Jump to content
House Price Crash Forum
Sign in to follow this  
The Masked Tulip

High Cost Of Borrowing May Be The Legacy Of The Credit Crunch

Recommended Posts

http://www.guardian.co.uk/money/2010/aug/09/high-cost-borrowing-legacy-credit-crunch

Interesting bit about a chap who bought a new build flat, who then discovered that it was worth less than the price he agreed with the builder, went into a legal dispute and now the subject is a matter of a confidential legal agreement.

But much of the article is stating that low IRs are here to stay and that we are all stuffed.... unless we bought a massive house years ago... (added that last bit myself.)

http://www.guardian.co.uk/money/2010/aug/09/high-cost-borrowing-legacy-credit-crunch

Share this post


Link to post
Share on other sites

The decade of easy money came to an abrupt halt in August 2007 but what has emerged since is a divided Britain in which young adults are paying the price of the credit crunch while their parents have landed a get-out-of-jail-free card. Existing borrowers are enjoying the windfall of a lower Bank of England base rate, while new borrowers are either locked out of the market or face permanently higher loan costs.

Yup! Us FTBs are the patsies.

It annoys the hell out of me that the people who were calling time on low interest rates because a credit boom was building were ignored. Not only were they correct, but they're also being punished for being ignored. We need financial reform to stop this happening again.

Still, there is time yet and there have been some big falls (especially here in NI). It looks like they government/bankers can't hold back the tide indefinitely and sooner or later the pinch will come. I suspect the radical monetary policy action being taken at the moment will result in all sorts of ill effects, but I doubt it will help the over priced housing market. Our time will come, it may just take longer than it would have done without the meddling central planners!

Share this post


Link to post
Share on other sites
<H2>Case study: flat dive

The slump in value of new-build apartments triggered by the credit crunch has left many young professionals facing financial ruin.

At the height of the property boom, Euan Robertson, a 31-year-old IT consultant, put down a £45,000 deposit – "my life savings", he says – on a £450,000 three-bed new-build flat in London's Docklands. Before signing up, he was prudent enough to make sure he could get a mortgage for the remaining 90%, which was valid until March 2009, by which time the apartments would be completed. But things started to unravel when, in December 2008, he obtained a valuation that indicated the flat had plunged in value to £340,000.

No lender would be willing to advance him £405,000 on a property valued at significantly less than that, and he could only access a loan of £270,000 against the property. But the developer, Berkeley Homes, insisted he stump up the full purchase price agreed in the initial contract. It left him in the near-impossible position of having to find more than £100,000 to plug the gap.

Robertson said he was so worried that "I couldn't sleep and couldn't eat". He was one of dozens of buyers caught out who joined the berkeleyhomescollective.com action group. He was served with legal papers by Berkeley in June 2009, but the case did not reach court. He said: "An agreement has been reached, the details of which are confidential".

Today he's living in a one-bed apartment in Greenwich and says: "We are hopeful of starting a family in the next 12 months. We've tried to put this behind us and enjoy where we live now, despite the constraints of space. We've been married two years now and I think having survived this together, we can survive anything."

A check on the Land Registry shows the Berkeley flat originally valued at £450,000 was later sold for £350,000.

oh dear. presumably lost his deposit and a lot more. still, being an IT consultant he is clearly so clever that no-one possibly could have seen this coming</H2>

Share this post


Link to post
Share on other sites

http://www.guardian.co.uk/money/2010/aug/09/high-cost-borrowing-legacy-credit-crunch

Interesting bit about a chap who bought a new build flat, who then discovered that it was worth less than the price he agreed with the builder, went into a legal dispute and now the subject is a matter of a confidential legal agreement.

The builders have little scope with a buyer who has no assets. If they insist that he keep his part of the deal all he has to do is declare himself bankrupt.

They are much better off accepting "something" to let him out of the deal.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 144 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.