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MrB

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That's the message I'm getting from those who are paid to predict these things and advise UHNW individuals, but it's hard to say for sure. I do believe they are right, though. There are some signs it's starting to happen (for example, the fall in rental asking prices in prime London). It's rather like a game of giant jenga - it will only take one block to come unstuck for the whole thing to come crashing down.

Some think it's already started and we just can't see it clearly yet, others that it's about to start, and yet others believe it will be a steady erosion rather than a dramatic crash. I can say one thing for certain, though - no-one is telling me that the party can carry on much longer!

When you see even modest houses changing hands for eight figures you know that there's no objective way they can ever be considered "worth" such - it's bubblenomics of the first order.

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That's the message I'm getting from those who are paid to predict these things and advise UHNW individuals, but it's hard to say for sure. I do believe they are right, though. There are some signs it's starting to happen (for example, the fall in rental asking prices in prime London). It's rather like a game of giant jenga - it will only take one block to come unstuck for the whole thing to come crashing down.

Some think it's already started and we just can't see it clearly yet, others that it's about to start, and yet others believe it will be a steady erosion rather than a dramatic crash. I can say one thing for certain, though - no-one is telling me that the party can carry on much longer!

Five years ago I wouldn't have questioned the logic of this. Even three years ago! But time and again we've been surprised by the lengths the UK political establishment has been prepared to go to hold up the market! I hope you're right about the direction of London prices even though the weight of circumstantial evidence seems overwhelmingly to suggest otherwise. I fear however the arrival of Carney will signal a renewed effort to generate HPI, especially with a GE just two years away.

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That's the message I'm getting from those who are paid to predict these things and advise UHNW individuals..

I hope you are right. But they make the rules, print the money and own the land. If they are determined to turn us into a nation of a debt slaves then there's a good chance that they will.

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Sorry, I should have clarified - I don't think the government can, or would attempt, to prevent London prices crashing, in the way that house prices in other regions have.

Help-to-Buy can't make any difference to London prime crashing. There is a 600k limit after all, and the foreign investors who have been driving the market are not eligible anyway. All it does is lessen the deposit requirements for a purchase, it doesn't address the fact that working people (the kind who will use Help to Buy) still need 11-14x average/median local income to buy in London.

I do however believe that Help to Buy may help stem the rate of price decline in other regions.

The primary aim was to prevent banks collapsing. Propping up house prices was initially incidental. However now I think supporting prices has become a secondary aim. There are still more votes in taking care of the haves than the have-nots. The worst form of government, except for all the others.

Prime London at present is a function more of international factors than UK domestic ones. HTB is an irrelevance in Zone 1 but will have a big impact outside it. There is a moat being drawn around the centre, a city within a city.

A couple looking to buy say a £400k 3-bed semi with 25% down would need £100k deposit and around £60k joint income. London is full of couples earning £60k but getting £100k together is a much bigger ask. HTB will fill £80k of that gap nicely leaving a much more manageable £20k to raise.

It is carefully calibrated and carefully targeted by George and I expect a huge takeup with a flood of newly cashed-up buyers entering the market in April 2014. I also expect a stampede before then of those who have been wavering as fear grips of watching the ladder rise ever higher and getting left behind.

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The primary aim was to prevent banks collapsing. Propping up house prices was initially incidental. However now I think supporting prices has become a secondary aim. There are still more votes in taking care of the haves than the have-nots. The worst form of government, except for all the others.

Prime London at present is a function more of international factors than UK domestic ones. HTB is an irrelevance in Zone 1 but will have a big impact outside it. There is a moat being drawn around the centre, a city within a city.

A couple looking to buy say a £400k 3-bed semi with 25% down would need £100k deposit and around £60k joint income. London is full of couples earning £60k but getting £100k together is a much bigger ask. HTB will fill £80k of that gap nicely leaving a much more manageable £20k to raise.

It is carefully calibrated and carefully targeted by George and I expect a huge takeup with a flood of newly cashed-up buyers entering the market in April 2014. I also expect a stampede before then of those who have been wavering as fear grips of watching the ladder rise ever higher and getting left behind.

Let me quote that for posterity.

£300k mortgage with £60k joint income.

Mmmkay.

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Let me quote that for posterity.

£300k mortgage with £60k joint income.

Mmmkay.

It's not right, but it has become standard.

There are much worse examples than that as well, and I don't think that a 25% deposit is always required now either. The £60k earning couple could put down £40k on the £400k house and borrow the other £360k.

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A couple looking to buy say a £400k 3-bed semi with 25% down would need £100k deposit and around £60k joint income. London is full of couples earning £60k but getting £100k together is a much bigger ask. HTB will fill £80k of that gap nicely leaving a much more manageable £20k to raise.

I just want to pick up on this point, because I think you've made a mistake in your calculatons.

I can't think of any lender which will lend more than 3.5x joint income, meaning the largest loan available to the couple on £60k would be £210k. HTB does not give people free money, but a loan which will be considered by mortgage underwriters when calculating how much a bank can lend. You won't be able to get 3.5x joint plus the HTB loan, since the repayments on that loan will be factored into the affordablity calculations all mortgage lenders do these days.

Mortgage providers lend on affordablity, so your £60k couple with a 5% deposit won't be able to purchase a £400k home. The correct maximum figure would be a little over £220k. This is why London prices are destined to fall, because at 11x/14x average/median income, they have reached the point where no amount of cheap government backed money is going to allow people to purchase that small 2-bed flat in a mediocre part of the city.

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It's not right, but it has become standard.

There are much worse examples than that as well, and I don't think that a 25% deposit is always required now either. The £60k earning couple could put down £40k on the £400k house and borrow the other £360k.

From which lender, exactly? Maybe in the crazy days of 2007, but no lender would offer that kind of multiple on a joint income these days. I recently applied for a mortgage myself, through a broker, and the largest multiplier available on a single income with perfect credit rating and no debt was 4.2x - the multiplier is less for couples.

Mortgages are lent now based on affordability calculations, rather than arbitrary multipliers, and that huge HTB loan will reduce the mortgage available further. They'd be lucky to get a 3x multiplier.

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I just want to pick up on this point, because I think you've made a mistake in your calculatons.

I can't think of any lender which will lend more than 3.5x joint income, meaning the largest loan available to the couple on £60k would be £210k.

Not sure how exact these figures are. BTW there are couples in London, mid 30s that are on considerably more than 60k joint. These are the people that have bumped up prices in our area (NW).

Find out how much you could borrow

Applicant one's annual income:£30000

Applicant two's annual income:£30000

You could borrow up to £300,000

http://www.alexander...n-i-borrow.html

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I just want to pick up on this point, because I think you've made a mistake in your calculatons.

I can't think of any lender which will lend more than 3.5x joint income, meaning the largest loan available to the couple on £60k would be £210k.

Not sure how exact these figures are. BTW there are couples in London, mid 30s that are on considerably more than 60k joint. These are the people that have bumped up prices in our area (NW).

Find out how much you could borrow

Applicant one's annual income:£30000

Applicant two's annual income:£30000

You could borrow up to £300,000

http://www.alexander...n-i-borrow.html

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Not sure how exact these figures are. BTW there are couples in London, mid 30s that are on considerably more than 60k joint. These are the people that have bumped up prices in our area (NW).

Find out how much you could borrow

Applicant one's annual income:£30000

Applicant two's annual income:£30000

You could borrow up to £300,000

http://www.alexander...n-i-borrow.html

Those mortgage calculators are next to worthless, in fact many are relics from pre-2008 days. The reality is that mortgage providers lend on affordablity and take into account existing or expected debt - like the HTB loan.

You only have to speak to a mortgage broker to understand the reality of what you can/cannot borrow. And yes, there are some couples on more than £60k in London, but not many, and the average household income in London is about 40k.

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From which lender, exactly? Maybe in the crazy days of 2007, but no lender would offer that kind of multiple on a joint income these days. I recently applied for a mortgage myself, through a broker, and the largest multiplier available on a single income with perfect credit rating and no debt was 4.2x - the multiplier is less for couples.

Mortgages are lent now based on affordability calculations, rather than arbitrary multipliers, and that huge HTB loan will reduce the mortgage available further. They'd be lucky to get a 3x multiplier.

I am not sure, to be honest, but I personally know a couple who have very recently borrowed £300k even though they only have a single £50k income between them. I believe it to be true, because they actually mentioned the figure to me and said how high it was. A massive mortgage is hardly something to boast about (although maybe it will be the way we are going!)

I also have a mortgage agreed (in principle) myself with First Direct at just over 4 times joint income and that was just because it was the figure that I asked for, not because it was the maximum that they'd go to. I'd never be comfortable actually using it, but I thought it interesting that it was available.

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NONE OF THIS IS NEW....

JUST THINK -- LIAR LOANS --

Look at ALL the links below -- and you will see that EVERYTHING you are saying relates to behaviour over the last 10-15 years -- IT HAS ALL BEEN GOING ON FOR YEARS

& LIAR LOANS

have got us here --- and they are STILL going on -- they are STILL skewing the whole system....

i.e. MASSIVE FRAUD GOES ON --- DESPITE EVERYTHING THAT HAS HAPPENED OVER RECENT YEARS.... :rolleyes:

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I also have a mortgage agreed (in principle) myself with First Direct at just over 4 times joint income and that was just because it was the figure that I asked for, not because it was the maximum that they'd go to. I'd never be comfortable actually using it, but I thought it interesting that it was available.

Yes, they hand out agreements in principle like candy. But when it get passed to an underwriter for approval - very different story. I've been informed by a mortgage broker, whose opinion I trust, that it's very rare for multiples over 4 to be offered in reality.

The wider point, though, is that any lender will take the HTB loan into account when offering a mortgage. So the idea that you can get a mortgage on a maximum multiplier plus the HTB loan is mistaken. It's the same as borrowing for a deposit, which a few lenders do accept (Santander for example), but they take your repayments into account and reduce the amount you can borrow.

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Maybe a strategic default on a Help To Buy mortgage is the way forward. £30k deposit + £120 H2B loan +£450k mortgage to co-opt a £600k house. Default on the £120k. What would the consequences be?

What would the repayments be on a £450k mortgage?

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Maybe a strategic default on a Help To Buy mortgage is the way forward. £30k deposit + £120 H2B loan +£450k mortgage to co-opt a £600k house. Default on the £120k. What would the consequences be?

What would the repayments be on a £450k mortgage?

I assume the HTB loan will be secured against the property - can't imagine it any other way! And about £2,500 at 4.5% interest, or over 3k at 6.5%...

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I assume the HTB loan will be secured against the property - can't imagine it any other way!

The government doesn't have the guts to enforce repossessions. It also wouldn't want to harm its own balance sheet by crystallising losses made on HTB buyers in negative equity. In the event of a house price crash with HTB defaults the government would extend and pretend.

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The government doesn't have the guts to enforce repossessions. It also wouldn't want to harm its own balance sheet by crystallising losses made on HTB buyers in negative equity. In the event of a house price crash with HTB defaults the government would extend and pretend.

hmm...tax evaders would tend to disagree.

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And about £2,500 at 4.5% interest, or over 3k at 6.5%...

Just looking at those figures for repayment on a 450K mortgage just reinforces how mad asking prices truly are in so many areas.

Virtually all the people I know who are selling not only have no idea just how much the repayments would be on their stupid asking prices but would be unable to buy their own house today. Even the wealthiest earners I know would have trouble servicing such a mortgage.

What a bubble.

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I am not sure, to be honest, but I personally know a couple who have very recently borrowed £300k even though they only have a single £50k income between them. I believe it to be true, because they actually mentioned the figure to me and said how high it was. A massive mortgage is hardly something to boast about (although maybe it will be the way we are going!)

I also have a mortgage agreed (in principle) myself with First Direct at just over 4 times joint income and that was just because it was the figure that I asked for, not because it was the maximum that they'd go to. I'd never be comfortable actually using it, but I thought it interesting that it was available.

It is not available to the masses though, or maybe they don`t want it any more? because volumes have collapsed.

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Just looking at those figures for repayment on a 450K mortgage just reinforces how mad asking prices truly are in so many areas.

Virtually all the people I know who are selling not only have no idea just how much the repayments would be on their stupid asking prices but would be unable to buy their own house today. Even the wealthiest earners I know would have trouble servicing such a mortgage.

What a bubble.

That will be people who THINK they are selling, but never will.

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...

:unsure::huh:

"One was of the opinion that house prices were to high...." :blink::unsure::unsure:

Do you mean

TOO high??? :unsure:

[Cannot BELIEVE how often you see this now.......]

Yes. I've noticed that also. I sometimes feel like asking, 'What school did you go to?' or I sometimes wonder how old some posters are, like are they over 16. It's a bad mistake but I blame the educational system.

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Yes. I've noticed that also. I sometimes feel like asking, 'What school did you go to?' or I sometimes wonder how old some posters are, like are they over 16. It's a bad mistake but I blame the educational system.

As with:

"loose" for "lose", I think I actually see the former more

"should of"

Although I am guilty myself of:

"there" / "their" - I know the difference and wouldn't write it incorrectly but do sometimes type it so.

I'm no grammar stickler as "its/it's" and "orange's" do not bother me in the slightest; IMO using an apostrophe in a plural of a word usually ending in a vowel makes it clearer that it is a plural, especially for trade names.

e.g.

Mondeo's is clearly a plural

Mondeos could be a word ending in s that isn't a plural, if you read it as "Mon-day-oss"

Language is about clear communication.

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As with:

"loose" for "lose", I think I actually see the former more

"should of"

Although I am guilty myself of:

"there" / "their" - I know the difference and wouldn't write it incorrectly but do sometimes type it so.

I'm no grammar stickler as "its/it's" and "orange's" do not bother me in the slightest; IMO using an apostrophe in a plural of a word usually ending in a vowel makes it clearer that it is a plural, especially for trade names.

e.g.

Mondeo's is clearly a plural

Mondeos could be a word ending in s that isn't a plural, if you read it as "Mon-day-oss"

Language is about clear communication.

I agree that language is about clear communication. That is why I disagree about your claim that breaking the rules helps communication. The rules, imo, are designed to aid clear communication. To me, Mondeo's is definitely possessive. It means the house or place or cafe (perhaps) belonging to Mondeo, whoever he is.

I am sometimes deliberately ungrammatical because the grammatical expression can seem stilted or snobbish. So I would say, 'It was him, not me, who did it.' even though I should say, 'It was he, not I, who did it'.

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  • 276 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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