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Realistbear

Subprime Mortgage Woes Spreading

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http://biz.yahoo.com/ap/070829/expensive_homes.html?.v=2

AP

Subprime Mortgage Woes Spreading

Wednesday August 29, 2:07 am ET

Subprime Mortgage Crisis Spreading to High-End Housing Market

NEW YORK (AP) -- The subprime mortgage crisis is spreading to a somewhat unexpected place: homes costing more than $500,000.

As lending has rapidly gotten more restrictive for borrowers taking out large loans, sales of expensive homes have fallen sharply around the country during what should be one of the busiest seasons for buyers and sellers, mortgage bankers and real estate agents say.
To some degree the change is due to difficulty getting financing, as borrowers are finding fewer lenders willing or able to fund "jumbo" mortgages, loans for amounts greater than $417,000. Such loans are too big to be guaranteed by government-sponsored housing finance agencies Fannie Mae, Freddie Mac or Ginnie Mae.
Given the troubles in the subprime sector, investor appetite for all types of mortgage loans not guaranteed by housing finance agencies has nose-dived.
Banks until recently were able to offload the risk of many jumbo mortgages by selling the loans to investors. But now, as investors burned by the subprime debacle have become extremely picky about what they will buy, banks are having to keep more of these loans on their own books and as a result are charging higher rates.

Well well well, the penny has finally dropped. Its not just the "poor" people who are suffering due to HPI and being forced to take dodgy loans. I was always amazed to see relatively well-off sheeple buying $800k houses in SoCal when they were only earning $80k!

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http://biz.yahoo.com/ap/070829/expensive_homes.html?.v=2

AP

Subprime Mortgage Woes Spreading

Wednesday August 29, 2:07 am ET

Subprime Mortgage Crisis Spreading to High-End Housing Market

NEW YORK (AP) -- The subprime mortgage crisis is spreading to a somewhat unexpected place: homes costing more than $500,000.

One of the most striking things about the US sub-prime crisis is how they always talk about $500,000 (£250,000) homes as being 'high-end' and mortgages over $400,000 as being 'jumbo'. It makes you realise just how much worse the housing bubble is in the UK.

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One of the most striking things about the US sub-prime crisis is how they always talk about $500,000 (£250,000) homes as being 'high-end' and mortgages over $400,000 as being 'jumbo'. It makes you realise just how much worse the housing bubble is in the UK.

I was thinking the same - a 'jumbo' mortgage of $400,000, equivalent to £200,000 would buy you not much more than the 'average' (according to the Land Registry) house of £180,000.

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I was thinking the same - a 'jumbo' mortgage of $400,000, equivalent to £200,000 would buy you not much more than the 'average' (according to the Land Registry) house of £180,000.

And I was going to post the same reply too.They think they've got problems:they earn more than we do,their houses are bigger and better and yet they have a crisis because they have reached $230,000 or £115,000 on average.

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I was thinking the same - a 'jumbo' mortgage of $400,000, equivalent to £200,000 would buy you not much more than the 'average' (according to the Land Registry) house of £180,000.

And I was going to post the same reply too.They think they've got problems:they earn more than we do,their houses are bigger and better and yet they have a crisis because they have reached $230,000 or £115,000 on average.

I agree. It just goes to show just how much debt exists in this country. When the bubble finally pops its going to be spectacular. Over the long haul HPI always stays in line with wages. But for irresponsible borrowing we would never have had Gordon's HPI-MEW-BTL miracle.

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Interesting response to the LA Land blog in the LA Times

The median income for a single California wage earner is about the same as the national average, around $43,000, so even an average California couple can't afford these houses (and given the descriptions, should be given mental health counseling for even trying). It's impossible for median incomes to be so out of line with prices everywhere in the state, this is simply the wrong neighborhood for the average buyer to be looking. And any upper-middle class buyer who pays these kind of prices for these dinky houses rather than buying a summer home in the Yucatan and banking the cash is a fool. The key to getting the housing market under control is to STOP OVERPAYING. The sellers must obey the market eventually...

Looks like we have a fellowship building across the globe!

http://latimesblogs.latimes.com/laland/200...house-culv.html

SB

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One of the most striking things about the US sub-prime crisis is how they always talk about $500,000 (£250,000) homes as being 'high-end' and mortgages over $400,000 as being 'jumbo'. It makes you realise just how much worse the housing bubble is in the UK.

According to the latest land registry report 78% of houses sold in England & Wales were under £250K.

So, the top 22% are over this figure. It may be worse than the US over here but £250K still buys you a relatively high end house nationally if you look at the figures.

Price Band			Number Sold		Cumulative	 PercentileUnder 50,000			 816			 816			  0.9%50,001 – 100,000		 11384		   12200			12.9%100,001 – 150,000		24128		   36328			38.3%150,001 – 200,000		21698		   58026			61.2%200,001 – 250,000		15762		   73788			77.8%250,001 – 300,000		6410			80198			84.6%300,001 – 400,000		7559			87757			92.6%400,001 – 500,000		3323			91080			96.1%500,001 – 600,000		1288			92368			97.4%600,001 – 800,000		1307			93675			98.8%800,001 – 1,000,000	  566			 94241			99.4%1,000,001 – 1,500,000	340			 94581			99.8%1,500,001 – 2,000,000	134			 94715			99.9%Over 2,000,000		   92			  94807			100.0%
Edited by jon211

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According to the latest land registry report 78% of houses sold in England & Wales were under £250K.

So, the top 22% are over this figure. It may be worse than the US over here but £250K still buys you a relatively high end house nationally if you look at the figures.

Price Band			Number Sold		Cumulative	 PercentileUnder 50,000			 816			 816			  0.9%50,001 – 100,000		 11384		   12200			12.9%100,001 – 150,000		24128		   36328			38.3%150,001 – 200,000		21698		   58026			61.2%200,001 – 250,000		15762		   73788			77.8%250,001 – 300,000		6410			80198			84.6%300,001 – 400,000		7559			87757			92.6%400,001 – 500,000		3323			91080			96.1%500,001 – 600,000		1288			92368			97.4%600,001 – 800,000		1307			93675			98.8%800,001 – 1,000,000	  566			 94241			99.4%1,000,001 – 1,500,000	340			 94581			99.8%1,500,001 – 2,000,000	134			 94715			99.9%Over 2,000,000		   92			  94807			100.0%

We aren't talking 250K we are talking 208.5k($417,000) for the high end in the US.Compared to what we are used to, the average US house at £115K looks cheap.

Edited by crashmonitor

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Don't forget that in the last four years US base rates have more than quadrupled while ours have less than doubled. That's the real cause of their pain - not absolute values.

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