One in 10 will face negative equity if house prices fall as expected.

[spacedin]

One in 10 will face negative equity if house prices fall as expected

Government predicts a 16pc drop in house prices once the current 'mini-boom' collapses

More than one in ten mortgage borrowers will fall into negative equity in the event of a house price crash – and young families are most at risk, an influential think has said.

 

Read more

Edited September 2, 2020 by spacedin

[Noledud]

In what location of the uk ?

[AAA]

So what is the problem? Houses are places to live. Their morgage will still be less than the rents.

[longgone]

Why lend then ???

[msi]

The key phrase here is '....as expected'.  Trying to ramp up fear to get another Government Bung / Prop.

 

[ForGreatLager...]

Straight in with the emotional language. It’s ‘young families’ that’ll be affected the most. Funny how it’s ‘property’ that goes up in price, but ‘homes’ that go down. 

Expect Rishi Sunak - Chancellor ™ to come up with a signature branded rescue package to save those young, hard-working families...

[flb]

For clarity, that's not what the government said; it's what a think-tank is forecasting, based on the worst case scenario taken into account by the OBR.

...however, one could argue that the OBR isn't pessimistic enough regarding the potential number of unemployed people.

[captainb]

4 hours ago, spacedin said:

One in 10 will face negative equity if house prices fall as expected

Government predicts a 16pc drop in house prices once the current 'mini-boom' collapses

More than one in ten mortgage borrowers will fall into negative equity in the event of a house price crash – and young families are most at risk, an influential think has said.

 

Read more

Back to stress tests. 

-16% being the worst reaosnably possible case not a prediction nor what they think is likely to happen 

For reference post the 2016 referendum it was - 30%

[scottbeard]

9 minutes ago, captainb said:

Back to stress tests. 

-16% being the worst reasonably possible case not a prediction nor what they think is likely to happen 

For reference post the 2016 referendum it was - 30%

+1

Come on folks, this is the second "clickbait" thread on HPC this week after the one about people "starving to death" when no-one starved to death.

There may be a 16% fall in house prices.  There may be a bigger fall.  But don't report something as a prediction when it isn't.

[Si1]

6 hours ago, flb said:

For clarity, that's not what the government said; it's what a think-tank is forecasting, based on the worst case scenario taken into account by the OBR.

...however, one could argue that the OBR isn't pessimistic enough regarding the potential number of unemployed people.

OBR forecast also only covers through 2021 (I think). Blimey 16% would be eye watering in that time and what would happen if govt really took their eye off the ball. Even as a non homeowner I can't see the advantages to all of us of that kind of economic crash.

[winkie]

7 hours ago, AAA said:

So what is the problem? Houses are places to live. Their morgage will still be less than the rents.

Exactly....you could say renting is being/living in negative equity.

Drive a new car out of a showroom in instant negative equity.

Only price that matters is the price paid and the price sold for....in-between all you are doing is paying for it hopefully building up an equity, creating your own equity.

[Si1]

7 hours ago, AAA said:

So what is the problem? Houses are places to live. Their morgage will still be less than the rents.

Not taking into account forgone income on the deposit, maintenance and risk. 

[richmondtw]

10 hours ago, AAA said:

So what is the problem? Houses are places to live. Their morgage will still be less than the rents.

Exactly if my house goes down 60% I could not care less. 

2 hours ago, Si1 said:

Not taking into account forgone income on the deposit, maintenance and risk. 

and not paying a LL mortgage for him

9 hours ago, scottbeard said:

Come on folks, this is the second "clickbait" thread on HPC this week after the one about people "starving to death" when no-one starved to death.

There may be a 16% fall in house prices.  There may be a bigger fall.  But don't report something as a prediction when it isn't.

Agreed - there may be  an uclear war next week but I am not going to spend my time worrying about it 

[msi]

9 hours ago, scottbeard said:

  But don't report something as a prediction when it isn't.

Erm...this whole site is trying to predict the Great House Price Crash 😀

[Bruce Banner]

3 minutes ago, richmondtw said:

Exactly if my house goes down 60% I could not care less. 

and not paying a LL mortgage for him

Agreed - there may be  an uclear war next week but I am not going to spend my time worrying about it 

Why are VI trolls so obsessed with the notion of paying a landlord's mortgage?

Personally, when I was renting, I couldn't give a damn about a landlord's mortgage. Some own outright anyway! 

What concerned me was whether or not the income from the money that I didn't have tied up in a house was more than covering the rent. Opportunity cost.

[flb]

3 hours ago, Si1 said:

OBR forecast also only covers through 2021 (I think). Blimey 16% would be eye watering in that time and what would happen if govt really took their eye off the ball. Even as a non homeowner I can't see the advantages to all of us of that kind of economic crash.

I'm all for it. Make it 33%, it would be even better. As a homeowner, I don't care what my house is supposedly worth because I live in it and I have no intention of selling. 

As a father, I would welcome a 33% drop (16% is alright too, just not as good) because, well, I might as well buy a second house (for my son)....and the cheaper it is, the easier it's going to be for me.

Bring it on.

[richmondtw]

1 hour ago, Bruce Banner said:

Why are VI trolls so obsessed with the notion of paying a landlord's mortgage?

Personally, when I was renting, I couldn't give a damn about a landlord's mortgage. Some own outright anyway! 

What concerned me was whether or not the income from the money that I didn't have tied up in a house was more than covering the rent. Opportunity cost.

Not a troll at old old chap.

If you prefer to pay rent it is fine by me  - no skin of anyone else's hooter  

[Bruce Banner]

57 minutes ago, richmondtw said:

Not a troll at old old chap.

If you prefer to pay rent it is fine by me  - no skin of anyone else's hooter  

Opportunity cost needs to be considered.

https://www.forbes.com/sites/emanuelemidolo/2019/10/29/why-millionaires-in-london-choose-to-rent-instead-of-buying/#23e5a625a5a7

https://speedhome.com/blog/why-do-a-lot-of-rich-people-pay-rent-instead-of-buy-property/

https://www.rd.com/list/what-rich-people-never-buy/

[richmondtw]

3 minutes ago, Bruce Banner said:

Opportunity cost needs to be considered.

I did not bother to open any link.  

I do not care what other people do.  

We are all different and have different ideas, circumstances, motivations, lifestyles.

The world would be very boring if we all had the same ideas, opinions, lifestyle and all made the same choices. 

Personally I could not care less if a person decides to rent, buy or fly to the moon.  It is their choice to which they are entitled and I totally accept that.  

 

[longgone]

10 minutes ago, Bruce Banner said:

Opportunity cost needs to be considered.

https://www.forbes.com/sites/emanuelemidolo/2019/10/29/why-millionaires-in-london-choose-to-rent-instead-of-buying/#23e5a625a5a7

https://speedhome.com/blog/why-do-a-lot-of-rich-people-pay-rent-instead-of-buy-property/

https://www.rd.com/list/what-rich-people-never-buy/

i always could tell you were high net worth. 

[Bruce Banner]

6 minutes ago, richmondtw said:

I did not bother to open any link.  

I do not care what other people do.  

We are all different and have different ideas, circumstances, motivations, lifestyles.

The world would be very boring if we all had the same ideas, opinions, lifestyle and all made the same choices. 

Personally I could not care less if a person decides to rent, buy or fly to the moon.  It is their choice to which they are entitled and I totally accept that.  

 

😂

[richmondtw]

10 minutes ago, Bruce Banner said:

Opportunity cost needs to be considered.

I do not think about my home in terms of profit or loss or a financial investment. I understand that some people do and that is up to them, I have no problem with how others think or live.  

It is a haven and  a home  for me, my wife and my kids in a road house we like being in in a street we love living in with lovely neighbours.

I do not think of everything  purely in terms of a cost profit basis,there is more to life than just money. 

[Bruce Banner]

1 minute ago, richmondtw said:

I do not think about my home in terms of profit or loss or a financial investment. I understand that some people do and that is up to them, I have no problem with how others think or live.  

It is a haven and  a home  for me, my wife and my kids in a road house we like being in in a street we love living in with lovely neighbours.

I do not think of everything  purely in terms of a cost profit basis,there is more to life than just money. 

🤣

[scottbeard]

3 hours ago, msi said:

Erm...this whole site is trying to predict the Great House Price Crash 😀

If people want to make a prediction about house price falls then go right ahead.

But I'm not happy if people report that someone else predicted something that they didn't predict!

[Unmoderated]

53 minutes ago, Bruce Banner said:

Opportunity cost needs to be considered.

https://www.forbes.com/sites/emanuelemidolo/2019/10/29/why-millionaires-in-london-choose-to-rent-instead-of-buying/#23e5a625a5a7

https://speedhome.com/blog/why-do-a-lot-of-rich-people-pay-rent-instead-of-buy-property/

https://www.rd.com/list/what-rich-people-never-buy/

The issue is that most of us do not have a million quid to buy a house with OR chuck into a business. If I did have a million quid right now and no house I'd likely still buy with a mortgage (cheap money init) and preserve as much of that million quid to invest in a business or stocks etc. 

But I don't, nor did I three years ago. What I did have was £70k saved up and I could borrow the rest for next to nothing. Could I borrow £360k to chuck on the stock market? Could little old me borrow that to start a business?

Might as well have an article about why poor people never buy either