Timz Posted July 24, 2010 Share Posted July 24, 2010 Merryn is right. The price of a house is very much about Availability of Finance but perhaps more importantly the Availability of New Finance. Availability includes the cost of finance and the number and types of mortgages on offer. The abrupt halt to the record falls seen in 2008 and the very slim but rising market we have seen over 2009 until the early summer of this year was caused by most existing mortgage costs being cut drastically when interest rates were set at the record low of 0.5%. Most demand came from cash rich buyers, perhaps funded by overseas purchasers of London properties. In London, the south east and certainly the south west for larger properties we are back to the peak and above seen in 2007. At the first time buyer end we are still significantly down because of high deposits required for mortgage finance. The market has been turned upside down; it is now driven from the top by cash not borrowing. Confidence in the market must also be important but it is again a secondary factor. As the more astute and perhaps up market buyers loose confidence due to the lack of New Finance to support the market, more properties will be placed on the market. It’s difficult to see the early trend locally. A number of large country estates seem to be up for sale, the premium for between the better positioned, higher value properties seems to be widening. In Castle Cary, there is a large five bed farm house near a railway line and road recently on at £625k, it seems cheap. Put this house in a better location and it would be on at £1.2M, perhaps double. I asked a couple of old FRICS’s who saw the early 1980’s and 1989-1995 and said surely the lovely rectory or farmhouse won’t fall and the clear answer was that in the end in the 1990’s they all fell by 40%, “there was just no money about”. Governments will do “what ever it takes”. They are fighting a war. Nothing has changed, the problem has moved from the private sector to the public. Exporting our way out when all other countries would hope to do the same looks difficult. Merryn is right. Quote Link to comment Share on other sites More sharing options...
Mega Posted July 24, 2010 Share Posted July 24, 2010 What "THEY" do is every dirty trick, but path of lest resitance.........so expect them to do:- 1. Inflation 2. Hide the scale of debt 3. Hide & hope it go's away Quote Link to comment Share on other sites More sharing options...
Venger Posted July 24, 2010 Share Posted July 24, 2010 Merryn is right. The price of a house is very much about Availability of Finance but perhaps more importantly the Availability of New Finance. She is half-right. Availability on one side and demand on the other. Only fools will take on mortgage finance to buy at today's prices if they fear for their job prospects or the prospects of the wider economy. Quote Link to comment Share on other sites More sharing options...
Mega Posted July 24, 2010 Share Posted July 24, 2010 Demand was fueled by greed, colasape by panic Mike Quote Link to comment Share on other sites More sharing options...
JustYield Posted July 24, 2010 Share Posted July 24, 2010 Merryn is right. Absolutely. His "house prices are opinion debt is fact" was spot on. Quote Link to comment Share on other sites More sharing options...
Cicero Posted July 24, 2010 Share Posted July 24, 2010 MSW repeating the obvious. Does she have any sage investment tips? Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 24, 2010 Share Posted July 24, 2010 She is half-right. Availability on one side and demand on the other. Only fools will take on mortgage finance to buy at today's prices if they fear for their job prospects or the prospects of the wider economy. you could argue Demand was on the lenders part....they had to sell these things to farm out the MBS deals, so vital to keeping the CDO merrygoround going. they fostered demand by giving mortgages away at lower and lower criteria. the people, and government, lapped it up. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted July 24, 2010 Share Posted July 24, 2010 Merryn bought a house recently. Quote Link to comment Share on other sites More sharing options...
JPJPJP Posted July 24, 2010 Share Posted July 24, 2010 Pretty much what Soros said in this book http://www.amazon.co.uk/Crash-2008-What-Means-Financial/dp/1586486993/ref=sr_1_1?ie=UTF8&s=books&qid=1279992335&sr=8-1 The price inflation of an asset class increases in line with banks willingness to lend against that asset class - or words to that affect... Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 24, 2010 Share Posted July 24, 2010 Pretty much what Soros said in this book http://www.amazon.co...79992335&sr=8-1 The price inflation of an asset class increases in line with banks willingness to lend against that asset class - or words to that affect... its obvious...how much would houses be if we had to pay cash and mortgages were illegal...as they should be. Quote Link to comment Share on other sites More sharing options...
plummet expert Posted July 24, 2010 Share Posted July 24, 2010 Merryn is right. The price of a house is very much about Availability of Finance but perhaps more importantly the Availability of New Finance. I asked a couple of old FRICS’s who saw the early 1980’s and 1989-1995 and said surely the lovely rectory or farmhouse won’t fall and the clear answer was that in the end in the 1990’s they all fell by 40%, “there was just no money about”. Governments will do “what ever it takes”. They are fighting a war. Nothing has changed, the problem has moved from the private sector to the public. Exporting our way out when all other countries would hope to do the same looks difficult. Merryn is right. Yes, this is absolutely spot on. That's why I have been banging on about proper mortgage controls being essential to see that this nonsence does not happen again. At the trough of this fall in house prices it would be best for the FSA to apply a 2x main income and 0.5 x second income criteria. It may sound very restrictive, but it is in everyone's best interests to have low house prices and look to investments being other things like manufacturing industry. No more remortgaging and ATM your life away. No more finding your house is making you more than going to work. Just sensible repayment mortgages and gradual moves up the ladder if you earn more over time. Quote Link to comment Share on other sites More sharing options...
neil324 Posted July 24, 2010 Share Posted July 24, 2010 My mothers, boyfriends, father just died. So my mother pays a visit to the wife of the dead man to have chat etc. If you followed that i'm amazed. Anyway it turns out they had a remortgage so still have outstanding debt on their house. Don't know how long is left but the payments are £200 a month and the dead man was 78 and the wife is 72. WTF! Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted July 24, 2010 Share Posted July 24, 2010 Demand was fueled by greed, colasape by panic Mike Panic, once that starts no amount of printing funny money will help. Still luckily it's all contained. Quote Link to comment Share on other sites More sharing options...
libspero Posted July 24, 2010 Share Posted July 24, 2010 -SNIP- Merryn is right. Absolutely. Merryn can do no wrong in my book Quote Link to comment Share on other sites More sharing options...
Authoritarian Posted July 24, 2010 Share Posted July 24, 2010 Nope, she's wrong. Property is and will forever be the only game in town, the availablity of finance is a secondary factor. The upshot is that the finance follows the land market, not vice versa. Even a GCSE science student could work this out; if the availability of finance caused prices to rise then all prices would rise as credit "loosened", not just prices related to housing. Stop deluding yourselves please. Quote Link to comment Share on other sites More sharing options...
NEO72 Posted July 24, 2010 Share Posted July 24, 2010 Nope, she's wrong. Property is and will forever be the only game in town, the availablity of finance is a secondary factor. The upshot is that the finance follows the land market, not vice versa. Even a GCSE science student could work this out; if the availability of finance caused prices to rise then all prices would rise as credit "loosened", not just prices related to housing. Stop deluding yourselves please. Wow-that is possibly the worst bull argument i've ever heard-and thats against some stiff competition.. Perhaps if I make the connection more obvious you might get it-ok here goes: The availability of MORTGAGE finance caused HOUSE prices to rise. See the connection? Quote Link to comment Share on other sites More sharing options...
the flying pig Posted July 24, 2010 Share Posted July 24, 2010 Nope, she's wrong. Property is and will forever be the only game in town, the availablity of finance is a secondary factor. The upshot is that the finance follows the land market, not vice versa. Even a GCSE science student could work this out; if the availability of finance caused prices to rise then all prices would rise as credit "loosened", not just prices related to housing. Stop deluding yourselves please. Interesting/unusual post - spelling & grammar suggestive of a post-16 education but 'reasoning' of the very worst playground variety. I'm not even sure I know what you mean to be honest... Quote Link to comment Share on other sites More sharing options...
whalewatcher Posted July 24, 2010 Share Posted July 24, 2010 ...if the availability of finance caused prices to rise then all prices would rise as credit "loosened", not just prices related to housing. Surely the difference between secured and unsecured loans is a factor? Quote Link to comment Share on other sites More sharing options...
wombat999 Posted July 25, 2010 Share Posted July 25, 2010 its obvious...how much would houses be if we had to pay cash and mortgages were illegal...as they should be. DID YOU KNOW MORT GAGE MEANS DEATH LOAN Quote Link to comment Share on other sites More sharing options...
Venger Posted July 25, 2010 Share Posted July 25, 2010 you could argue Demand was on the lenders part....they had to sell these things to farm out the MBS deals, so vital to keeping the CDO merrygoround going. they fostered demand by giving mortgages away at lower and lower criteria. the people, and government, lapped it up. That was then, this is now. Then, CDO and other mortgage backed securities had eager buyers with their AAA ratings and the money gave some banks the position to lend out ever more each year fuelling house price inflation. What is the appetite for these types of mortgage backed securities at the moment? I don't know. The market didn't exist after the crunch for some time. The Fed is now trying to sell $409 million of them on, "wrapped by an FDIC guarantee, which is backed by the full faith and credit of the U.S. government." What do we have in the UK now? Low interest rates under which many mortgage holders have more disposable money to spend each month or pay down their mortgage. And only somewhat of a tightening in mortgage financing. Quite a number of attractive looking mortgage deals to encourage those with deposits to buy and keep a support under values. Meanwhile public sector spending cuts and a whole load of uncertainty beneath. Quote Link to comment Share on other sites More sharing options...
Bloo Loo Posted July 25, 2010 Share Posted July 25, 2010 DID YOU KNOW MORT GAGE MEANS DEATH LOAN Death Pledge I thought. Quote Link to comment Share on other sites More sharing options...
WiseBear Posted July 25, 2010 Share Posted July 25, 2010 Wow-that is possibly the worst bull argument i've ever heard-and thats against some stiff competition.. Perhaps if I make the connection more obvious you might get it-ok here goes: The availability of MORTGAGE finance caused HOUSE prices to rise. See the connection? NEO72 - you don't need finance to buy a property - didn't you know that? Property just goes up all by itself - it's a fundamental law of nature - ho ho ho. Quote Link to comment Share on other sites More sharing options...
WiseBear Posted July 25, 2010 Share Posted July 25, 2010 Merryn is right. The price of a house is very much about Availability of Finance but perhaps more importantly the Availability of New Finance. First comes confidence. If borrowers and lenders have confidence in the market then demand and availability of finance soon follows. It doesn't matter if that confidence is justified or not it just needs to exist. You are just about to find out what happens when this massive confidence bubble built up over decades goes POP! Quote Link to comment Share on other sites More sharing options...
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