Credit Crunch!

[Beach Hut]

Be interesting to see if these Government Bonds force the mortgage lenders to lower mortgage costs - bearing in ind I think Halifax raised some of theirs today

 

[Bozza]

The consequences of 'the credit crunch' seem ace to me...

1. Property prices will fall or crash or something. Cool because my next property purchase will be 'up the ladder' and, for anyone looking to move in such a direction, rising prices mean your next purchase is getting ever more expensive. Falling prices mean the gap narrows rather than widens.

2. 'The stock market' is volatile and generally edging lower relative to boom times. Great for me because I'm a buyer and not a seller. Investments, including my pension, can snap up at bargain prices for a while rather than inflated prices at other times.

So crash stock market, please. Crash, property prices, please. The more the merrier and all that.

 

[Freddie Goodwin.]

How come all these well paid financial consultants didn't see this coming?

I know from the experice of my youngest, that credit has been dished out to people who have no hope of repaying. How can you go onlending money like that? nobody in their right mind would lend somebody else some money and, when they couldn't pay it back, lend them more.

But then, what do i know? I'm not a high paid financial adviser.

 

[larus]

There is a drawback to a crash in the property market which most on here seem to be ignoring.

Our 'economy' has been reliant upon growth coming from cheap credit, booming house prices and the financial services for the last few years. Once this is removed and people don't have the feel-good factor of wealth in their property, this will have a knock-on effect to the real ecomony.

 

[Weezle]

How come all these well paid financial consultants didn't see this coming? QUOTE]


Many of us did see this coming. I've been looking like an idiot for the last four years now as i've stated property prices were way overvalued and that we were due for a correction. However, as long as the economy remained strong and financiers found more creative ways to sell their mortgage debt, the amount be loaned grew to stupid levels - but no-one seemed to care as housing seemed a one-way bet - house prices always go up don't they?!

I'm with Bozza - our mentality that house prices going up is a good thing is all wrong. The only people that benefit from this are the banks as people have to borrow more and more and pay more and more back.

In essence all the time you have a mortgage, you don't own your house - it is owned by the bank. When you want to move to a bigger house and prices have been rising, it is going to cost you more and you'll be even more in debt to the bank. Once prices get too high you may not even be able to afford a repayment mortgage and should prices then drop as is happening now you may get stuck in the negative equity trap.

The even worse thing is that when people come to remortgage and find 'their' house is worth more, they're tempted to take out the equity in their house and spend it. They've therefore not benefited from the rise at all and have only succeeded in getting themselves mroe in debt, making the bank richer and leaving themselves vulnerable to a change in the state of the market.

It owuld be much more sensible if banks would only lend three times salary at a rate of 80% loan to value of the house. This would stop this stupid level of inflation where first time buyers can't afford to get onto the property ladder.

 

[Titanic]

How come all these well paid financial consultants didn't see this coming?...

You ought to know... as Chief Executive of one of the worlds top ten banks!

http://en.wikipedia.org/wiki/Fred_Goodwin

 

[eastlondonseagull]

Is or me or are the press are absolutely DESPERATE to have a recession? They can't wait. If you want to get on the telly/radio tomorrow just:

1. Make up a name fictitious economic research consultancy
2. Send out a press release saying you forecast house prices to drop by 35% in the next five years
3. Wait for the interview requests to commence

PS - You may be aware that I'm a recruitment scumbag. Very little change in the job market. I have placed people at HSBC, First Direct and Alliance and Leicester (all in credit risk funilly enough). It's as you were in the financial houses

Trouble is, the media's stories really are affecting the housing market. There was a headline in the London Paper the other night saying something along the lines of "Negative Equity woe for Woolwich" (near where I live), saying that it was one of the five negative equity hot-spots in the whole of the UK.

It wasn't until you got to the final paragraph (I think) that it explained that this was because lots of people in the area have 95-100% mortgages. It was nothing to do with the area being shitty. But the scary headlines are putting people off moving into the area.

Woolwich and Plumstead (where I live) have, in fact, got some of the lowest, most affordable house prices in London. It's far cheaper than in Brighton. And there's much redevelopment going on here, the DLR will be finished early next year.

But these scare stories are making it hard for people like me to sell. We need to move to a bigger home, but will have trouble doing it now. We've had to drop our house price by £10,000 but it still won't sell because no one wants to buy atm - the media have built up this huge story about prices dropping 20%. Obviously, the less we get for ours, the less we have to spend on a bigger place. We're in a bit of a pickle atm.

.

 

[Bozza]

But these scare stories are making it hard for people like me to sell. We need to move to a bigger home, but will have trouble doing it now. We've had to drop our house price by £10,000 but it still won't sell because no one wants to buy atm - the media have built up this huge story about prices dropping 20%. Obviously, the less we get for ours, the less we have to spend on a bigger place. We're in a bit of a pickle atm.

I wouldn't say you are at all, although I can appreciate why you may feel like that.

If, say, a £200k property has fallen by £10k, then it is likely that a £300k property has fallen by £15k. If you were making a move 'up', you would have needed to find £100k before, now you'll only have to find £95k extra.

The issue, I guess, is timing if you feel you have to move now.

 

[sten_super]

I wouldn't say you are at all, although I can appreciate why you may feel like that.

If, say, a £200k property has fallen by £10k, then it is likely that a £300k property has fallen by £15k. If you were making a move 'up', you would have needed to find £100k before, now you'll only have to find £95k extra.

The issue, I guess, is timing if you feel you have to move now.

That's great if there is a consistent fall in prices across the country, or if you want to move within the same area. As an example prices here in Cambridge are unlikely to fall, and if they do it will be by much less than in the rest of East Anglia; anyone wanting to move to Cambridge from say Royston or Ipswich will get less for the property they are selling (compared to say 12 months ago) but will have to pay a value in Cambridge similar to what it was 12 months ago.

 

[Curious Orange]

Woolwich and Plumstead (where I live) have, in fact, got some of the lowest, most affordable house prices in London. It's far cheaper than in Brighton. And there's much redevelopment going on here, the DLR will be finished early next year.

TBH, even with the development you'd still need to be pretty desperate to want to move to Plumstead as the place is a total dive.

 

[eastlondonseagull]

TBH, even with the development you'd still need to be pretty desperate to want to move to Plumstead as the place is a total dive.

Oi, no it's not. I've been here four years now, and it's great. Lots of green open space, two commons and parkland, near Greenwich and Blackheath, only 20 minutes from London Bridge. Just needs a decent pub or two.

 

[NMH]

...it is, all I could afford for my tea was lamb chops and mustard mash...no pudding!

Ah, but did you eat your meat?

You can't have any pudding, if you don't eat your meat.

 

[Gully]

I thought that you couldn't have a pudding if you didn't eat your greens...anyway, sometime after posting that I found a very nice Greek yoghurt at the back of the fridge, which hit the spot nicely.