Wednesday, Jul 19, 2006

HPC.co.uk in the news again

BBC News: How high can house prices go?

...But there are still some pessimists out there. Just because a crash hasn't happened yet doesn't mean that it won't, says Reinhard Schu, spokesman for Housepricecrash.co.uk.

Posted by webmaster @ 02:05 PM (688 views)
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9 Comments

1. Zag said...

Excellent comment there Reinhard! Finally HPC voice is heard in the main stream media.

We should be doing more of this.

Wednesday, July 19, 2006 02:17PM Report Comment
 

2. uncle tom said...

This parental guarantor business is very nasty - many of those parents (probably most of them) still have substantial mortgages of their own to pay.

When the market falls over, whole families will be facing financial ruin - eventually, the whole notion of guarantees might end up being considered as a form of mis-selling, with the guarantees voided by statute - I certainly can't see the lenders forcing many parents to cough without a major outcry...

Wednesday, July 19, 2006 02:48PM Report Comment
 

3. Retiredbanker said...

In my experience people are usually happy to give financial guarantees, which they blithely assume they
will never have to honour.

When the debtor defaults and the guarantor is called upon to meet their obligation, the astonishment, utter
dismay, and the attempts to wriggle-out of the liability, are quite something to behold.

Wednesday, July 19, 2006 03:40PM Report Comment
 

4. Hoi Polloi said...

Eventually, it all reverts to the mean. I'm paid reasonable well but I've refused to go out and get a morgage to buy a house that I want or settle for a low quality house because the prices will eventually revert to the mean. May not be today or tomorrow or even next year but it just means when there's a hiccup, more lenders are likely to fail. If parent and well as child are all leveraged to the hilt, who'll stop financial ruin from wrecking the whole UK economy?

Wednesday, July 19, 2006 03:46PM Report Comment
 

5. bidin'matime said...

I dont agree, Tom. Its one thing for a guarantor to claim that they didnt know what they were doing and just trusted the borrower not to default, but I cant see parents being able to claim this about their offspring.

In any case, following Lloyds Bank Limited v. Bundy [Court of Appeal 1974], the banks generally advise guarantors to take independent legal advice before signing, so this would substantially undermine any miss-selling claims. I suspect that any new products aimed at this market will bring Mum & Dad very much on board, so they cant cry foul.

In addition, I suspect that many are funded by means of Mum & Dad remortgaging to get the deposit and keep the offspring mortgage requirement down to a level that they can be offered and one that gets them the best deal. So no guarantor at all.

Wednesday, July 19, 2006 04:38PM Report Comment
 

6. uncle tom said...

Bidin'

If the numbers were not that high, I would agree with you, but we're getting to the point where most genuine FTB's (setting aside the second time round brigade who get included in the stats) are getting this type of support.

It's got so big, it's going to be very difficult for the lenders to exercise their rights. Bear in mind that a lot of influential people - MP's, broadcasters and columnists - will have signed these guarantees for their kids - and won't be slow to cry foul when the party ends...

Wednesday, July 19, 2006 04:57PM Report Comment
 

7. The Bald Man said...

This housing bubble is looking more and more like the dot-com boom. Asset prices high with low or non-existent yields. A lot of people geared up to get into it. Investors got burned then I expect the same will happen here soon.

Wednesday, July 19, 2006 06:02PM Report Comment
 

8. Bubbles. . . . said...

Well done Hoi Polli...I agree with you..People are going mad and they will be assured of financial distruction I could not believe when I went for my FTB mortgage and said what will happen when a 1% rise happens and they re did all the calculations on my mortgage and it almost doubled!!! I earn a good income but will not support these high prices and as for asking my parents to guarantee my payments huh was anyone round for them to do this??? No they did it all themselves..I got it all handed on a plate for me but thrown the plate away others have got bigger plates and want them filled by their parents as if to say you have too help us we will never get on the property market without YOUR help...(major guilt trip for them)What if they do and then prices go down negative equity etc...Who will get the blame? The parents for being stupid enough to support a completely unsustainable boom, parents loose out as they dont have the income to pay their mortgage....When the bubble bursts there is a lot of people that are going to fall into extreme poverty..

Wednesday, July 19, 2006 07:43PM Report Comment
 

9. Ganesh said...

A lot of parents pressurise their children to get onto the property ladder saying "house prices always go up".
Coming from the parents, who always knew best for their children and also the children are not educated enough
in economics to question the wisdom of the parents, a lot of first time buyers make the mistake of taking too
huge a mortgage to service. Even highly educated people like doctors, banker, accountants, etc. who are very good
at looking at others problems very objectively, when it comes to their own life / problems, they can not apply the
same objectivity to arrive at a right conclusion.

Upon seeing different deals available and their too many options designed to confuse the customer, the
poor first time buyers end up taking a 6 or 8 times salary mortgage. Some of them also learn that their friends
are helped by their parents to get onto the property ladder, and they ask their own parents to help them get onto
the ladder.

Now the pressurising arguments the parents used can be used by the children to get the parents to
part with the money to their children's mortgage, either in the form of withdrawing savings/pensions etc. or
borrowing or MEWing their own property to get the required deposit for their children.

Thursday, July 20, 2006 11:22AM Report Comment
 

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