Wednesday, December 5, 2007

Yessssss Yeah Hieeeepiiieeeeeee Ya Haaaa!!!!!!!!!!

House prices drop 1.1% but mortgage approvals PLUMMET says Halifax

House prices dropped by 1.1% in November according to the latest data from the Halifax while mortgage approvals have plummeted by a third compared to last year. The latest survey by the Halifax found that market activity in the housing market fell by 12% in November but mortgage approvals in the month were 32% lower than the same month last year.

Posted by confused76 @ 07:02 AM (1595 views)
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24 thoughts on “Yessssss Yeah Hieeeepiiieeeeeee Ya Haaaa!!!!!!!!!!

  • THAR SHE BLOWS!

    Ahaar.

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  • Yep, looks like a soft landing.

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  • We have reached a tipping point where affordability was stretched too far. When that happens everyone stops buying and simply refuses, or is not able to pay more. If prices drop say 2-3% in the next couple of months then stabilize we might see people coming back in! Prices have also fallen as a percentage of people have simply had to sell and with the credit crunch going on dropping the price is the only way. Now I know you all think I am an EA or VI or just a plain bull but I said a 10% fall would come last year before any of the so called experts had started saying it.

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  • ‘The UK economy is in sound shape. Strong market fundamentals, a structural
    housing supply shortage and pent-up demand from a large number of potential
    first-time buyers will support house prices, preventing a sustained and
    significant fall.’

    Phew and i thought for a minute there we were going to have a crash! – I’m so glad i read what this guru has to say about the market putting me straight. Now who was it he works for?? And where is David to assist me further in the bullsh*t – sorry i mean bullish perspective.

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  • David Smith's Sub Prime. . . says:

    There is no Sub Prime… There will be no housing crash..

    Love David Smith aged 13 and a quarter.

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  • C'mon Correction says:

    Mortgage lenders like Halifax and Nationwide that produce a recognised report that gets a lot of media coverage can control the market (as we know, they will always produce reports in a good light); now that the writing is on the wall for the UK housing market, they could ‘weed’ out the newer more exposed mortgage lenders i.e. northern rock by reporting heavy falls and becoming very bearish. I just wonder if the ‘big boys’ have had a strategy to push the market but not take too much risk – let the newer mortgage companies do that; then ride out a bad 5 years or so, watch northern rock etc go to the wall and start all over again when real stability and sustainability has returned to the housing market.

    Just a theory.

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  • C'mon Correction says:

    maddison – when prices start to fall, the mortgage lenders have to keep lowering the amount they lend. It will spiral downwards. Also only some fools will jump in before the full downward cycle has taken effect – this will be a number of years at least. don’t catch a falling knife etc,etc.

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  • Well done Maddison. But I think you are wrong – we have to correct not an upmove of small degree but an upmove of Supercycle degree. Still the fact that everyone refuses to believe that is exactly why it will happen. I dont want to sound rude but if thats what you believe fine, fill your boots when prices decline by 2 to 3 % or 10% (im not quite certain which you mean). For a while you might even be right. I for one think this is the 1st move in a NEW DOWNWARD TREND. Unlike the moves before which were merely corrections to an upward trend. But isnt that the beauty of such a discussion? I suppose that it will end up somewhere in the middle. I agree when prices fall its time to buy – the question is how far you think they will fall and how far i think are different. Maybe it will end up a la Steelers Wheel.

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  • Congratulations since Spanish H. Prices Crash (burbuja.info)

    Yessssss Yeah Hieeeepiiieeeeeee Ya Haaaa!!!!!!!!!!

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  • Halifax are telling everyone that prices are up 6.3% year on year – but take their average house price for Nov 07 and divide by their figure for Nov 06 and you get an increase of 3.7%

    – Do they think we’re too stupid to use a calculator??

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  • Maddison said: “If prices drop say 2-3% in the next couple of months then stabilize we might see people coming back in!”
    I agree that prices might drop 2 – 3% in the next few months – but why do you think they might then stabilise? Who will buy voluntarily when there is so much bearish sentiment around, next to no ‘cheap’ mortgages available for the sort of person without much brainpower and prices are falling. It will be more sensible to wait. After all, everyone is living somewhere at the moment. Very few people HAVE to buy. Prices will now have to fall to ‘ridiculously’ cheap levels before it would be worth trying to call the bottom of the market.
    I remember someone a while back who bought in Japan when prices had been coming down for 6 or 7 years. They thought they had a bargain at the time. They are still in negative equity now…

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  • george monsoon says:

    Lets take a trip down memory lane…..

    ======================
    January ’07

    Mr Joe Public – I need a £180,000 to buy a house
    Bank manager – How much do you earn?
    Mr Joe Public – combined income with my wife of 30k (about normal for the North West)
    Bank manager – Do you have any capital to use as a deposit
    Mr Joe Public – no, but I have 5 credit cards, 4 of which are maxed out and Fiat panda.
    Bank Manager – Here, have 200,000 and can I give you a cuddle?
    ======================

    and in the future………
    ======================
    January ’08

    Mr Joe Public – I need a £20,000 MEW to pay off my credit cards.
    Bank manager – What do you have in the way of capital?
    Mr Joe Public – I have had my current house valued at 80,000 more than I paid for it in 2002
    Bank Manager – F*** off and close the door on your way out, don’t you know there is a depression?
    ======================

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  • European-bear says:

    “A mixed pattern of monthly price rises and falls is a typical feature of a more subdued housing market. For example, there were six monthly falls and six monthly increases between July 2004 and June 2005 as the market slowed in response to a series of interest rate rises during 2004.”

    So three months in a row of falls are a mixed pattern of monthly rises and falls?

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  • little professor says:

    LOL george 🙂

    My dad told me of how he got his first mortgage – he had an individual appointment with the local branch bank manager, he only needed 3x salary and had a good deposit, but the manager wanted to know his life history and assess his character and personality before he would give him the mortgage.

    He got it in the end because the manager used his experience to assess him as a good credit risk.

    Now they just throw credit at anyone who applies.

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  • little professor says:

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  • Prices might stablize when the Government/BOE starts to panic and interest rates are cut next year. I am afraid I am not convinced that the credit squeeze will last forever and mortgage rates will always be higher despite what the BOE does. Yes I am sure they will tighten up the criteria a bit but I dont think it will completely unhinge the market.

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  • voiceofreason says:

    And on Radio 5 Live, Mickey Clark said that UK mortgage banks will have a £90bn shortfall next year because their current business models don’t work anymore in the credit crunch. And that no-one forecast this.

    Well, the bubble bloggers on this site did !!!! If the archive was working (v slow), I would start digging some comments out for him.

    Maybe his show should be called “Wake Up to Reality” or “Wake Up and Smell the Coffee” .. ?

    Little Prof @8: Mickey did mention that scenario, how in the 70s when he took out a £9Kmortgage, he had to go on a waiting list.

    On the Halifax results. The last 3 months annualised gives -9.6%, and accelerating.

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  • Maddison – even if the mortgage market frees up early next year and people can still borrow silly amounts of money – why would they choose to buy something at that point when it will be cheaper the next month? And so on…

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  • little professor says:

    Uncle Tom: “Halifax are telling everyone that prices are up 6.3% year on year – but take their average house price for Nov 07 and divide by their figure for Nov 06 and you get an increase of 3.7%- Do they think we’re too stupid to use a calculator??”

    From December 2002 onwards the ‘annual change’ numbers are the quarterly year-on-year figures. These figures provide a better
    picture of underlying trends compared to a monthly year-on-year number as it smooths out any short-term fluctuations.

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  • Everyone keeps going on about silly money borrowing. It is not like buying a sofa with 36 months interest free credit. These mortgages have to serviced by income. In the US things were very different with interest rates at 1% rising to 5% so a 5 fold increase, 500%! Fixed rates coming to end from 4.5% to 6% is hardly catastophic. In the US people have seen their mortgages payments double or triple. Personally it beggars belief that the US banks didnt see this coming. I had not paid much attention to the US market and had no idea what was happening.

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  • voiceofreason says:

    maddison, the US banks did see it coming. But the players are incentivised on a 12 month bonus basis.
    So long as the blow-up was 2 years away, they didn’t care.
    Also the banks sold on the “toxic waste” as the syndicated loans are known, to hapless investors. Making yet more lovely comissions..
    Goldman even shorted the products they had sold to the fools.
    (They are also probably investing in the legal companies that will make billions defending them …)

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  • To add to the points made by G Monsoon & Little professor, there has been a steady rise in lenders appointing valuers to conduct “drive by” valuations – in simple terms the property looks from the outside to be in a reasonable state of repair, actually exists and has a roof on it. This has subsequently developed into lenders using “desk top” or AVM’s (Automated valuations) – basically a computer system to analyse like for like sales in a post coded area and verify a value for lending purposes. So just as responsible lending in the form of the good old style Bank or BS Manager has disappeared so has (to a certain extent) the traditional property valuation.

    The point I’m alluding to here is that lenders could face a double whammy i.e. taking on customers who in the past definitely would not have been awarded a mortgage coupled with an inferior valuation at outset to demonstrate that the property is adequate security to lend against.

    To demonstrate my point here is a recent genuine case – Client contacts Mortgage Broker to organise a mortgage on a property – valuation comes back stating property is subsiding and is totally unsuitable as security for lending purposes. Broker moves mortgage to another mortgage company who he knows will use an automated valuation (AVM) and hey presto the offer letter is issued and the mortgage completes in 6 weeks. The lender having diluted the valuation process has little or no security as a result and more to the point doesn’t know it!

    There are numerous adverse factors hidden from the public at large and as a result the impending downturn in the UK housing market is going to be a lot worse than the last one.

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  • Another thing that might cause problems is the shortening of leases on victorian conversions that were done in the 80’s. These are typically less than 80 years now and lenders might get nervous. I suspect this will hit so called up and coming areas in major cities. These funnily enough were up and coming in the 80’s as well!

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  • “Fixed rates coming to end from 4.5% to 6% is hardly catastophic”

    … and loan to value > 90% and loan to pretax salary 7x … and a score of immigrant BTLetters just returning keys and jumping on a plane back home

    Maddison, this is the real sub-prime armageddon… the US was a Walt Disney video game by comparison

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