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Realistbear

Huge Disaster About To Hatch Out In U S House Market

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http://news.yahoo.com/s/usatoday/20060403/...adjustablerates

Some homeowners struggle to keep up with adjustable rates

By Noelle Knox,

USA TODAY

Mon Apr 3, 7:00 AM ET

For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.
When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work.
The rate on their mortgage has jumped from 7% to 10.5%
.
They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans.
To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments
. The homeownership rate hit a record 70%.
Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages.
Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.

How many buyers in the UK took out IO and other forms of irrational loans to get on the ladder hoping against hope that the low intro rate would not come to an end?

It amazes me that people did not see this one coming years ago.

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They've been living (&paying a mortgage?) there 45 years??? & they are remortgaging into their 70's?

Without wanting to sound too callous, they sound like financial morons. I can't beleive they are representative of their country (at least I hope not!)

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Guest Winners and Losers

They've been living (&paying a mortgage?) there 45 years??? & they are remortgaging into their 70's?

Without wanting to sound too callous, they sound like financial morons. I can't beleive they are representative of their country (at least I hope not!)

No, they were just willing to do ANYTHING to get on the ladder. They thought prices would go up forever. They were banking on their capital gain. Oh, yeah, they were financial morons. Learn the lesson.

Edited by Winners and Losers

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The scary thing is that in our market ALL of the mortgages are adjustable with only a minority being locked for a longish term of 10+ years. All of the cheap intro and IO loans are vulnerable to the coming IR storm building in Japan.

Sheeple do not look far ahead whether in the UK or the US--getting on the ladder is all that matters. Problem is that you have to be able to afford to stay on the ladder and to factor in the big rises in IR that are coming.

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No, they were just willing to do ANYTHING to get on the ladder. They thought prices would go up forever. They were banking on their capital gain. Oh, yeah, they were financial morons. Learn the lesson.

They should start thinking about going in the ground rather than going up the ladder at that age :)

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They should start thinking about going in the ground rather than going up the ladder at that age :)

The problem is that the pension funds are not there to pay for their retirement--40 years of contributions dissappeared overnight for many. Just like they have in the UK--people work and save over a lifetime only to retire with owt. The "Miracle Workers" who have been selling our country out in the name of HPI and MEW are the ones who need planting in the ground not the poor sods who have been ripped off.

I think Gordon "Miracle Economy" Brown may go down as the most disastrous Chancellor the world has seen. At least "Big Al" Greenspan saw his mistake a little earlier and got the US hiking IR longer and faster.

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At least "Big Al" Greenspan saw his mistake a little earlier and got the US hiking IR longer and faster.

And retired as a 'genius' before the crash... IMHO it's already too late for Brown.

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And retired as a 'genius' before the crash... IMHO it's already too late for Brown.

that disgusting old fraud greenspan actively encouraged the take up of ARM's :angry:

with the result that those who took them up because of their subprime status get shafted...

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that disgusting old fraud greenspan actively encouraged the take up of ARM's :angry:

with the result that those who took them up because of their subprime status get shafted...

That is right he did--much to the surprise of many investment gurus. I wonder if Al failed to see the coming Pearl Harbour 2?

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that disgusting old fraud greenspan actively encouraged the take up of ARM's

Yeah, I think that was his final joke on the American people...

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Guest Winners and Losers

They should start thinking about going in the ground rather than going up the ladder at that age :)

:lol::lol:

I think RB has said it already, but I was going to say 'they invested in property for their pension'!

Keep 'em comin.

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http://news.yahoo.com/s/usatoday/20060403/...adjustablerates

Some homeowners struggle to keep up with adjustable rates

By Noelle Knox,

USA TODAY

Mon Apr 3, 7:00 AM ET

For 45 years, Robert and Lorraine Brown have lived in their ranch-style home in Florissant, Mo. One of their four children was even born there. But for the past eight months, the couple have been locked in a sleep-wrecking race to keep up with their rising mortgage bills. They've switched to cheaper phone service, cut back on groceries and sometimes put off ordering medicine.
When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work.
The rate on their mortgage has jumped from 7% to 10.5%
.
They feel alone, but they're not. America's five-year real estate boom was fueled partly by a tempting array of cut-rate mortgages that helped millions of Americans qualify for home or refinance loans.
To afford soaring home prices, many turned to adjustable-rate and other, riskier loans with low initial payments
. The homeownership rate hit a record 70%.
Now, the real estate market is cooling, interest rates are rising and tens of thousands more Americans are starting to have trouble paying their mortgages.
Nearly 25% of mortgages - 10 million - carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.

How many buyers in the UK took out IO and other forms of irrational loans to get on the ladder hoping against hope that the low intro rate would not come to an end?

It amazes me that people did not see this one coming years ago.

I wonder what bills they paid off. A major medical problem like cancer can cost tens of thousands dollars for people with insurance. Realistbear talked about the pension. When they took the loan their financial picture might have looked very different.

I don't know about you guys, but really I don't want a 72 year old nurse looking after me in the hospital.

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I think Gordon "Miracle Economy" Brown may go down as the most disastrous Chancellor the world has seen

Without doubt; history will re-visit over and again the track record of this truly appalling steward of Britain's finances.

Consider the following:

In 1997 he inherited a robust economy from the Conservatives - he has wrecked it.

In 1997 the UK had the finest private pension schemes in Europe - he has systematically thieved billions every year from these funds by the removal of tax dividend credits. In addition his ruling that they invest substantially in gilts, which represents yet another nasty and deciteful Goverment stealth tax, has denied these same funds the opportunity to invest in equities yielding better returns. In short he has utterly destroyed private pensions and meanwhile has created endless 'make-work' jobs in the public sector whose recipients enjoy gold blocked pensions and the ability to retire at 60, while we are forced to toil into our 70s to pay for these non-productive idlers.

Add to this the narrow-minded predujices of the Calvinist, his hatred for the middle class in general and the English in particular, and you see a truly awful man who will go down in history as one of the worst ever Chancellors.

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I don't know about you guys, but really I don't want a 72 year old nurse looking after me in the hospital.

You'd probably get kinder and more professional

care than from some NHS slapper who spends her

time nattering to her mates and eating

your food while you cry out in pain (see the Panorama prog

recently?)

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Add to this the narrow-minded predujices of the Calvinist, his hatred for the middle class in general and the English in particular, and you see a truly awful man who will go down in history as one of the worst ever Chancellors.

How bothered will he be as he sipps another pink gin watching the sun set from his own private beech in Barbados? Another greed-soddon, self-obsessed, megalomanic politician in the same vein as Winston Churchill II - the only man to win £12 million from the lottery without even buying a ticket.

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No, they were just willing to do ANYTHING to get on the ladder. They thought prices would go up forever. They were banking on their capital gain. Oh, yeah, they were financial morons. Learn the lesson.

I dont think they'd invented property bubbles 45 years ago!

Surely 45 years should be long enough to pay off a mortgage!

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Surely 45 years should be long enough to pay off a mortgage!

Presumably they did pay it off, then someone convinced them to MEW to pay their other debts.

Forgetting to mention that yes, actually, they did have to pay the money back one day.

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Could it be they're being charged an extortionate rate because they're in their 70s and won't be around much longer to pay it off?

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"The rate on their mortgage has jumped from 7% to 10.5%.%

10.5%??? how? TNX is at 4.9%

7% on an ARM is very high and 10.5?

Somethng is rotten in Denmark. Either they had very poor credit or were taken.

Could it be they're being charged an extortionate rate because they're in their 70s and won't be around much longer to pay it off?

I don't believe that is legal in the US. For the most part no one is alowed to ask your age, only that you are over 18 (the legal age to sign a contract). Or 21 (the drinking age)

Edited by Karen

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No, they were just willing to do ANYTHING to get on the ladder. They thought prices would go up forever. They were banking on their capital gain. Oh, yeah, they were financial morons. Learn the lesson.

They were silly MEWS.

You know, my missus ended up showing Gordon Brown & Greenspan around Edinburgh Uni at some formal

award thingy. Apparently greenspan had Secret Service looking types, fit and trim and in black suits and shades (like Mr Smith from the Matrix) B) . Gordon had a bunch of rumple suited overweight coppers, like the kebab eating detectives from the fast show.

Maybe this is where they became best pals, and al decided to spend his retirement hammering the final nails into our economy. <_<

Edited by geneer

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"The rate on their mortgage has jumped from 7% to 10.5%.%

10.5%??? how? TNX is at 4.9%

They may have had sub-par credit. The shylocks were loaning at ridiculous rates when the market was going up but now its back to reality credit has tightened and the shys want their pound of flesh.

The venerable Wall Street Journal pick up on the story as a grave warning to the millions of punters who jumped on the HPI/MEW wagon in the US:

http://www.realestatejournal.com/buysell/m...404-cullen.html

Is it Time For You to Switch

To a Fixed-Rate Mortgage?

By Terri Cullen

From The Wall Street Journal Online

More than $2 trillion of adjustable-rate mortgages come up for interest-rate resets in 2006 and 2007, according to Moody's Economy.com. For homeowners who want to refinance to a fixed-rate loan, the timing couldn't be worse -- the average rate for 30-year fixed rate mortgages is at the highest level since 2003.
The Toll of Rising Rates
Simulated effect on adjustable-rate mortgage payments of a four percentage-point increase in the ARM Index, used as the basis for adjusting rates on ARMs.
BORROWERS Change in Payment Below 5% of Gross Income Change in Payment 5-10% of Gross Income Change in Payment More Than 10% of Gross Income
All 68% 23% 9%
In Bottom Half of Income Distribution 60% 24% 16%
In 50th-90th Percentile of Income Distribution 77% 20% 3%
In Top Decile of Income Distribution 68% 28% 4%

$2 Trillion--don't think for a minute this is not going to affect the markets in the UK. Meltdown time folks and time to go to cash (or gold if you have the stomach which I don't!).

Time to sell IR sensitive assetts--NOW.

7% on an ARM is very high and 10.5?

Somethng is rotten in Denmark. Either they had very poor credit or were taken.

I don't believe that is legal in the US. For the most part no one is alowed to ask your age, only that you are over 18 (the legal age to sign a contract). Or 21 (the drinking age)

Latest mortgage averages from the US:

Loan Type Rate APR

30-yr Fixed 5.93% 6.13%

15-yr Fixed 5.62% 5.92%

5/1 ARM 5.62% 6.84%

6.84% for top percentile credit score. In a falling market few will get this rate.

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"When they refinanced their home two years ago to pay off some bills, Robert, now 78, was working as a deliveryman. But his employer went out of business last April. Now he and Lorraine, 72, a retired nurse, are both seeking work. "

Right, so they took cash out and the USA Today spin is that it went on 'bills' - a nice amorphous phrase. I would be uncharitable and suggest they got involved in something they did not know much about (credit) spent the money and guess what, they failed to appreciate what could happen. They were almost retirees anyway, presumably on low wages, so what where they playing at getting into debt with sub-prime lenders. I know some people have to, but I know what my suspicion is - they wanted stuff that was out of their consumer league, but credit meant they could have it, they just failed to understand credit is not a gift.... - remember that all of you with a fat lot of non-house money owed on cards, unsecured loans and even your houses..... - it's a 'game' where you can lose and lose big....

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Again, to me this is just global Capitalism at work in it's most evil form. I am not left wing 'nut' but I sometimes wonder if some James Bond style Capitalist 'villians' sit down every 5 years or so and say "OK, how can we screw the people this time?".

They've done endowments - tame - and dot.con shares, now houses. What will be next? Gold? Oil?

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[url=http://news.yahoo.com/s/usatoday/20060403/bs_usatoday/

How many buyers in the UK took out IO and other forms of irrational loans to get on the ladder hoping against hope that the low intro rate would not come to an end?

It amazes me that people did not see this one coming years ago.

Do you mean that with massivly low inflation making long term borrowing more expensive then it has ever been (long term) but still exposed to Interest Rates.. and then borrowing the very most you can just afford if you only pay the interest which was at about the lowest rates it has ever been...?

Do you mean to ask if anyone thought this might be a bad plan??

a few caught on to the idea.. :)

There has never been a worse time to borrow long term then since the powers that be commited to keeping inflation low.

To then enter into a massive variable rate loan over quarter a centuary...

A huge loan.. now.. over a long time..

The tv adverts on four just ten minutes ago where for..

Emergency consolidation loans, and well national homebuyers..

There are morrons out there.. who were sold credit..

now they have credit.. just hope they spent it wisely

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  • 301 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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