution, this can be extracted easily from a house if in positive equity.

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Some of the "north korean" types on this site would have you believe that a HPC can happen in isolation from the rest of the economy - it cant and it wont.

During the 'Great Depression', the 70% or so of the US population who kept their jobs were often better off than they were before: they made as much money and prices were lower.

So yes, a crash will affect the economy in general: but there's no reason why it has to affect individuals who've behaved in a sensible manner and not borrowed vastly more money than they can ever afford to pay back. And those who have, well, tough turds.

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  • 335 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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