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What Do You Mean I Can't Sell?

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What do you mean my flat is worth less then I paid for it??

Thats impossible..

To sell it I would have to find the £30,000 needed to meet the full mortgage now I am in negative equity..

But I have a £180,000 mortgage.. and its interest only.. I can't afford to pay of any capital..

and now by fixed rate low interest mortgage is ending... What can I do..??

I can't re-mortgage to another fixed rate its worth less then I owe..

I borrowed more then I could afford and now I need to pay the higher variable rates..

I need to sell, I can't take the loss..

so I can't sell.

I am going to have to keep paying my Interest Only mortgage against a property worth less then I paid for it.. I can't move.. There is such low inflation so my wages will take many years to grow enough so I can start making capital payments..

I thought low inflation was a good thing.. But now my debt is not shrinking... Is this how people progressed up through the ladder before??

What do I do...?

The above is fictional.

but in exeter I have seen new build flats on an ongoing development drop from £170,000 to £130,000 over the last two years..

Fixed rate terms are often two years..

Wages are low and we all know that Interest Only Mortgages are common..

How fictional is it?

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The negative equity scenario is beginning to be played out all around the world. I recently moved back to the UK from San Diego, California where HPI has been more dramatic than the average in the UK. Just read an article that shows that San Diego is now number 2 in the nation for the highest rate of DEPRECIATION in the HPI rate(Las Vegas is number 1). IMagine the super tanker going at full speed and then hitting reverse thrust--forward momentum is maintained but the breaking effect is dramatic.

In the last year over 80% of homes purchased in CA were facilitated by interest only loans. These have produced instant negative equity and bankers I have spoken with in my old town have all said they expect financial carnage once stretched buyers see that capital appreciation is falling behind debt levels.

THe last housing crash was precipitated by energy costs and a sinking economy. My bet is that the next crash will include both of these features with the added ingredient of massive debt to income ratios--unprecedented in economic history. INterest rates are at their highest level in history right now if you look at the amount of the payment rather than the gross interest rate. People are paying more in the way of interest because they have paid more for their home. Much more--in most cases in excess of 5 times income. The last crash, in the US at least, saw a crash where debt to income was only 3 times.

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  • 333 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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