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Low Deposit Mortgages Evaporate


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I think LTV ratios will have more bearing on how fast and far house prices will fall than interest rates.

http://news.bbc.co.uk/1/hi/business/7729291.stm

The the muppets have scored a own goal by imposing their will on retail banks interest rate policy.Some of the current indebted homeowners will have lower repayments and Brown and co have their headlines of being tough on th banks, but because of their action they will see the value of houses fall faster and lower as a result of their meddling.

The part nationalised banks having been forced by the government to pass on lower interest rates are now making much lower margins on their existing customers.The banks need wider margins and lower risk to account for losses from the current recession as well as recapalise and pay their dues to the FSCS scheme.

As lower interest rates are being forced onto the lenders they are taking the only other option left open to them which some have predicted on here.They need to reduce the risk to match the smaller margins imposed by reducing LTV and I am sure we will see in due course lending multiples will shrink even further. Other banks will follow suit to avoid the business.

As a nation of debtors house prices will have to fall much further than expected so that prices will match the much higher deposit levels demanded and wages earnt. If the government continues to brow beat lenders to offering artifically low rates it will force lenders further down this path crashing the market harder and futher then letting the lenders charge properly for risk at higher LTV.

It will take a considerable amount of time for there to be suffcient numbers who have a deposit to enter the market to stablise prices.

We will see transaction levels worsen and stay low for many years to come and I thin we will see lower prices than alot of us thought possible.

If you looking to buy then wait and be patient. Only when you see LTVS returning back to normal should you consider buying again.

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I think LTV ratios will have more bearing on how fast and far house prices will fall than interest rates.

http://news.bbc.co.uk/1/hi/business/7729291.stm

The the muppets have scored a own goal by imposing their will on retail banks interest rate policy.Some of the current indebted homeowners will have lower repayments and Brown and co have their headlines of being tough on th banks, but because of their action they will see the value of houses fall faster and lower as a result of their meddling.

The part nationalised banks having been forced by the government to pass on lower interest rates are now making much lower margins on their existing customers.The banks need wider margins and lower risk to account for losses from the current recession as well as recapalise and pay their dues to the FSCS scheme.

As lower interest rates are being forced onto the lenders they are taking the only other option left open to them which some have predicted on here.They need to reduce the risk to match the smaller margins imposed by reducing LTV and I am sure we will see in due course lending multiples will shrink even further. Other banks will follow suit to avoid the business.

As a nation of debtors house prices will have to fall much further than expected so that prices will match the much higher deposit levels demanded and wages earnt. If the government continues to brow beat lenders to offering artifically low rates it will force lenders further down this path crashing the market harder and futher then letting the lenders charge properly for risk at higher LTV.

It will take a considerable amount of time for there to be suffcient numbers who have a deposit to enter the market to stablise prices.

We will see transaction levels worsen and stay low for many years to come and I thin we will see lower prices than alot of us thought possible.

If you looking to buy then wait and be patient. Only when you see LTVS returning back to normal should you consider buying again.

Very good observation. I disagree in one slight aspect. It's deliberate, not a result of meddling. The government, probably as much as all of us here, want to see it flushed out of the system as quickly as possible.

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I am not so sure.

It would be best for the country if he was carry through the right policies to rebalance the economy which would cause a sharp fall but this would mean making unpopular policy.

I think that Brown would sell his mother if it meant winning the next election.

The rating bounce after the bail out of the banks will just spur the maniac on to more damaging policies to court voters which are on the whole indebted,losing their job or seeing their asset values crash.

Edited by equitystasher
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I am not so sure.

It would be best for the country if he was carry through the right policies to rebalance the economy which would cause a sharp fall but this would mean making unpopular policy.

I think that Brown would sell his mother if it meant winning the next election.

The rating bounce after the bail out of the banks will just spur the maniac on to more damaging policies to court voters which are on the whole indebted,losing their job or seeing their asset values crash.

well his trying his best to sell his wife, these days you see her a lot more in the news. so who knows maybe he might get a few quid for the mum and wife as a job lot. ok any offers :lol::unsure:

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Very good observation. I disagree in one slight aspect. It's deliberate, not a result of meddling. The government, probably as much as all of us here, want to see it flushed out of the system as quickly as possible.

Politicians are nowhere near clever or sensible enough to do that, and especially not Labour politicians.

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This is the real reason prices will continue to fall. As long as LTV's remain low you can be sure that prices will fall cos most people simply don't save. Once prices stabilise then the banks will loosen their lending a bit. So it goes. Perhaps that's why it's easier to see the bottom than the top.

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Very good observation. I disagree in one slight aspect. It's deliberate, not a result of meddling. The government, probably as much as all of us here, want to see it flushed out of the system as quickly as possible.

It is an interesting sort of squeeze that is occurring.

As I see it there are to ways to cleanse the system:

1) The targeted antibiotic route - higher LTV requirements, leaving the bad borrowers unable to re mortgage and stuck on higher rates until they go pop, but not harming the good borrowers.

2) The cleansing flames of damnation - just burn all the m***** ******* by raising interest rates to 8%.

I can see 1 being the case pre-election. But if Sterling stays weak or gets weaker the BoE will need to jack rates up.

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Politicians are nowhere near clever or sensible enough to do that, and especially not Labour politicians.

I think that the government are a bit better informed than the average man on the street, but a tad behind the average HPCer. They realised we were in trouble some time last year. This was before it was common knowledge in the media.

I know it doesn't appeal to conspiracy theorists, but to my mind the government behaves exactly like a bunch of randomly selected slightly above average intelligence individuals with access to good but not perfect information would. I don't see any sign of them being idiots, villains, geniuses or Machievelian plotters.

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I think that the government are a bit better informed than the average man on the street, but a tad behind the average HPCer. They realised we were in trouble some time last year. This was before it was common knowledge in the media.

I know it doesn't appeal to conspiracy theorists, but to my mind the government behaves exactly like a bunch of randomly selected slightly above average intelligence individuals with access to good but not perfect information would. I don't see any sign of them being idiots, villains, geniuses or Machievelian plotters.

This is spot on. There is rarely conspiracy, just different degrees of ****-up and failure to act.

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Politicians are nowhere near clever or sensible enough to do that, and especially not Labour politicians.

The main thing that Labour have done wrong is not to reverse years of Thatcherite errors, but rather run with them.

Don't get me wrong, i'm no fan of the current government. As the famous anarchist sentiment goes. "It doesn't matter whom you vote for, the government always wins."

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to my mind the government behaves exactly like a bunch of randomly selected slightly above average intelligence individuals

Yes. Which still makes them thick.

What smart person would voluntarily do a public sector job in a large institution where you are publicly scrutinised?

They have ego problems, are mentally ill, thick or naieve. None of these traits are any use to the people. The whole system is flawed. You better hope there's a shadow government behind the scenes, or we are all in serious trouble.

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Teletext best mortgage listing have averaged top 5 and bottom 6 per cents for a long time.

Just recently they are early all 6 and some 7 percents for the same 75%-90% LTV

Except for a couple at around 4 per cent for 60% LTV ... alright for established home owners but won;t encourage upsixing or keep the equity release brigade happy.

I expect sharp increase in forced sales (unfortunately) and even faster price drops (fortunately).

Once prices have consolidated the 25% drop (according to Rightmove) there will not be much market for less than 75% LTV mortgages.

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It's leverage in action.

100% mortgage at up to 5 times average salary means a house price of roughly 150k

75% mortgage means a house price roughly 4x average savings, regardless of multiple offered.

But as house prices fall the amount that 75% equates to falls too, so it is an ever decreasing average salary amount. And the more the banks reduce the LTV's the less it becomes. Until the banks feel that the bottom has been reached. They know we are looking at 40% drops minimum from the peak.

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