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richcrashman

What % Of Properties Have A Mortgage On Them?

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People say they wont sell at a loss so prices wont fall.

Maybe true for those that bought at peak, i can see how this is tricky situation for them.

However many homes owned by the older generation have no mortgage at all. If they bought in the 80's say they could still be happy with a paper profit even if we had a 40% reduction in prices. My mother for example could care less about the notional value of her house. If she sell at £X she can buy similar for £X.

The same goes to all those who still have a mortgage but bought before the silly years.

I'm kinda not including the mewers. What % i wonder did fall for there house being a cash machine. I only know of a few.

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IIRC the amount of mortgages at risk of default (ie those fowarded after 2001, over 3.5 times earnings and with <10% deposit) is between 1-1.5million.

Ie about 10% of outstanding mortgages, or less than 5% of households.

And thats a worst case scenario if they all went kaboom.

Thats the travesty of the whole thing. The entire economy has been hijacked to bail out a few hundred thousand borrowers.

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People say they wont sell at a loss so prices wont fall.

Maybe true for those that bought at peak, i can see how this is tricky situation for them.

However many homes owned by the older generation have no mortgage at all. If they bought in the 80's say they could still be happy with a paper profit even if we had a 40% reduction in prices. My mother for example could care less about the notional value of her house. If she sell at £X she can buy similar for £X.

The same goes to all those who still have a mortgage but bought before the silly years.

I'm kinda not including the mewers. What % i wonder did fall for there house being a cash machine. I only know of a few.

As a rough rule, the UK has 30 Million adults, 20 million households and 10 million outstanding mortgages.

So 50% of houses have an outstanding mortgage, and the average balance of outstanding mortgages(for those properties that have them!) is circa £100k

Although, you also have to consider those who, although they have no mortgage, have taken a bet on the value of their property to provide a pension in the absence of any other arrangements, by downsizing.

Edited by cheeznbreed

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People say they wont sell at a loss so prices wont fall.

Maybe true for those that bought at peak, i can see how this is tricky situation for them.

However many homes owned by the older generation have no mortgage at all. If they bought in the 80's say they could still be happy with a paper profit even if we had a 40% reduction in prices. My mother for example could care less about the notional value of her house. If she sell at £X she can buy similar for £X.

The same goes to all those who still have a mortgage but bought before the silly years.

It's not just those who bought at peak. When someone downsizes they usually want as much as they can possibly get for their house, because they always have plans for the 'profit' generated between the two purchases. And have often made promises to family based on what they think they will get.

Paying off debt, leaving legacies, grandkids uni fees, FTB deposits, the daughter's wedding, the holidays, new cars, augmenting a meagre pension - whatever.

All you then need then is an EA greedy for the right to sell the house. He/she quotes a ridiculously high selling price, and this fixes a 'value' in the vendor's mind, which will govern the seller's subsequent decisions and attitude.

You will never find a vendor who is indifferent to what they will get for their house.

Edited by juvenal

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People say they wont sell at a loss so prices wont fall.

Maybe true for those that bought at peak, i can see how this is tricky situation for them.

However many homes owned by the older generation have no mortgage at all. If they bought in the 80's say they could still be happy with a paper profit even if we had a 40% reduction in prices. My mother for example could care less about the notional value of her house. If she sell at £X she can buy similar for £X.

The same goes to all those who still have a mortgage but bought before the silly years.

I'm kinda not including the mewers. What % i wonder did fall for there house being a cash machine. I only know of a few.

One of the factors bringing a lot of property to the market in my area is now inherited property which is now being put on the market rather than being held onto, which was the case 5 years ago. Small decreases in house values have made people change there mind about hanging onto property especially when they cannot rent or have had hastle with renting.

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One of the factors bringing a lot of property to the market in my area is now inherited property which is now being put on the market rather than being held onto, which was the case 5 years ago. Small decreases in house values have made people change there mind about hanging onto property especially when they cannot rent or have had hastle with renting.

One of the two properties we have recently offered on, was in this situation, and has been rented out for past 2 years. For some reason owner we were told just wanted to get shut of it and sell, having had issus with last rental, and wanted income from sale for inprovements to their current new home. We made them a offer of what it was purchased for, but they have not accepted it and according to agent want and extra £5-7K , The now owners of this property were left it in a will.

As chain free buyers we felt our offer on this one was very fair. The agent in question claim to have another buyer now, yet they have still rung us up and chased to see if we will increase offer. We are not able to increase offer. Hence we smell a rat with fact it has now only gone "under offer" not "STC" and still they chase us, as vendor really wants to sell to us and not other person in a chain?

Edited by chrismar

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It's not just those who bought at peak. When someone downsizes ............

Ah.... the old downsizing chestnut!

I see very little evidence of empty nesters downsizing. Sure, some do, but in my experience, they are very much in the minority. For most of that generation, downsizing is just not a serious consideration. They are generally happy living where they are and don't relish the upheaval of moving away from the home they have lived in for many years, and leaving behind their network of neighbours. And despite the prejudices on this site, most have paid off their mortgage and manage within their means.

Besides, it makes little financial sense. For example, consider someone downsizing from a £600K house to a £350K property. The costs of moving will include:

- 1.5% estate agent fees +VAT = £10,800

- Solicitiors fees for selling & buying = £1,500 (say)

- Stamp duty @ 3% on their new house = £10,500

- Removal costs = £2000 (say)

ie a total of £24,800 - and that excludes the costs of getting their new house fitted out to their needs + furinishings, etc, which could easily add another £5 to £10K bringing the total cost of moving to £30K to £35K

Sure, they have released £250K of capital but at current interest rates, they might only get £4K / year after tax. Even alowing for reduced heating costs and council tax, that's still only a benefit of £5K /year. From a business case perspective that represents a payback period of 6 to 7 years, a timescale many commercial businesses would turn down.

I'm afraid most oldies stay in their existing house until ill health or the grim reaper forces them to leave.

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Ah.... the old downsizing chestnut!

I see very little evidence of empty nesters downsizing. Sure, some do, but in my experience, they are very much in the minority. For most of that generation, downsizing is just not a serious consideration. They are generally happy living where they are and don't relish the upheaval of moving away from the home they have lived in for many years, and leaving behind their network of neighbours. And despite the prejudices on this site, most have paid off their mortgage and manage within their means.

Besides, it makes little financial sense. For example, consider someone downsizing from a £600K house to a £350K property. The costs of moving will include:

- 1.5% estate agent fees +VAT = £10,800

- Solicitiors fees for selling & buying = £1,500 (say)

- Stamp duty @ 3% on their new house = £10,500

- Removal costs = £2000 (say)

ie a total of £24,800 - and that excludes the costs of getting their new house fitted out to their needs + furinishings, etc, which could easily add another £5 to £10K bringing the total cost of moving to £30K to £35K

Sure, they have released £250K of capital but at current interest rates, they might only get £4K / year after tax. Even alowing for reduced heating costs and council tax, that's still only a benefit of £5K /year. From a business case perspective that represents a payback period of 6 to 7 years, a timescale many commercial businesses would turn down.

I'm afraid most oldies stay in their existing house until ill health or the grim reaper forces them to leave.

You make good points.

I would add a factor that's relatively new in the equation. The size of house deposits and the price of houses sees an increasing number of parents now feeling they should, or are obligated to put their kids 'on the ladder'. They rationlise downsizing with this very much in their mind. "The kids might as well have it now, as later" is the mindset.

I currently know two downsizers. One (70) with an IO mortgage and no repayment vehicle has D Day next year. They have no choice but to sell and scale down. The other (36?) fears they will not be able to pay their current mortgage for much longer due to falling income.

Edited by juvenal

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One of the two properties we have recently offered on, was in this situation, and has been rented out for past 2 years. For some reason owner we were told just wanted to get shut of it and sell, having had issus with last rental, and wanted income from sale for inprovements to their current new home. We made them a offer of what it was purchased for, but they have not accepted it and according to agent want and extra £5-7K , The now owners of this property were left it in a will.

As chain free buyers we felt our offer on this one was very fair. The agent in question claim to have another buyer now, yet they have still rung us up and chased to see if we will increase offer. We are not able to increase offer. Hence we smell a rat with fact it has now only gone "under offer" not "STC" and still they chase us, as vendor really wants to sell to us and not other person in a chain?

Why worry? If they don't want to sell at that price they won't. I know agents try to push up offers in the vendor's interest, but ultimately a vendor will only sell if they feel the price is right. They may be misguided, but it's their property and they can do with it what they want.

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It's not just those who bought at peak. When someone downsizes they usually want as much as they can possibly get for their house, because they always have plans for the 'profit' generated between the two purchases. And have often made promises to family based on what they think they will get.

Paying off debt, leaving legacies, grandkids uni fees, FTB deposits, the daughter's wedding, the holidays, new cars, augmenting a meagre pension - whatever.

All you then need then is an EA greedy for the right to sell the house. He/she quotes a ridiculously high selling price, and this fixes a 'value' in the vendor's mind, which will govern the seller's subsequent decisions and attitude.

You will never find a vendor who is indifferent to what they will get for their house.

+1

Loads of such houses like that around here. Most in desperate need of modernisation because the owners have done little to them since they bought them from new thirty years ago.

They ain't budging on price (there is stuff still on the market we dismissed three years ago, after looking for a year) and they ain't selling.

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There are loads who won't sell and don't need to sell but the market will move down if there are enough forced to sell or who want to sell.

My Dad has been in his home for 50 years and around him there are many others who have done 30/40/50 years in the same houses.

His house has gone from £3,750 up to £130k down to £80k back up to about £325k down to £300k and now back to the peak price £325k . This happened without him having anything to do with the market .The buyers and sellers in the market around him during the years have always set the price of his house not him .

The unknown equation is what % of people forced or wanting to sell without willing buyers who have the finance will set prices in a downward spiral.

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  • 284 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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