Jump to content
House Price Crash Forum
Sign in to follow this  
Thunderbird 900

Young Buyers Trapped In New Homes

Recommended Posts

Sometimes I think that I am trapped in an Alternative Universe.

One where the "Bleedin Obvious" is presented as headline news.

Read on...

http://www.dailymail...-years-ago.html

But hang on, if the second rung is lower surely they won't need as big a mortgage - I am assuming they have been saving hard in their first homes ready for their next move.

Share this post


Link to post
Share on other sites

But hang on, if the second rung is lower surely they won't need as big a mortgage - I am assuming they have been saving hard in their first homes ready for their next move.

Get with it, man! Saving is a mugs game. Soooo uncool!

Share this post


Link to post
Share on other sites

Not that it changes the thrust of their hard hitting investigative journalism, but haven't they used average house prices rather than average first time buyer prices?

Presumably FTBers don't go straight in to the middle of the pack?

What does "presume" make, Moneyspinner? :P

Share this post


Link to post
Share on other sites

But hang on, if the second rung is lower surely they won't need as big a mortgage - I am assuming they have been saving hard in their first homes ready for their next move.

When you're in negative equity and need something like 15% deposit on your next house? The more expenisve home, even if it might have fallen in value too.

At least FTBs Timmy and Johnny who had BOMAD help can take comfort none of that money gifted them towards buying in 2007 has been destroyed with falling values. The collective money has just moved elsewhere and is still circulating. And that there's no worry about BOMAD money beginning to dry up, eh Scott? Sorry I'm still processing your thoughts on that one. :blink:

Share this post


Link to post
Share on other sites

But hang on, if the second rung is lower surely they won't need as big a mortgage - I am assuming they have been saving hard in their first homes ready for their next move.

They wouldn't have even had to save that much if they had not bought with silly LTVs in the first place!

Share this post


Link to post
Share on other sites

Who is Scott?

Just a message left for a member of HPC who I expect to read this thread later today. It follows on from a discussion of yesterday where he was trying to convince me money doesn't get destroyed but is always circulating. His belief BOMAD money isn't drying up. It sure looks like destruction for some buyers who put down deposits to buy at around peak prices, but I'm still getting me head around the rest of his argument. There is no 'collective' pot though for the money. Some buyers see money used to buy destroyed on an individual basis with falling values.

Share this post


Link to post
Share on other sites

11 grand in 4 years.... £2.54K per yer or £230 per month.

Unless you were paying less than £200 per month on rent, would you be worried?

Of course, including London house prices in the national average is ludicrous.

Edited by MiCasaSuCasa

Share this post


Link to post
Share on other sites

But if they bought 4 years ago surely they've paid off a substantial amount of the capital?

Wouldn't they still be paying mostly interest at this point, with maybe a tiny sliver of capital?

Share this post


Link to post
Share on other sites

Wouldn't they still be paying mostly interest at this point, with maybe a tiny sliver of capital?

I would have thought they would have paid off £5k off a £100k mortgage at least. After 5 years I've managed to pay off supposedly what's been lost here with getting a bit lucky and getting a couple of grand to pay off, perhaps it's all those pennies that I find gives it a huge boost? :P

Share this post


Link to post
Share on other sites

Just a message left for a member of HPC who I expect to read this thread later today. It follows on from a discussion of yesterday where he was trying to convince me money doesn't get destroyed but is always circulating. His belief BOMAD money isn't drying up. It sure looks like destruction for some buyers who put down deposits to buy at around peak prices, but I'm still getting me head around the rest of his argument. There is no 'collective' pot though for the money. Some buyers see money used to buy destroyed on an individual basis with falling values.

what a fool eh

fact is that the amount of money in circulation is small compared to the amount of wealth in assets and bonds

so yep when house prices fall value IS destroyed, the 'money' he is talking about really does dissappear

Share this post


Link to post
Share on other sites

I would have thought they would have paid off £5k off a £100k mortgage at least. After 5 years I've managed to pay off supposedly what's been lost here with getting a bit lucky and getting a couple of grand to pay off, perhaps it's all those pennies that I find gives it a huge boost? :P

My mortgage that ran from 2004-2008 was around £80k. I paid the standard payments and each year about £1500 went off the capital, the rest of the £400-£500p/m was interest. So after 5 years i'd expect them to have cleared approx £7k, though if they've got a mortgage over 35 yrs this obviously goes down, and i don't even want to think about them having interest only...

Share this post


Link to post
Share on other sites

http://www.dailymail.co.uk/news/article-2061552/Young-buyers-trapped-homes-Bought-property-peak-years-ago.html

Around 360,000 of young people are ‘trapped’ in homes they bought when property prices peaked four years ago, an alarming report has warned.

Over the last four years, they have seen an average of £11,000 wiped off the value of the home, amid fears that house prices will continue to fall.

The report, from the banking giant HSBC, warns young people face ‘a near impossible’ task to move from their first home on to the second rung of the property ladder.

The worst-hit victims have been plunged into negative equity, which means their mortgage is bigger than the value of their home.

Even those who have avoided this situation will find it difficult to buy a bigger property because of the crippling cost of moving, according to the report.

Experts fear Britain's housing crisis is forcing the young to delay important milestones, such as getting married and having children.

Share this post


Link to post
Share on other sites

Sometimes I think that I am trapped in an Alternative Universe.

One where the "Bleedin Obvious" is presented as headline news.

Read on...

http://www.dailymail.co.uk/news/article-2061552/Young-buyers-trapped-homes-Bought-property-peak-years-ago.html

I just hate these emotive headlines using words such as 'trapped'. None of them are trapped. Each and everyone one of them can sell and move if they want. They just dont want to crystallise a loss. There is still this unhealthy sense of entitlement that people should not be allowed to ever 'lose'.

Assuming the average figure quoted for the level of negative equity these people face is correct, and that for the most part these FTB-ers are dual income households on average salaries, then this is not a huge amount to clear - albeit with some obvious belt tightening and forgoing of taken for granted luxuries for a year or so.

These people have to decid ewhat is more important to them, refusing to let go of £10,000 or so pounds (the equivalent of 1 years joint hard savings) or getting on with their lives in the manner they want. (e.g have kids, etc). Yes, a year or more of hard earned joint income savings is a hard loss to swallow just to cover ones negative equity - but in the grand scheme of things over a 25 or 30 year time frame and all the things they could do with their lives, it's a pittance.

This whole culture and concept that nobody should have to ever suffer a loss or experience hardship ultimately makes these very people worse off. Those who will do best are those who can stomach the loss, eat humble pie and accept they paid too much for their pad in the first place - they will be wiser and smarter for the rest of their lives and collectively the nation will be too over the longer term.

For those for whom the negative equity is genuinely very signififcant (e.g many years worth of net savings - and would equate to a significant number of years extension to their mortgage term) then the house/flat could indeed be described as becoming a virtual ball and chain. They should simply hand back the keys and rent or emigrate. Make their lives for at least 12 years somewhere else let the mortgage debt 'die' and then, IF they still want to come back to the UK they can do so with a clean credit sheet. Chances are such people already in extreme negative equity are those whom the banks, just 20 years ago, would not have lent the extreme sums they did in the first place no matter how much the foolish buyers may have wanted the money and believed thay could manage it. This last scenario places a 'loss' on both guilty parties - the banks pay for their foolishness and the buyers pay by having to make personal sacrifices.

Edited by anonguest

Share this post


Link to post
Share on other sites

BBC running the old "half a million mismatch" story between supply and demand by 2015.

Federation of master builders guy reckons the problem is that FTBs just can't borrow enough. Implication is that the costs of the shabby sh!t-holes they throw up are too high for them to turn a profit at lower selling prices. Do me a f*ckin' favour.

If that's the case just sell your land-bank on to FTBs and let them build what they like. If a bunch of gypsies can afford it I'm pretty sure the rest of us can.

Forget forcing the banks to lend.

Force the builders to relinquish their hoarded land-banks and sell at market rates. It's pure hoarding. Somebody start an e-petition.

PS : anyone done any work on the size of land banks held by the big developers?

Edited by Sledgehead

Share this post


Link to post
Share on other sites

I just hate these emotive headlines using words such as 'trapped'. None of them are trapped. Each and everyone one of them can sell and move if they want. They just dont want to crystallise a loss. There is still this unhealthy sense of entitlement that people should not be allowed to ever 'lose'.

Assuming the average figure quoted for the level of negative equity these people face is correct, and that for the most part these FTB-ers are dual income households on average salaries, then this is not a huge amount to clear - albeit with some obvious belt tightening and forgoing of taken for granted luxuries for a year or so.

These people have to decid ewhat is more important to them, refusing to let go of £10,000 or so pounds (the equivalent of 1 years joint hard savings) or getting on with their lives in the manner they want. (e.g have kids, etc). Yes, a year or more of hard earned joint income savings is difficult to lose just to cover ones negative equity but in the grand scheme of things over a 25 or 30 year time frame, it's nothing.

You're completely out of touch with reality, they certainly are trapped if they have to move to a similar or more expensive house. You say crystallise a loss, say of 10K, but how to do that - either by wiping out savings, or losing deposit on first purchase, or by getting a loan to pay it off. The lender will want to know where their money is coming from if you're selling under the outstanding mortgage. After that is sorted, there's the matter of getting together a deposit for the 'new' place, plus conveyancing costs. I've been here myself in 1993, moving and having to pay off substantial NE, and you're grossly simplifying how easy it is if you don't have some wealthy benefactor. As for £10K being one years hard earnings, for most couples, sorry but that's total pie in the sky, many of these 'trapped couples' are on average incomes and already have 1 or 2 kids. £10K is usually 3-5 years savings for people on ave incomes.

Share this post


Link to post
Share on other sites

They're pretty much trapped. Can't say we didn't try to warn them.

Just crystallise your loss and move on. Right-ho. (That's what everyone else does after all :rolleyes: .)

They should associate and default en-masse - Facebook? Push the problem back to where it orignated. :ph34r:

That would set the cat among the pigeons.

Share this post


Link to post
Share on other sites

BBC running the old "half a million mismatch" story between supply and demand by 2015.

Federation of master builders guy reckons the problem is that FTBs just can't borrow enough. Implication is that the costs of the shabby sh!t-holes they throw up are too high for them to turn a profit at lower selling prices. Do me a f*ckin' favour.

If that's the case just sell your land-bank on to FTBs and let them build what they like. If a bunch of gypsies can afford it I'm pretty sure the rest of us can.

Forget forcing the banks to lend.

Force the builders to relinquish their hoarded land-banks and sell at market rates. It's pure hoarding. Somebody start an e-petition.

PS : anyone done any work on the size of land banks held by the big developers?

+1 nail on head

not sure about the e-petition - unless you're featured in the daily mail, it's a waste of time - I think it's a shame I didn't/couldn't get more involved in Occupy London and highlight the land hoarding + debt-fuelled property bubble aspects of the monumental mess that the politicians and banksters have made for us.

Share this post


Link to post
Share on other sites

You're completely out of touch with reality, they certainly are trapped if they have to move to a similar or more expensive house. You say crystallise a loss, say of 10K, but how to do that - either by wiping out savings, or losing deposit on first purchase, or by getting a loan to pay it off. The lender will want to know where their money is coming from if you're selling under the outstanding mortgage. After that is sorted, there's the matter of getting together a deposit for the 'new' place, plus conveyancing costs. I've been here myself in 1993, moving and having to pay off substantial NE, and you're grossly simplifying how easy it is if you don't have some wealthy benefactor. As for £10K being one years hard earnings, for most couples, sorry but that's total pie in the sky, many of these 'trapped couples' are on average incomes and already have 1 or 2 kids. £10K is usually 3-5 years savings for people on ave incomes.

They'll have to make 'sacrifices' - I repeat the word SACRIFICE.

So they'll have to move somewhere cheaper? Put up with longer commuting times? Get a job elsewhere?

They made a bad mistake and paid too much for their home pure and simple. The sooner they come to terms with it the better for all. I didnt say crytallising their losses wouldnt be painful - but in the very long term they will be better off for it. How doe sthe old adage go? "No gain without pain"?

£10,000 for two average income earners is NOT a huge amount. So no takeaways for a year, a very very cheap holiday, quit the booze, fags, no new clothes for a year, pick a cheaper mobile phone contract, etc etc etc.

Share this post


Link to post
Share on other sites

They'll have to make 'sacrifices' - I repeat the word SACRIFICE.

So they'll have to move somewhere cheaper? Put up with longer commuting times? Get a job elsewhere?

They made a bad mistake and paid too much for their home pure and simple. The sooner they come to terms with it the better for all. I didnt say crytallising their losses wouldnt be painful - but in the very long term they will be better off for it. How doe sthe old adage go? "No gain without pain"?

£10,000 for two average income earners is NOT a huge amount. So no takeaways for a year, a very very cheap holiday, quit the booze, fags, no new clothes for a year, pick a cheaper mobile phone contract, etc etc etc.

Well we could argue about how much 2 people on 25K can save, but given HP is on a downward trajectory, many of these people might be better off selling for a loss and renting. If they're FTBs, then often finding something cheaper with affordable commuting costs is a big ask. They could otherwise decide to save, turn themselves into hermits to save that £10K, only to find their house has lost another 15K. Or given that many of these lenders do not have security on their loan if the buyers are in NE, why not let them carry their NE on to another property provided the LTV is unchanged (even if negative). Most lenders won't go with that one, even if their exposure to default is essentially unchanged.

Share this post


Link to post
Share on other sites

They're pretty much trapped. Can't say we didn't try to warn them.

Just crystallise your loss and move on. Right-ho. (That's what everyone else does after all :rolleyes: .)

They should associate and default en-masse - Facebook? Push the problem back to where it orignated. :ph34r:

That would set the cat among the pigeons.

No. They should be made to rent from the bank.

Their deposit and equity, if any, is lost, but they keep a roof over their heads.

No defaults here thanks.

They must pay.

Or lose the (possibility of ever having the) deeds.

Edited by shindigger

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.

  • 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%



×
×
  • 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.