Mortgage crunch

[broken man]

I blame self certification for the prices going up.... people borrowed silly amounts against their wages!!!!

 

How is it "OK" for you to pretend you earn xxxx as long as you pay half or one percent more....... what utter ~~@~@@ lox! greedy berstarddddssss......banks!

[al4x]

you don't even need to go self cert if you play your cards right. I've a monster mortgage compared to my salary but on a renovation property so am working towards mortgage free living. If you just sit and buy a house and try and pay for it long term its very expensive. My brother in law and sister have moved 3 times in 2 years doing up houses as they go and they've cleared 110K so far, starting off with a house at 115K and gradually moving into bigger houses. It can be done but needs hard work. I'll second the opiion that people are sitting back at the moment waiting for prices to go down before investing so it won't be a major dip. Couldn't have timed it better for me as I can get this house done and ride it out a bit before selling when the market picks up.

[Pirate]

Me and Ms SS are looking for a first mortgage and with both wages at £15k ish (we are both 24) we ar looking at a max of £140k but if we only took £125k we would still pay back £850 per month (35yrs)which is massive ! and nearly a whole wage used up before any other bill. Not much room for new anythings at that rate let alone cartridges.

 

Any other first time buyers out there ?

 

 

Hi Sniper:

 

It's basically a numbers game, and not as bleak as it first appears!

 

Wherever you choose to live, there will be a cost.

From the £850 pcm you mentioned, deduct the cost of an equivalent rental property, and only the 'difference', is the basic cost of ownership!

 

Compare what return this "difference" would have brought in various investment scenario's, over the last 35 years!

 

Admittedly, there are no guarantee's as to what the future might hold, but 35 years ago, home buyers were faced with exactly the same decisions.

 

Pirate:

[starlight32]

The problem is the goverment should have slowed house prices down ages ago. The only benefit of rising house prices is to those who own multiple properties- not the general joe bloggs off the street who is trying to bring up a family and live the typical 'British life'.

 

You spend your life putting all your income into bricks and mortar, only to achieve a paid house at the end of your working life, and that is not providing you have any misfortune along the way such as divorce,illness or unfortunate unemployment.

 

Regards starlight32

Edited March 26, 2008 by starlight32

[Disco Stu]

http://www.housepricecrash.co.uk/forum/

 

[Markio]

Pirate: The difference between renting and buying is not just the difference of ownership but the difference of £300-£400pcm, which when you don't have it might has well be a difference of £1000+pcm. The problem is that people simply don't have that extra chunk of money and therefore the only choice is to rent.

 

As starlight said, the government should have stepped in and done something to slow this down, they didn't, or if they did they did a **** poor effort of it. I can only guess that they figured it would make them look good to the average thicko if thought that they were rich due to the price of there house. If this whole cock up has made a very small minority better off then it's the likes of salop sniper and me that are now paying for it. Like i said earlier, here comes the headache.

[Mungler]

The economy's growth has been fuelled on credit based spending.

 

Lots of equity release activity ("unlocking the capital in your home"), low % rate loans (some secured against property) etc. all because people suddenly thought they had more money than they actually did because their house became more valuable as the market surged upwards.

 

The bit everyone's forgotten is that any loan needs to be repaid - well it's that or you have to move house to actually unlock capital. Problem there though is that if your house has gone up just the same as all other houses then to repay what has been taken out means moving to somewhere cheaper (downsizing).

 

EDIT:

 

I can't call which way interest rates will go.

 

The government need them low to keep growth but at the same time they need to curb credit spending and inflation.

 

Curbing credit spending now appears to have fallen to the banks who have dramatically tightened their lending criteria (something they should have done years ago). Interest rates are low (by reference to the bank of England rate, but the ability to borrow money [and it's availability between finance houses] is getting to be a problem). Add on the fact that inflation is a problem - the government have fudged the figures but when you look at the cost of living as opposed to the basket of goods test for inflation the two sets of figures are massively out of whack.

 

So, I reckon rates may drop a maximum of 1% over the next 6 to 12 months but after that I reckon it's going pear shape with lots of inflation.

 

I am on a tracker rate at present but would look to jump to fixed for as long as possible any time after the next 1/2% rate cut.

Edited March 27, 2008 by Mungler

[Pirate]

Markio & Sniper:

Lads:

 

My post was only meant to bring a ray of light to what appears to be a daunting path.

I wasn't smugly suggesting it was an easy path, and irrespective of whose fault it may be, or what should have been done; property is expensive.

 

I know exactly how you lads feel, I’ve been there, but the fact remains, if you want to get on the property ladder, you must find that ‘difference’ between renting and buying.

 

I was not privileged by any means, and I vividly recall, holding down 3 jobs and working a 60-70 hour week, with no spare time, or spare cash for luxuries in the early days, just graft! (My priorities)

 

However you may feel about this County’s misgivings, and many are undoubtedly justified, the fruit is there for the picking, you just have to reach that bit higher than your neighbour, or settle for the ‘fallers’.

 

Good luck Lads.

 

Pirate:

[pin]

People say it's not going to happen, but it is. Houses at the moment are still priced against yesterdays credit market - won't be long before that equalises.

[al4x]

Depends a lot on where you live etc it may happen but won't be drastic there is too much demand out there for housing and Interest rates don't look set to do anything particularly nasty. What will cause it is the banks clamping down on dodgy lending and realistically they haven't been stung in the uk so far. What they have done is used it as an excuse to increase their rates and so people may find it harder to move.

The whole credit crunch idea is ridiculous Interest rates rising was meant to cool the housing market which it has done nicely and people have cut down on spending as a result hence the fears for the economy. Houses are still selling and now is a traditionally busy time of year for house sales so the next few months will be interesting.

 

Pirate made the biggest point that it never has been very affordable to buy houses people have had to struggle financially to do so. All our parents had to work their ***** off to get theirs but ours is a more spend spend life and we don't expect to struggle

[pin]

There are huge American lending institutions who are still extremely exposed in that they have been lending money backed by asset/corporate bonds. If these companies have their credit ratings downgraded (and this is happening now) the bonds have to be re-valued as well. These institutions have been "insuring" these bonds by literally taking out insurance against them devaluing. The problem is the companies who have been taking on these insurances never thought they would have to pay out and recently two big houses have been exposed.

 

The worst of these examples is a house who have been caught trying to insure $69billion of bonds with a little over $300million of capital.

 

Similar stories are beginning to emerge over here. This affects us because the real cost of lending, and the associated risk, has been artificially hidden by practices such as these. In times when the housing market is booming and the banks themselves look solid there's no problem, but when uncertainty and fear predominate then people start actually thinking about exit strategies - its only then that these malpractice instances are uncovered (think situations like Enron et al).

 

Hold on to your hats, it's going to get bumpy.

[Mungler]

:blink:

 

 

In 2 days I have been contacted by 2 old work mates recently made redundant and looking for work. One based in the City - wholesale redundancies based on predictions and the other worked in a team of plenty for a major financial institution doing commercial lending. Their source of money to lend dried up and that means an entire office shut.

 

They are at the sharp end and the effects will ripple through.