lozgti

Can anyone actually really say hand on heart there is not a problem with it now?

House prices post record fall | Personal Finance | Reuters

Nearly there (the edge of the drop)

SiPie

Not really a problem as long as you aren't in a great rush to sell and mortgaged to the hilt or above

Henrik

iTrader: (5)

I don't think there's any point in having a discussion about it anymore

It's just a matter of how many 10's of percent they fall now, IMO.

PeteBrant

As SiPie said, it's only a problem if you are plannign to move and have bought in the last few years. Or if you remortgaged within the last year and are coming to the end of your discount period and need to remortgage.

If you dont need to remortgage, or, don't need to sell, then you arent affected.

That said, people are so utterly conditioned to value thier lives based on the value of thier house, that there will be millions of people ****ting themselves today.

Henrik

iTrader: (5)

Pete, that's fair enough about not having to sell etc etc, but many people who haven't MEW'ed over the last years will be coming off fixed rate mortgages as well, and probably have to settle for higher rates than their previous fixes -> it will cost more money either way.

The mortgage outstanding might still be 200k for a 300k house bought before the last couple of years (depending on how you define "couple"), so coming off a fixed rate and having one say 1% higher will hurt quite a bit. This might force some owners to sell to downsize (or rent), which IMO will make prices fall further.

SPEN555

Or if you have bought a property to make money out of it in the last 12 months :

PeteBrant

It entirely depends really - I am not sure there will be many people at the absolute limit of thier repayment ability with a discount rate mortgage. People adjust, they manage. If they have to find an extra £50 a month they usually do.

And remember, the dicount rates are still out there, the only people unable to remortgage will be those that have remortgaged in the last year. And since redmeption penalty periods usually last 2 years, that means no one is really affected much in this respect.


It will be the bottom up affect that continues the slow down. FTBs not buying, and so on up the chain.

Plus of course those people that were going to "upgrade" a few months ago and have now decided to stay put.

PeteBrant

Well, its still possible, but you would actually have to do some work, rather than just sit an let it appreciate.

All of the sudden, programmes like Property Ladder are actually interesting because not any ****wit can now make money off of property - You actually have to know what you are doing.

davegtt

Get real.. 1% increase on 200k you'd be looking at a smidge over £100 a month extra to fork out. OK I know other things have increased with the cost of living now but £100 is not going to force people to downsize or rent. They'll sell that 10k car and buy something cheaper to run. Cancel the £80 a month Broadband, TV and Phone package, drop the use of Mobile Phones etc. Loads of ways to save money before having to consider moving home

Some people really do still live ina major hope of everyone falling into trouble so they can get their own lives together.

Henrik

iTrader: (5)

You keep saying that, but at some point people run out of money and can't afford to pay their bills.

This may come as a surprise to you, but not everyone has broadband, cable tv or expensive mobile phone contracts. Even if they do, they might not be able to cancel them due to being locked into a long contract.

I agree that 100 on its own probably isn't going to force people to downsize, but add to that increase in petrol, increase in gas prices, increase in electricity, increase in food bills (my weekly shop is 20 quid more expensive than last year!) and it soon adds up to big money.

PeteBrant

There a sfew options Henrik - You could switch to Interest only for a couple of years to ride it out. Speak to the mortgage companies etc.

Actually having to sell your home or a repossesion is a last resort - Of course, it does happen, but the interest rate is not particularly high, so we arent going to see 91 levels.

If you borrowed to the absolute hilt, on an interest only, figuring you could afford the payments at the introductory rate, and are coming to the end of that deal, then, you might be in trouble.

Henrik

iTrader: (5)

The amount borrowed is so much higher that a little percentage increase makes a comparably big difference to the monthly payment.

Edit: Also, say you borrowed so that you had a couple of hundred quid spare in 2006. You're now coming off your fixed rate mortgage and need to re-fix. However, increases in other bills have eaten up a large part of your couple of hundred spare quid, so now you find yourself really stretched.

P1-Brad

I don't need to sell, and have an affordable (and very competitive) 5 year fixed term mortgage ... but the falls still make pretty depressing reading!

After all, I think it's fair to say that most homeowners would like to think that their houses are fairly shrewd long(ish) term investments, as well as somewhere to live!!

MattW

Why is it a problem if you've moved in the last few years, we moved a year ago, bigger place and can honestly say if it drops i couldn't give a stuff.

davegtt

Also getting a house mate in helps with money. Personally couldnt justify running a car so sold them and cycle everywhere, save a fortune in petrol every week and have a house mate in one of the spare rooms gives me a few hundred a month extra too.

OK with a family a housemate isnt exactly practicle but people who want to keep their property can also rent it out until they are in a better position to move back in etc. As Pete says most people will do everything they can before having to give up their home.

PeteBrant

Its a problem if you need to remortgage, to, say, get a new discount deal. Because there is potential that the mortgage company wont lend you the amount you need to borrow - On account of the property not being worth what it was 12months ago.

Of course this will depend of personal circumstances

Paul3446

Quote:
"I don't need to sell, and have an affordable (and very competitive) 5 year fixed term mortgage ... but the falls still make pretty depressing reading!"


Why? I just don't get this mindset at all? The only way high house prices can be good is if you are planning on selling and not buying another house, or are going to downsize? If you are not doing either of these things you should be pleased!

Look at it this way, if you have a £200k house and would like a £400k house, you need to find an extra £200k. If house prices halve in value you will only need to find an extra £100k to get your dream house.

MattW

Ah yes of course. No issue here

cookstar

iTrader: (6)

Fingers crossed for 30% drop

PeteBrant

You'll probably get near to that in London/South east - But not Nation wide.

cookstar

iTrader: (6)

Suits me.

what would scooby do

30% drop is looking likely !

cookstar

iTrader: (6)

The exact same house I was looking at earlier on in the year, has now had over £20k knocked off its asking price, the poor sod of an estate agent keeps sending me the details.

.pslewis. .

Cast Iron certainty!!

And fantastic news IMO ...... I am looking for a property by the coast, have watched the recent falls and auction properties.

Could even buy that house I couldn't afford to upgrade to 3 years ago

It's great news for most people.

sti-04!!

4 bed detached houses in one of the areas near me have dropped 30k+ since November.

Although the new builds arent dropping at the moment i am taking it they will though.

PetesDad

New build prices only drop when the developer has exhausted all other means of disguising a drop in value ....... 100% P/Ex values, Mortgage Free for 5 years, Free Carpets and appliances, Free landscaping ... etc. etc.

cookstar

iTrader: (6)

I have noticed more adverts for "deposit matching" etc on new builds, they seem to be all you hear on the radio by me now.

Mind you there are a LOT of new build developments either being built or waiting to be sold round here.

lozgti

Thought a lot of the big names said they have stopped building?

NACRO

You'd care if interest rates rose by 2 percent and you lost your job as a result of the recession/depression that will be made worse by falling house prices.

My hope is for an economic crisis that brings the UK/US/Europe to it's knees and ushers in a decade of austerity and hardship.

Henrik

iTrader: (5)

I think you're far too optimistic there. A generation ruined, at least.