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Just How Fast Are House Prices Going To Drop?

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I think we might see a swift impact on prices due to the following.

1. NR were, until last week, under writing about 20-25% of UK mortgages. This tap has been turned off. Thus where are the NR type customers going to get mortgages from now? There isn't the capacity in the the cuurent market for all of these to be accomodated. Plus a lot of them may be sub prime.

2. The banks have already started to tighten their lending criterea. I just tried HSBC mortgage calculator and it appears that you now need a minimum 10% deposit (not sure what the maximum multiples are). I put combined salary of GBP100,000 with a GBP15,000 deposit and the maximum lend was GBP135,000 (also tried GBP20,000 deposit and the maximum borrow was GBP180,000). I presume that BLT mortages will also be harder to come by. This will severely restrict the number of people able to buy property.

3. I haven't got the figures to hand but there must be thousands of mortgages processed each moth. If we assume that NR had 25% of outsanding applications some of these borrowers (if not all of them) will have to go else where. This will ubdoubtedly lead to numerous chains being broken all at the same time as not all of these will be able to secure a mortgage offer. I reckon this wil start to panic a few people.

I reckon the biggest fall will be in all these city flats. There are currently loads unlet and with many thousands, nationwide, in various stages of completion. With the BLT brigade having borrowing issues / the jitters there will be a massive over supply.

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