Mortgage Recomendations...

[davidjpowell]

Rubbish.

Prices were boosted by two factors - demand and what people were prepared to pay.

If people had stopped conniving with the banks to 'break the rules' then the prices wouldn't have been boosted.

Instead an house price arms race took place. People felt they couldn't afford not to be on the ladder and the finance sector backed them to up the ante.

It wasn't helped by increased demand from other sources (buy to let and immigration) - which only needed a small % influence to move prices dramatically.

What was happening was blindingly obvious.

But instead of the financial sector and its customers reacting to the bubble by restricting risks the idiots blinded themselves to the obvious and started offerig 125% mortgages.

Some sort of enforcement of a reasonable multiple and a minimum deposit would have held things back to more reasonable levels.

Easy to say now - no-one was asking for this them, and the typical conversation in the pub was over how much the house is worth now.

Buy to Let demand only came about because of Capital Value increases - the yields are traditionally low, unless you include this growth. Some people have a slightly 'bigger' portfolio because they were banking on the growth that is no longer there.

I'm not actually sure where you disagree. Sure the banks were enablers in this, and did very nicely out of it too, but the effect is that the middle aged have typically priced their children out of the market.

I was valuing in 2007 as a Consultant for a large group and saw many of these 125% applications. Not only was the 125% foolish, but their idea of values was ridiculous.

Despite this lenders frequently did put the screws on valuers not to downvalue. I will remember one memo, which was very much stop down valuing - we know who you are... and in the next paragraph talked about reaching the top of the market and making valuations defensible.

 

[Dieselman]

Would you be making it easy for people with dubious declared earnings to re-mortgage on houses that have gone down 4.6% in a years.

House prices falling is one of the best things that can happen to this Country, I love it even though I am losing money.

When house prices are falling it makes it hard for people to re-mortgage and spend that money on luxury items like cars.

 

[Dryce]

but the effect is that the middle aged have typically priced their children out of the market.

This was the bit that deserved the "rubbish".

The prices were stoked up from the bottom by buyers and not sellers.

Competition from buyers bankrolled by the finance sector was what put prices up.

It doesn't really matter who the buyers were - but a fair number of them were new entrants to the markets - as long as they were willing to pay over the odds. That then released sellers going on to buy to do the same thing further up the market. And so on.

Despite this lenders frequently did put the screws on valuers not to downvalue. I will remember one memo, which was very much stop down valuing - we know who you are... and in the next paragraph talked about reaching the top of the market and making valuations defensible.

Arms peddlers just want a bigger war to feed.

 

[davidjpowell]

This was the bit that deserved the "rubbish".

The prices were stoked up from the bottom by buyers and not sellers.

Competition from buyers bankrolled by the finance sector was what put prices up.

It doesn't really matter who the buyers were - but a fair number of them were new entrants to the markets - as long as they were willing to pay over the odds. That then released sellers going on to buy to do the same thing further up the market. And so on.

Arms peddlers just want a bigger war to feed.

Of the valuations i saw not many were ftb. Lots of people I saw were refinancing and lots of buy to let's.

We were always given an 'estimated value', an interesting question was always who had set this value, particularly when it could be termed optimistic. Invariably it would be the broker.

FTB were effectively trying to play catchup. Apartments for instance are classic ftb real estate, but suddenly they were competing with every man and their monkey buying off plan.

 

[JOB-BLACK-RAT]

I'm hunting about at the moment too as mine is up soon, Santandare seem a good bet, they just want my soul and first born!

 

[Charles Morgan]

I'm hunting about at the moment too as mine is up soon, Santandare seem a good bet, they just want my soul and first born!

Barking up the wrong trees there then.....

 

[Dieselman]

Now we are talking about house prices and mortgages, etc. how low do people think the house prices will go?

 

[Deleted member 6183]

I'll kick off with 20% off peak (2007) prices.

Allowing for a new build with no improving/extension of any value.

Return to peak around 2016 to 2018

 

[davidjpowell]

Now we are talking about house prices and mortgages, etc. how low do people think the house prices will go?

That's the million dollar question.

When we start to see supply between 75k and 100k. Some markets will be hit harder than others. Far too many apartments were built for BTL Market that no longer exists. Over supply will hit harder.

Good sized family homes will be hit less hard. Ultimately the Market is not functioning properly at present. Unless the stupid lending comes back I can see 25% off peak values.

Lenders will have to introduce new types of product to keep the Market moving, allowing people to port negative equity I thin

 

[Dieselman]

I'll kick off with 20% off peak (2007) prices.

Allowing for a new build with no improving/extension of any value.

Return to peak around 2016 to 2018

It will take longer than that. Last time peak was 1988 dropping to lowest in 1993 and slowly, slowly rising until 1997 then gradually accelerating for ten years.
We aren't even anywhere near the bottom yet.
We are already 20% off 2007 peak but falling quicker this month.

 

[Deleted member 6183]

It will take longer than that. Last time peak was 1988 dropping to lowest in 1993 and slowly, slowly rising until 1997 then gradually accelerating for ten years.
We aren't even anywhere near the bottom yet.
We are already 20% off 2007 peak but falling quicker this month.

Average 2007 about £180K
Current about £166k
So average £144k would see my 20%

Agree further drops, shallow ones while interest rates are low. Should rates rise (when) we will see average in the region of £144k.

Rises will be dependent on rates also.

My predictions.

 

[Dieselman]

Average Halifax index price in 2007, £200k, now £160k. That's 20% and still going down.

 

[Deleted member 6183]

Average Halifax index price in 2007, £200k, now £160k. That's 20% and still going down.

I was using Nationwide.

 

[wemorgan]

I was looking to buy since 2007 and only just bought this year. For the same location (W.Midlands) and type of house (small 3 bed countryside house), I'd say that prices have fallen 10% over that period. We bought the house for the same amount as the previous owners paid in 2005.....not sure how that fits in to the statistics.

I predict prices for similar houses to be stagnant for the next 5 years or so.

I've no idea how the national market will behave. But for as long as there are jobs in the W.Midlands (automotive is key) I don't think prices will move too much one way or the other

 

[PXW]

We've made our call on the housing market - with four juniors/grandkids having now left home, there are just three of us living in the house - me, Mrs PXW and PXW Junior. Rattling around a bit (the house is c.3500 square feet) so we are moving to a property about 2/3 the size (so still plenty big enough) and in the process we are killing off the mortgage. Henceforth I won't much care about mortgage rates, or even property price movements, since there's no way I can ever be threatened with negative equity, or a loan to value ratio that would trim my equity to a level where I could not afford to buy something I would be happy living in. House prices could fall by 75% and I would lose no sleep (apart from concern for friends/family in less fortunate circumstances, and worry about the macro-economic implications of that sort of move, of course!)

I'm currently negotiating a new job, and assuming any of my lines of enquiry work out, we would technically be able to 'afford' a house at about twice the price we are actually paying. But we're not interested in taking the risk and will be looking at alternative investments to the family home.

Slightly unusually, the bottom of our sale chain does have a first time buyer. According to agents, a fair bit of the house market around here is caused by people downsizing (like us), which then allows others to move on up the ladder if they wish - a sort of circulating market that never disturbs the lower price levels.