Monday, January 21, 2008

This is shaping up as a housing armageddon — Will Gordon bail out homeowners the way he did with NR?

Half a million homeowners miss mortgage payments

"Cash-strapped borrowers are struggling to pay off their home loans" Ooooops! "Half a million cash-strapped homeowners have missed a monthly repayment on their mortgage in the past six months. Despite the Bank of England’s quarter point cut in interest rates in December, many homeowners are still struggling. Some mortgage rates have in fact increased since December’s cut. The average fixed-rate deal has risen from 7.30 to 7.31%". Folks, do you remember? just 18 months ago davidsmut and other pundits said we entered a 'new era' of never-rising interest rates, between 3 and 5% forever and ever and ever. MWAU HAHA HHAH HAAHA HAHA HAHAHHAH

Posted by confused76 @ 08:18 PM (1201 views)
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11 thoughts on “This is shaping up as a housing armageddon — Will Gordon bail out homeowners the way he did with NR?

  • Boom

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  • What chance have the car-loans and credit card bills got of being paid now?

    You will find that most of these people took a good hardcore holiday to Antigua or South Africa. Keeping up appearances………

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  • If you canot pay your mortgage, will you be paying your council tax?

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  • There is no doubt in my mind now it’s time for the smug new middle classes and property millionaires to get their just dessert. I feel for those who bought at the top of the market out of sheer desperation, I know because I felt the pressure from society and within my family enviroment to jump on the gravy train before it had gone for good. After years of searching the news blog on this excellent site daily, close to lose all hopes of a rightful correction, it’s somewhat comforting to know we have been right all along.

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  • @magnifico

    I hope you are right but it hasn’t happened yet – and it might not happen in quite the way we expect.

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  • Quite right magnifico.

    The only people who will suffer are those that were speculating in house prices when they shouldn’t have. Those that bought a home that they are comfortable living in should not be concerned.

    What really frustrates me is the naive greedy self-assured idiocy of the present “equity in my house” generation. They don’t pay attention to disposable incomes being eroded away so long as they can pretend to have made £50,000 on paper.

    It’s high time the invisible hand started dishing out some serious smacks to those that have created this asset bubble which has caused social havoc amonst the less well off.

    Long may it continue.

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  • the northerner living in oz says:

    4. magnifico said…
    There is no doubt in my mind now it’s time for the smug new middle classes and property millionaires to get their just dessert. I feel for those who bought at the top of the market out of sheer desperation, I know because I felt the pressure from society and within my family enviroment to jump on the gravy train before it had gone for good. After years of searching the news blog on this excellent site daily, close to lose all hopes of a rightful correction, it’s somewhat comforting to know we have been right all along.

    I was in a similar sitation in the late 1980,s priced out of the market and had given up hope of ever buying a house
    then after the house market correction of the early 1990’s i managed buy my first property.

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  • @magnifico. I’m not sure anyone knows quite what to expect. Truth is all there is so many possible outcomes. My feeling is that it will be about a year from now before the true impact is felt. Employment is the big unknown,only a fool would try to predict the full scale of inevitable falling house prices in the general economy. My guess is that the pound will be sacrificed and we’ll join the Euro. But then again, I don’t know sh*te.

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  • crash bandicoot says:

    The banks are in some real trouble with this. They have lent people more than they can afford to pay back, so now they are struggling to pay it back. What do the banks do? Reposses the house and sell it to someone else? This implies lending the new owner more can they can afford to pay back too. IVA or bankruptcy? Quite a lot of money down the drain. Find some way to keep the owner hanging on? Probably so, expect the banks to start renegotiating terms – extended durations together with proper credit checks and credit card lockdowns.

    You’ve lived the dream, now try the reality for size.

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  • As well as the half million people missing payments, there are many who are using a credit card to make mortgage payments:

    http://www.thriftyscot.co.uk/Mortgages/102007/paying-your-mortgage-with-a-credit-card.html
    http://money.guardian.co.uk/news_/story/0,,2192885,00.html

    To me, this implies that the problem described in the Times article is actually *worse* than it seems – some people will be paying off their credit card in full each month but many will actually be borrowing money at usurious credit card rates to try and stay afloat. Not good.

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  • when the average median salary in london is 27k sterling per annum, how can anyone afford to buy a house when a one bedroom apartment in a decent area is priced at one million pounds sterling – even with two persons working this is out of sight!!! if the persons at the low end are getting hit with credit card rates to pay their mortgages, then once the bottom of the pyramid is pulled out just watch the rest come tumbling down – this will happen as they reach their credit limits. Problem is that most of those recently entering the housing and stock markets have never experienced a falling market and are relying on capital gains from their homes and investments – the current stock market conditions have decimated gains in the last week, the housing market cannot be far behind – take a look at the USA.

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