Monday, June 13, 2011

Re-hashed news but welcome nonetheless.

Taxpayer-funded Lloyds to suffer most if house prices drop

'Investment bank Morgan Stanley is expecting UK house prices to drop 10% by the end of next year.' That is all.

Posted by sibley's b'stard child @ 11:35 AM (1709 views)
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4 thoughts on “Re-hashed news but welcome nonetheless.

  • Note that they expect a 10% drop from Q4 2010 to Q4 2011, add on any falls from now till end of Q4 this year – I reckon 15% wouldn’t be out of the question. Every little helps.

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  • When someone owns the home they live in, negative equity (though depressing) does not automatically provoke them into throwing in the towel. Few, I think, would be tempted to abandon ship before their NE reached 20%, unless their finances were up the creek in other respects as well.

    The hazard, for the likes of Lloyds, is the BTL market. Few BTL portfolio players (I suspect) would sit out a market correction once their net worth was six figures negative..

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  • ut,
    The BTL crowd usually have a primary home that the bank can repossess if need be. Landlords won’t fight to keep their lettings, but they’ll fight to keep their main home, and that might mean working extra hours (in their day job) to afford repayments on their BTL portfolio.

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  • mark wadsworth says:

    Our personal break even point is about two per cent nominal price falls per annum to end up better off by staying renting.

    Sure, our cash loses real value because of inflation, but the nominal amount is fixed (we use the interest to subsidise our rent) and it is always best to compare like with like.

    D, if people own more than two or three BTLs, it will be one heck of a fight to earn the extra money to subsidise their tenants on a highly leveraged ‘portfolio’ so best of luck with that

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