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guitarman001

Friend Anecdotal

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Got a friend of mine, bought a 2-bed flat for ~£145k. Two babies, job almost lost last year but supposedly ok now for 5 years. Wife low-paid work, maybe £40k between them. He knows I know my sh!t, he's heard all the HPC arguments - he's seen the news and he often complains about the size of his mortgage. RIGHT outside his house is a massive banner saying there is up to £70k (!!) off 2007 prices. HOWEVER, he now says he needs more space and is looking to buy a 3-bed semi for £180k+!! What does he think THAT will do to his outgoings? I really can't fathom this.... can't the two babies share a room for 5 years? Can't people live within their means?

As long as the credit is available people will take all they can and indebt themselves to the max. He has a mortgage meeting at some point - let's see how that goes. I'll be interested to hear of any offers he gets on his flat, also.

:huh:

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Thanks...

Update:

He got his mortgage review - they are going to give him the £180k+ mortgage as long as he can also stump up £20k deposit, which isn't going to happen. Flat he has is £10k in negative equity. Says he is going to wait it out for a year until prices rise again (wtf).

Other anecdotal: Sold an 8-track recorder to a guy from Livingston the other day. Says his house doubled in value since when he bought and that the new schemes in the area are charging £200k+ for 3-bed semis and that he doesn't see who's going to pay that for a 3-bed semi....

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With friends like you, he'll be just fine.

Not sure I get your point?

You'd rather he lived in a small flat with 2 kids than living in a good sized house and borrowing more money, because;

  1. you don't wan't him to get more in debt

  2. you're 100% house prices are going to come down enough to make it worthwhile waiting

  3. or because you don't want to accept that buying a house at todays prices is valid thing to do? and this undermines your view that house prices must come down

I couldn't agree more that house prices are too high, believe me I wish they weren't as am going to be buying a 200K house and we earn about 40K between us, but the trends seem to suggest in the short term prices may be leveling off, at least for the very best property that's available - and there's not much about where I live.

Maybe your friend has factored in that his new house may loose him money but want's to make the move anyway and will treat it as his home for life rather than an investment.

Anyhow sounds like unless he gets a 'gift' from parents he's going to be staying where he is, perhaps you should buy him a beer and remind him how lucky he is to have a good friend like you.

Edited by chewy75

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am going to be buying a 200K house and we earn about 40K between us

:lol:

but the trends seem to suggest in the short term prices may be leveling off, at least for the very best property that's available

do they?!?

:lol:

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Thought I'd add a couple of anecdotes from recent conversations with friends.

Friend 1:

Purchased a granny house in a downbeat Midlands urban area near-ish new job. Not entirely sure when he bought it, think maybe 2005-2007. Spent low-£xxk on it ripping out the disability stuff and updating it. Has been commuting 45+ mins to work each way. Now getting a bit tired of it and wants to either move closer to work, or take up another job. Is a fairly well paid chap, above national average, but perhaps only average for this website. Is frustrated that recent valuations have placed his house at virtually the same price as his purchase price. Our conversation:

Him: "I can't believe it's worth the same as what I paid. I mean, I spent £xxk on it. I only have £xk savings because of this house and have spent so much time on it. What a complete joke. What a waste."

Me: "Mmmm" (Drinks beer and am secretly curious as to how bearish my friend has become)

Him: "Well, I'm not selling it and losing money. I'll rent it out instead."

Me: :huh:

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Friend 2:

Also purchased a house, in 2006-ish, has spent lots on it, but will be glad to get out without negative equity and is well aware of the situation. He works for a mortgage provider, and has a hand in their mortgage-risk calculations. Basically, his department uses mathematical calculations and social data to pre-identify mortgages at risk of going underwater - and if possible prevent this from happening.

Our conversation turned to a key variable - the BoE interest rate. I tried to pin him down to numbers. For an institution that holds millions of mortgages - a large number of their customers will be underwater if the BoE rate rose to 3%, and it will be chaos if it rose to 5%. :ph34r:

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Him: "I can't believe it's worth the same as what I paid. I mean, I spent £xxk on it. I only have £xk savings because of this house and have spent so much time on it. What a complete joke. What a waste."

Me: "Mmmm" (Drinks beer and am secretly curious as to how bearish my friend has become)

Him: "Well, I'm not selling it and losing money. I'll rent it out instead."

Me: :huh:

:lol:

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Friend 2:

Also purchased a house, in 2006-ish, has spent lots on it, but will be glad to get out without negative equity and is well aware of the situation. He works for a mortgage provider, and has a hand in their mortgage-risk calculations. Basically, his department uses mathematical calculations and social data to pre-identify mortgages at risk of going underwater - and if possible prevent this from happening.

Our conversation turned to a key variable - the BoE interest rate. I tried to pin him down to numbers. For an institution that holds millions of mortgages - a large number of their customers will be underwater if the BoE rate rose to 3%, and it will be chaos if it rose to 5%. :ph34r:

Thanks for the info!

Strange though - people got by with inflation almost like that a few years back. Must be different due to lack of lending (easy credit) to fund it all this time?

Update from friend. He is dying to get his hands on his inheritance 'like everybody else' supposedly. His dad works in oil and they are LOADED, they already stumped up the original deposit for the flat. I wont admit I'm pretty envious - I will have no inheritance to speak of - not that I'd wish for my parents to pop it so I could get anything...

Edited by guitarman001

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  • 149 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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