Jump to content
House Price Crash Forum
Frank Hovis

House Prices Dive - Sunday Express

Recommended Posts

This is in the "House Prices to SOAR!" Express. Um, wibble. They're trying to confuse me.

RETURN OF NEGATIVE EQUITY LOANS AFTER HOUSE PRICES DIVE

Sunday January 30 2011 by Kirsty Buchanan

THE slump in house prices has meant the return of negative equity mortgages for the first time in 18 years.

More than three million customers of major lenders like Halifax, Lloyds and Cheltenham and Gloucester will from February get the chance to move house even if they are trapped in negative ­equity.

The last time this type of mortgage was offered was during the 1993 housing market ­recession when 1.5 million lived in homes worth less than their mortgage.

It will increase pressure on Chancellor George Osborne to turn around Britain’s floundering economy in his March Budget and it comes before more gloomy figures are published next week on house prices and mortgage lending.

From next month Lloyds Banking Group will offer negative equity mortgage loans.

For example, a family wanting to move from a £110,000 house, but with a mortgage of £130,000, will be offered a loan up to that value. If they want a more expensive home they would have to use their own funds.

It follows a similar deal launched by the Nationwide Building Society.

It offers customers in ­negative equity a new loan of up to 95 per cent and the chance to carry over up to 25 per cent of the loss incurred on their home because of its drop in value.

Shadow Housing Minister Alison ­Seabeck described the return of the negative equity mortgage as “very worrying”.

She said: “It may be designed to get some movement, some churn, back in the ­system but unless you can get lending and get some first time buyers back in at the bottom end it’s hard to see how it is going to succeed.”

The Bank of England is expected to ­report on Tuesday that mortgage approvals fell to a 20-month low of 45,000 in ­December – from 48,019 in ­November and a peak of 59,019 in November 2009.

Mortgage approvals have averaged 90,000 a month since 1993.

Nationwide and Halifax are also ­expected to report this week that house prices fell by 0.3 per cent between December 2010 and this month.

House prices are down by an average 4.5 per cent between this month and ­January 2009 and are forecast to fall by 10 per cent from their peak 2010 levels by the end of this year.

An estimated nine per cent of UK home owners are in negative equity and 18 per cent have too little equity to move.

Bob Pannell, head of research for the Council of ­Mortgage Lenders, said: ­“Negative equity will contribute to subdued property ­turnover but otherwise should have few adverse effects for the majority of households affected.

“Where people need to move house for a job or other priority reasons, lenders can often be flexible to existing borrowers with low or negative equity, as long as their ­financial position is sound and they have a good payment track record.”

Additional reporting: Tracey Boles

http://www.express.co.uk/posts/view/226110/Return-of-negative-equity-loans-after-house-prices-dive

Share this post


Link to post
Share on other sites

THE slump in house prices has meant the return of negative equity mortgages for the first time in 18 years.

The 18 year cycle as suggested by Fred Harrison :-)

Share this post


Link to post
Share on other sites

“It may be designed to get some movement, some churn, back in the ­system but unless you can get lending and get some first time buyers back in at the bottom end it’s hard to see how it is going to succeed.”

PONZI.jpg

Ah, so you ARE running out of players.

Share this post


Link to post
Share on other sites

is the important bit. If the "can't afford to meve till prices pick up" brigade can now afford to move and crystallise their loss, it's party time.

It's an important step, but don't open the champagne just yet. You still need people to start chains off - BTL or FTB would do equally well. If it's just people who buy one house and sell one house, there's an issue with needing very long chains, so the market won't move very quickly.

Share this post


Link to post
Share on other sites

is the important bit. If the "can't afford to meve till prices pick up" brigade can now afford to move and crystallise their loss, it's party time.

No this is bad news for HPC.. with these types of loans Negative Equity matters less.

The sheep can move up the ladder even if they have NE.. savings can be used to leverage an even bigger loan instead of having to pay off the NE first.

Edited by MonkeyNuts

Share this post


Link to post
Share on other sites

No this is bad news for HPC.. with these types of loans Negative Equity matters less.

The sheep can move up the ladder even if they have NE.. savings can be used to leverage an even bigger loan instead of having to pay off the NE first.

So these financial wizards who have managed to get themselves into a position of NE are going to have savings are they?

More likely to have maxed out credit cards and having a car in the driveway that they could just about afford the hubcaps for in reality.

It's non news, HPC cometh, relax and stock up on popcorn.

Share this post


Link to post
Share on other sites

No this is bad news for HPC.. with these types of loans Negative Equity matters less.

The sheep can move up the ladder even if they have NE.. savings can be used to leverage an even bigger loan instead of having to pay off the NE first.

No, this is good news for HPC.

Muppet bought a house for £190k with £190k mortgage.

House now has MV of £160k but cannot sell until house price goes back up, preventing said HPC.

All of a sudden, muppet is allowed to sell at £160k and move into a new house. House price has dropped (leading to more drops in asking and achieved prices locally, causing a virtuous circle).

Beautiful.

Share this post


Link to post
Share on other sites

lol at this rate the Times will become a leaflet.

I wonder if we will see some newspapers go pop soon, some relied heavily on VI once in a lifetime house investment opportunity (suckers) ads.

Share this post


Link to post
Share on other sites
No this is bad news for HPC.. with these types of loans Negative Equity matters less.

The sheep can move up the ladder even if they have NE.. savings can be used to leverage an even bigger loan instead of having to pay off the NE first.

They wont be able to move UP the ladder, only across.

While banks may be willing to let people move to a similarly priced house, maintaining their negative equity, I can't see them lending them a lot more.

On top of this, the debtors will need to find cash for stamp duties, estate agents fees and removal companies.

oh... and these negative equity mortgages are unlikely to be interest only no documentation liar loans... they are going to want full paperwork, proof of income etc... very few people will even be eligable.

Share this post


Link to post
Share on other sites

No, this is good news for HPC.

Muppet bought a house for £190k with £190k mortgage.

House now has MV of £160k but cannot sell until house price goes back up, preventing said HPC.

All of a sudden, muppet is allowed to sell at £160k and move into a new house. House price has dropped (leading to more drops in asking and achieved prices locally, causing a virtuous circle).

Beautiful.

.....and the banks angle appears to be adding the NE to said muppets next mortgage thus extracting interest on a higher loan amount rather than having an undervalued asset on their books and a rick of default.

Banks must be getting desperate, I think that this is more about clearing undervalued assets from their books than making profit. I wonder if the other banks will follow suit and the trickle becomes a waterfall.

As you say, good news for hpc but surely the banks will realise that they will dump house prices doing this. I sense some political intervention in the post.

Share this post


Link to post
Share on other sites

No, this is good news for HPC.

Muppet bought a house for £190k with £190k mortgage.

House now has MV of £160k but cannot sell until house price goes back up, preventing said HPC.

All of a sudden, muppet is allowed to sell at £160k and move into a new house. House price has dropped (leading to more drops in asking and achieved prices locally, causing a virtuous circle).

Beautiful.

Better than that even. The muppet can only get the ne mortgage and the new property, if they put more of their own money into the 'deposit', which reduces their negativity equity, and makes the financial system a bit sounder. And it also reduces their purchasing power. Lovely.

Share this post


Link to post
Share on other sites

They wont be able to move UP the ladder, only across.

But when you have up to 5% stamp duty and 2% agency fees.. there's no moving across, you're losing up to 7% each time. (all else being equal)

Edited by exiges

Share this post


Link to post
Share on other sites

EXPRESS WEBSITE HACKED.....

30.01.11, 1:49pm

I think one of the disenchanted renters we get on here has hacked the website.

House prices in non des res areas have fallen a bit but London and SE is really strong and will never drop 1 pence.

Take a look in the papers. Nothing going cheap around here and prices will rise when banks start lending.

Sellers need to sit this out. Sell in 2012 and get the right money.

• Posted by: Sibley • Report Comment

Read more: http://www.express.co.uk/posts/view/226110/Return-of-negative-equity-loans-after-house-prices-diveReturn-of-negative-equity-loans-after-house-prices-dive#ixzz1CWjblFZU

See Comments page:

That's funny. Shame he doesn't post here anymore.

Share this post


Link to post
Share on other sites

They have a full page article today stating that the Govt can't blame snow for the dip back towards recession.

They also have a survey pointing out that most peoplev surveyed would vote Labour in the next election, people thinking that the coalition have made things worse.

Yes, a huge turn around for the Express. I can only assume their Editor put his house up for sale, got it valued and had a big shock?

Share this post


Link to post
Share on other sites

Yes, a huge turn around for the Express. I can only assume their Editor put his house up for sale, got it valued and had a big shock?

:D

It's a bit of a theme I've noticed - there are several papers which have contradictory messages like this on a regular basis. The Herald in Scotland had a full 3 broadsheet pages (including the front page) dedicated to stories of how the housing market was doing well. 3 weeks or so later, it's the opposite. All the papers seem to play that game.

Share this post


Link to post
Share on other sites

lol at this rate the Times will become a leaflet.

I wonder if we will see some newspapers go pop soon, some relied heavily on VI once in a lifetime house investment opportunity (suckers) ads.

I suspect that most local newspapers heavily rely on listings from EAs...The property section in my local used to be so sickly sweet, that I was half expecting these pages to be stuck together...

Share this post


Link to post
Share on other sites

:D

It's a bit of a theme I've noticed - there are several papers which have contradictory messages like this on a regular basis. The Herald in Scotland had a full 3 broadsheet pages (including the front page) dedicated to stories of how the housing market was doing well. 3 weeks or so later, it's the opposite. All the papers seem to play that game.

Sometimes there are articles within the same issue of a newspaper with some articles contradicting other articles.

Tomorrow's fish and chip wrapping - actually even most chippies don't touch them now.

Edited by billybong

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...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 312 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.