Hpc Not Happening Because Briton's Cannot Hand The Keys Back?

[Chest Rockwell]

From what I understand, in the US you can simply say "fvck this" and hand the keys back to the bank and everyone is quits. But in this country it ain't quite so simple as the bank will auction the house after "handing the keys back" but will then come after you for the short fall.

Is that why HPC hasn't happened in the UK? Because in the UK you cannot walk away from being a slave? Or should I say: walk away from dumb ass decisions?

Edited December 18, 2010 by Chest Rockwell

[Fairies Wear Boots]

Doubt it. Our market hasn't fallen enough to warrant handing back the keys. I think the excess of stock over there has been a significant factor in why there crash has been hard and fast. That and the astounding number of people who couldn't keep up payments after they reverted back from the teaser.

Now the fact they can just "walk away" is kicking in.

[Chest Rockwell]

Doubt it. Our market hasn't fallen enough to warrant handing back the keys. I think the excess of stock over there has been a significant factor in why there crash has been hard and fast. That and the astounding number of people who couldn't keep up payments after they reverted back from the teaser.

Now the fact they can just "walk away" is kicking in.

that occured to me too...but I just cannot understand how prices in the UK appear to be just sitting at there same old level DESPITE the elephant in the room: limited mortgage availabiltiy. Of course there is unemployment and other factors...just how long can this country go on defying the laws of nature?

[miko]

that occured to me too...but I just cannot understand how prices in the UK appear to be just sitting at there same old level DESPITE the elephant in the room: limited mortgage availabiltiy. Of course there is unemployment and other factors...just how long can this country go on defying the laws of nature?

Yes I must admit I would have laid money on the crash happeing much bigger and faster than it has , I thought it would go the same way as in the late 80's but it has not.

With what I read, hear and see one week im sure we are in for the biggest crash in history and then the next i think not.

Maybe we are in a situation where there are enough people who can afford to pay the crazy house prices and the rest lose out and will never own or rent a house at a resonable price.

[Krackersdave]

in a word - immigration.

[okaycuckoo]

that occured to me too...but I just cannot understand how prices in the UK appear to be just sitting at there same old level DESPITE the elephant in the room: limited mortgage availabiltiy. Of course there is unemployment and other factors...just how long can this country go on defying the laws of nature?

I reckon prices aren't sitting at their old level - they are seriously down, but you can't discover this until sellers are forced to discover it on their own. UK price indexes are mostly worthless, and there are serious bargains to be had. Depends on your flexibility, I suppose - are you flexible enough to buy for peanuts in certain parts of Florida/California/Ireland/Spain?

The debt assets of UK banks - NRK, RBS, Lloyds - are kept in play at the whim of government, and government is commanding those banks to Go Easy on mortgagors who should need to sell. That's the reason we don't see much price discovery. It will come, but piecemeal - unless the cosy compromise is broken by bond investors (unlikely, given the maturity period on UK gilts).

Not much to do with demand through immigration or supply of units.

Basically, you'll just have to wait. That's how I see it.

[OnionTerror]

in a word - immigration.

in three words - low interest rates

[jones87]

in three words - low interest rates

Took the words out of my mouth..... "borrowed time" also comes to mind.

Edited December 19, 2010 by jones87

[Pauly_Boy]

in three words - low interest rates

Win!!

Imigeation is a lie, 48m ppl lived here in ww1 iirc, , we have built many more houses since then!

[MarkG]

Doubt it. Our market hasn't fallen enough to warrant handing back the keys.

The UK housing market has dropped dramatically in real terms, but that's been hidden by the collapse of the pound. In addition, two of my relatives sold houses in the last year and they got significantly less in pounds than they would have done three years ago... which didn't really matter because they got the house they moved into for significantly less pounds than it would have cost three years ago.

[Mr Yogi]

From what I understand, in the US you can simply say "fvck this" and hand the keys back to the bank and everyone is quits. But in this country it ain't quite so simple as the bank will auction the house after "handing the keys back" but will then come after you for the short fall.

Is that why HPC hasn't happened in the UK? Because in the UK you cannot walk away from being a slave? Or should I say: walk away from dumb ass decisions?

The situation here is not as different to that in the US as everyone thinks. If you can no longer afford your mortgage payments and have no equity in the house you can simply hand the keys back to the bank. Of course your credit rating will be shot to pieces for a few years so this makes the next step almost completely painless - going bankrupt.

Any debt to the bank for the shortfall on the mortgage is then cancelled - together with any other debts you might have.

However, I don't think that this has anything to do with prices holding up. Low interest rates and interest-only mortgages mean that servicing a huge mortgage is currently not particularly painful. People will only sell up at a loss or hand the keys back when they really have no alternative.

HPC won't happen properly until rising interest rates make peoples' large mortgages unaffordable.

Edited December 19, 2010 by Mr Yogi

[Xurbia]

I think it's all down to low short term interest rates too. We have also see the artificial expansion of the public sector. Everything has been fuelled by MEW and government spending. Those taps are now switched off.

Interest rates can only go up from here. Petrol and other goods are rising fast too. VAT is going up to 20%. I still cannot grasp that enormous number. You give the government a third or more of your wages and then give them another fifth on top to buy goods! So I work hard for my 100 pounds in wages and receive only 66. I go into a shop and buy something costing 66 pounds. 11 pounds of that 66 was VAT, so the value of my work was really only 55 pounds. Part of that 55 pounds was eaten up with just the cost of going to work each day. It's hardly surprising that people are screwed once inflation and interest rates rise.

Britons will start handing back in the keys but it'll take a couple of interest rate hikes to kick it all off. Watch it unfold.

[MarkG]

You give the government a third or more of your wages and then give them another fifth on top to buy goods! So I work hard for my 100 pounds in wages and receive only 66. I go into a shop and buy something costing 66 pounds. 11 pounds of that 66 was VAT, so the value of my work was really only 55 pounds.

No, it's worse than that: your employer paid 12% (I think?) 'national insurance' on top of that 100 pounds, so you're actually working for the government more than half of the time you're at work.

Edited December 19, 2010 by MarkG

[olliegog]

The situation here is not as different to that in the US as everyone thinks. If you can no longer afford your mortgage payments and have no equity in the house you can simply hand the keys back to the bank. Of course your credit rating will be shot to pieces for a few years so this makes the next step almost completely painless - going bankrupt.

Any debt to the bank for the shortfall on the mortgage is then cancelled - together with any other debts you might have.

However, I don't think that this has anything to do with prices holding up. Low interest rates and interest-only mortgages mean that servicing a huge mortgage is currently not particularly painful. People will only sell up at a loss or hand the keys back when they really have no alternative.

HPC won't happen properly until rising interest rates make peoples' large mortgages unaffordable.

In addition if you are in negative equity (or can make the figures on a quick sale appear so) you can go bankrupt, keep the house and buy back the beneficial interest for a relatively small sum. Of course you have to keep paying the mortgage and remortgaging would be difficult - but you would get rid of the other higher rate debts no need to hand back the keys.

[LuckyOne]

Look at recourse states and non-recourse states.

Then look at recourse with respect to HELOCs and mortgage restructuring.

A bit of research will reveal that the "get out of jail free card" by simply handing your house back to the bank with no further recourse is actually pretty rare.

Residents of 2/3 of all states as well as many who have MEWed or restructured their mortgages in most states are on the hook for the negative equity in the same way that they are in the UK.

I recall reading lately that personal bankruptcies in places like Florida are falling because people cannot even afford to pay the filing fees.

This misunderstanding about the pervasiveness of risk free jingle mail in the US compared to the Uk doesn't seem to want to go away even on this site where people should be interested enough to do a bit of research.

[LuckyOne]

TMT's thread contains clues for the more likely reason why the US market has fallen harder than the UK market. It is probably due to the difference in fixed versus floating rate financing preferences in the two markets.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=156364

[Bloo Loo]

nothing to do with mortgage interest relief at 6% if you have up to a 200K mortgage, recently reduced to around 3% then?

no need to give up the home if the taxpayer pays the monthly bills.

as for price falls taking a long time, they took a long time in the 1990s too....its just that this time its NATIONAL, and in the 1990s the falls were mostly in the South, where the bubble was.

Prices fell in other parts, but they hadnt risen so much in the first place.

Edited December 19, 2010 by Bloo Loo

[StainlessSteelCat]

I don't where Chest is - but HPC is definitely on where I live in West Yorkshire. There is masses of inventory - and still increasing. Asking prices (and I assume selling prices) are slowly reducing. The price indexes all have their flaws and houses price cycles are like other commodity cycles but in slow motion. Hardly surprising given how long it takes to sell a house compared to a share. Nevermind the fact that you can hardly compare like with like. If a 2BR house owner knocks £10K off the price of their asking price - what is the value of a 4BR detached a few streets away? If you are expecting monthly 10% falls in your area - I think you'll probably be disappointed. But you might well see some big reductions over a short period on specific houses.

It may be that you are in a particularly robust area - I am surprised at how east London prices seem to have recovered from 2008. But I think it wouldn't take much to start pushing them back down again.

Edited December 19, 2010 by greencat

[frenchy]

The UK housing market has dropped dramatically in real terms, but that's been hidden by the collapse of the pound. In addition, two of my relatives sold houses in the last year and they got significantly less in pounds than they would have done three years ago... which didn't really matter because they got the house they moved into for significantly less pounds than it would have cost three years ago.

irrelevant, just like comparison between gold and house prices I am afraid.

GBP has "collapsed" (-25% in past 3yrs) but wage have not risen, so the collapse is irrelevant, the people who need to buy a house in GBP need to earn GBP to buy and repay it. GBP could collapse 90% it would not make UK house prices any more affordable! Who do you know from general public has converted large GBP into EUR or CHF 3 years ago and is now in a position to convert back into GBP to benefit from a 25% gain? not the general public.

And the "foreign" investors with their foreign dosh don't buy houses where general public does, so the collapse of GBP doesn't result in price rises either.

[twatmangle]

irrelevant, just like comparison between gold and house prices I am afraid.

GBP has "collapsed" (-25% in past 3yrs) but wage have not risen, so the collapse is irrelevant, the people who need to buy a house in GBP need to earn GBP to buy and repay it. GBP could collapse 90% it would not make UK house prices any more affordable! Who do you know from general public has converted large GBP into EUR or CHF 3 years ago and is now in a position to convert back into GBP to benefit from a 25% gain? not the general public.

And the "foreign" investors with their foreign dosh don't buy houses where general public does, so the collapse of GBP doesn't result in price rises either.

Just because YOU didn't gain, doesn't make it irrelevant.

[frenchy]

Just because YOU didn't gain, doesn't make it irrelevant.

it is completly irrelevant, sorry.

I am not general public and you probably aren't.

Now as for your comment about me not gaining, be careful as you don't know me although my name should have made you think twice about commenting...

the bulk of my money is in EUR and CHF where I have physical accounts, I have gained more than you can imagine and even until as recently as last year when I was still paid, in EUR, at 1.35EUR to the pound when the pound was around 1.1/1.

Again, it is irrelevant, I am not general public...

Edited: for it to be relevant, general public wages should rise by the amount at which the currency has fallen, so 25% (compared to a currency from which we import a lot of stuff). Until that happens, the collapse in GBP does the opposite to what was suggested, it actually makes houses appear even more expensive than they are by reducing the purchasing power of people who need to buy a house. Most of the inflation we have is due to the weak pound.

Edited December 19, 2010 by frenchy

[winkie]

I think it's all down to low short term interest rates too. We have also see the artificial expansion of the public sector. Everything has been fuelled by MEW and government spending. Those taps are now switched off.

Interest rates can only go up from here. Petrol and other goods are rising fast too. VAT is going up to 20%. I still cannot grasp that enormous number. You give the government a third or more of your wages and then give them another fifth on top to buy goods! So I work hard for my 100 pounds in wages and receive only 66. I go into a shop and buy something costing 66 pounds. 11 pounds of that 66 was VAT, so the value of my work was really only 55 pounds. Part of that 55 pounds was eaten up with just the cost of going to work each day. It's hardly surprising that people are screwed once inflation and interest rates rise.

Britons will start handing back in the keys but it'll take a couple of interest rate hikes to kick it all off. Watch it unfold.

Everything you have said makes sense, working to live survive......you can think your property is worth whatever you want it to be, pick a number and double it, only when it is sold will anybody find out the real true worth.

[twatmangle]

it is completly irrelevant, sorry.

I am not general public and you probably aren't.

Now as for your comment about me not gaining, be careful as you don't know me although my name should have made you think twice about commenting...

I've been buying gold for years, the bulk of which was pre- 07.

I had converted >100k GBP to EUR at 1.54. and converted it back to GBP at c.1.02

I have some income in Euros and work for a Eurozone company.

For me, houses in 09 were 40% off peak, and for a cash buyer, this is very attractive.

Very very relevant IMO.

[Bloo Loo]

I've been buying gold for years, the bulk of which was pre- 07.

I had converted >100k GBP to EUR at 1.54. and converted it back to GBP at c.1.02

I have some income in Euros and work for a Eurozone company.

For me, houses in 09 were 40% off peak, and for a cash buyer, this is very attractive.

Very very relevant IMO.

how true, my soveriegn has doubled since I bought it...the house I am going to buy is sooooo much cheaper now...thanks to the small quarter ounce of gold....and I have more soveriegn than most people who are buying houses.

very relevent.

[twatmangle]

how true, my soveriegn has doubled since I bought it...the house I am going to buy is sooooo much cheaper now...thanks to the small quarter ounce of gold....and I have more soveriegn than most people who are buying houses.

very relevent.

Depends how much gold you have. If it's in tens or hundreds of thousands of pounds, then it's relevant.