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House Price Armageddon This Weekend.


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68% drop in lending.

3.5 times income multiples only.

The average house price is now marked to market by the Banks and BSs.

All other prices have been adjusted therefore.

If you are a homeowner, you have just had your equity wiped out.

Instantly.

If it is stupid to lend in a rising bubble market, surely it's more stupid to lend to a burst bubble market?

Previously, I have predicted 50% falls (adjusted) in 4 years. I had never considered this mortgage provision withdrawal factor (they seemed so stupid on the way up didn't they?).

If they have decided to stick at 80% LTV, 3.5x etc. then the average price is fixed NOW.

The sheeople have lost their equity overnight. Negative equity instantly.

The advantaged for the banks is obvious. Losses are now quantifiable, write them down, tap the BoE for dosh and start again.

Managing the market down slowly will result in greater losses. So they've decided not to.

Strange how "marked to market" applies only to ordinary people's balance sheets.

Edited by SurgeonGeneral
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Guest DissipatedYouthIsValuable
68% drop in lending.

3.5 times income multiples only.

The average house price is now marked to market by the Banks and BSs.

All other prices have been adjusted therefore.

If you are a homeowner, you have just had your equity wiped out.

Instantly.

You've got cancer of the houseprice.

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Someone needs to tell that to those silly buyers who are still desperate to get "on the ladder". They are still making offers.

yes they must be extremely silly to make offers at the moment, but maybe some of these silly buyers will be rescued, when they apply for a mortgage and can't get it ?

These would be the lucky silly ones.

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You've got cancer of the houseprice.

Not any more. I went to see a doctor who used an advanced American technique to reduce the size of my houseprice. He thinks that if I keep up the treatment my houseprice will be indistinguishable from a normal houseprice within 6 months!

Edited by thecrashingisles
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You've got cancer of the houseprice.

I know it sounds dramatic. The 68% drop in lending in March will not feed through to the data for some months.

I was talking to a friend who was on the phone to a mortgage broker yesterday and mortgages were disappearing off the screen. As he went to another company, they were withdrawn on so on. This is with a £65k deposit-cash-on a 130k place.

The broker said, there are no mortgages available today, they've all been withdrawn.

The day to bury this story? The government in chaos etc. Bank holiday weekend? Having seen the Halifax data?

Nick

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No no no, you have it all wrong...

An odd bull (or odd ball even) argument:

- House prices rising, go ahead and splash out for a house before it becomes too expensive...

- Falling house prices, go ahead and splash out for all those excellent BMV deals... The market will recover and house prices will continue to double every ten years.

Do people really believe this bull argument? I fear that many do...

Just pop over to singing pig (stinking pig), you'll find a treasure trove of irrational exuberants, borrowing the phrase from Mr Alan Greenspan (not to be confused with the green giant who sells sweet corn.)

:blink:

Edited by werewolves
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I know it sounds dramatic. The 68% drop in lending in March will not feed through to the data for some months.

I was talking to a friend who was on the phone to a mortgage broker yesterday and mortgages were disappearing off the screen. As he went to another company, they were withdrawn on so on. This is with a £65k deposit-cash-on a 130k place.

The broker said, there are no mortgages available today, they've all been withdrawn.

The day to bury this story? The government in chaos etc. Bank holiday weekend? Having seen the Halifax data?

Nick

Your friend couldn't get a mortgage on a 130k property despite having a 65k deposit? Incredible.

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You've got cancer of the houseprice.

It's been cut out

No chemo reqd either, these cells wont be multiplying again for many decades

& Well done SG, you took the argument to its final (gulp) conclusion.

So that's bubble No1 sorted, what's next?

Credit Cards?

Big business re-financing?

Peak Oil?

Peak Wheat?

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Your friend couldn't get a mortgage on a 130k property despite having a 65k deposit? Incredible.

No need for a lender to pay brokers fees when the business is not really required is there?

............. but if you must have a mortgage now then us ask direct

...... & we'll tell you to save your deposit with us & next year you wont need a mortgage at all to buy the place.

Next

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I'm as bearish as the next man but I just don't buy this 'back to 3.5X income' stuff. All of the main banks are offering me about 4X joint income on their calculators, some without even asking re: size of deposit. I'm hoping that it will revert back to sensible multiples, but I don't think we got the evidence yet to say that it has.

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Yes. Incredible.

Rather than dole, he has an NHS job.

Two gulps...

A couple fo gulps from me too. That almost mirrors my situation. Have a deposit of that size and looking at paying no more than 130,000 for a house. Wage probably similar to NHS (£15k). Hopefully this time next year my deposit will be nearer 80k. (In case you're wondering I'm also self emplyed, but this does fluctuate, so don't include this in my wages.)

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I am a potential 'silly buyer' contemplating putting in an offer on a property....I know you might have a go! but It would be an offer 20% under and its likely it will be accepted, my mortgage will be less than 3.5 x salary and frankly I don't know how much longer I can stand living in a small rented house, with a 2 man business growing in my Dining/Laundry drying room, with my son running around making war noises, along with my dog chasing my 2 cats while I am on the phone to clients!!. all our circumstances are different an right now this larger house I viewed (that has room for an office) is an attractive option.

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I am a potential 'silly buyer' contemplating putting in an offer on a property....I know you might have a go! but It would be an offer 20% under and its likely it will be accepted, my mortgage will be less than 3.5 x salary and frankly I don't know how much longer I can stand living in a small rented house, with a 2 man business growing in my Dining/Laundry drying room, with my son running around making war noises, along with my dog chasing my 2 cats while I am on the phone to clients!!. all our circumstances are different an right now this larger house I viewed (that has room for an office) is an attractive option.

You don't need a new house, you need a proper office and a nanny!

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I'm as bearish as the next man but I just don't buy this 'back to 3.5X income' stuff. All of the main banks are offering me about 4X joint income on their calculators, some without even asking re: size of deposit. I'm hoping that it will revert back to sensible multiples, but I don't think we got the evidence yet to say that it has.

Early days I agree.

But if you were a bank what would you do? Be kind, manage the market down, giving mortgages for multiples of 5 and 6 times income, then take the defaulters through court with the cost accumulating and damage to your reputation, with losses amplified by this 6 month process before you get the property auctioned off, into a weakening market, with less and less credit around.

I think Brown's thrashing on Friday shows he is holed below the water, and they are cashing out of this game of managing things down over two or three years while inflation offsets the losses.

Best not lend. After a quick collapse in prices, safe lending will begin again for those left standing.

Close analysis of the repossession figures by David Owen, of Dresdner Kleinwort, shows that lenders are waiting for far fewer months before taking possession of struggling households' homes.

Edited by SurgeonGeneral
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I was in Kettering today shopping and as I was walking up the high street I could see a small crowd looking

in the W H Brown EA window. A bit curious as to what the interest was I went over and took a look.

I couldn't work out what they were all looking at, it was just he usual cards with houses for sale on, but then I noticed

they all had New Price, then I overheard someone say " Its been a while since I have seen prices like those".

Nobody went in though it was empty. :lol:

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I'm as bearish as the next man but I just don't buy this 'back to 3.5X income' stuff. All of the main banks are offering me about 4X joint income on their calculators, some without even asking re: size of deposit. I'm hoping that it will revert back to sensible multiples, but I don't think we got the evidence yet to say that it has.

Have you actualy applied for a mortgage? There is a big difference between a mortgage 'illustration' and a real mortgage offer!

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Your friend couldn't get a mortgage on a 130k property despite having a 65k deposit? Incredible.

If you think that is incredible check this out from the Times

Banks - previously happy to hand out self-certified loans to individuals with no proof of their earnings - have become ultra-cautious even with the creditworthy. In one case, a man borrowing just £200,000 to buy a £750,000 property had to show he had a substantial sum in spare savings.

Now that is a serious lack of confidence on the banks part if you ask me. I wonder if they are giving bonuses for the biggest mortgage refusal these days :blink:

Edited by FTBagain
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