House prices to crash

[The Spanish]

Housing market to crash in six months time according to the estate agent of a woman at my work who has had her house in Woodingdean on the market for five months and can't sell it. Bring it on.

i can see that being quoted verbatim on the bloomberg tickertape, i would ensure you get the credit for that cheeky.

 

[Deleted User X18H]

Housing market to crash in six months time according to the estate agent of a woman at my work who has had her house in Woodingdean on the market for five months and can't sell it. Bring it on.

The reason your acquaintance can't sell is, that most Cockerneys don't want to trek into the North Laine or Maderia Drive from the suburbs of Patcham or Woodingdean, every weekend.

 

[Uncle Spielberg]

There is a real unspoken whisper that the Banks have been directed by the government to lend very little for the next 5 years. This is to bring down National debt. At the moment more is being paid back on mortgages, credit cards and loans than lent. On mortgages we are in net lending or close to it. I am afraid for the next 5 years only the privieldged case iron certainties will get a mortgage. This will drive forward the BTL sector and landlords will snap up properties that are possibly falling in price and create a new generation of renters, who cannot get a mortgage or a place of their own.

This is a very real possibility and is already happening. I think the growth area in the next 3 years will be buy to lets on the mortgage side and that is going to be a key area of growth as new lenders return to the market as there is no competition and the rates and fees charged are sky high so the profit margins are huge. The residential mortgage market will continue to be dire for 3-5 years with the few lenders left ( mainly high street banks ) cherry picking the best 60% loan to value clients and offering token 90% mortgages at rates over 5% above BBR and turning down 8 in 10.

 

[Cheeky Monkey]

i can see that being quoted verbatim on the bloomberg tickertape, i would ensure you get the credit for that cheeky.

 

[Alex Alex Dawson oo! oo!]

This is not true. Do not get confused with self cert and fast track. The FSA with their pea brains could not understand the difference. Self cert was an income declared but no proof was asked for, fast tack is an income declared but the lender reserves the right at anytime including after the mortgage has gone through to ask for proof of income. Self cert was around 6% of all mortgages tops, but this does not grab headlines or sell papers. Also just because it was self cert does not default into that every person lied about their income, it was abused by some but many self cert loans were legitimate and infact the areas records on self cert mortgage are not much different to status mortgages and for fast track the arrears records are better than status mortgages. All this is ignored by the FSA who have banned self cert mortgages and are going to ban fast track as well.

So lenders will in future require potential borrowers to prove their personal income. Pay slips, P60's, business accounts; I can't see what on earth is the big deal with this?

 

[Uncle Spielberg]

I agree it went too far and self cert was abused but it has gone too far the other way now. Your experiences are not the norm I can assure you. It is a real battle to get finance for 90% of the public. There has to be a way of assessing affordability in the future or the 4 000 000 self employed with never be able to move again or get a mortgage / property. There has to be a way of funding a healty mortagge marketplace and with respect you cannot eliminate ALL risk from lending which is what the FSA want. And if it was so clear to all why did the FSA do the square root of f*ck all about 125% mortgage, self certs etc for the 5 years they were being offered and arranged on their watch from 2004-2009 ?.

 

[Simster]

There is a real unspoken whisper that the Banks have been directed by the government to lend very little for the next 5 years. This is to bring down National debt. At the moment more is being paid back on mortgages, credit cards and loans than lent. On mortgages we are in net lending or close to it. I am afraid for the next 5 years only the privieldged case iron certainties will get a mortgage. This will drive forward the BTL sector and landlords will snap up properties that are possibly falling in price and create a new generation of renters, who cannot get a mortgage or a place of their own.

I don't believe a word of this. The day a government succumbs to housewife economics is the day the economy contracts.

What I suspect is more likely is that the government is insisting that banks lend responsibly to potential home owners, perhaps more like the way they lend to start up businesses. If you start up a business and ask for a chunk of cash to finance it, the banks have always expected:
* you to put up a chunk of collateral yourself, to show commitment
* a proper business plan, including income projection

I'm fairly sure the government will simply demand similarly tight control when it comes to home ownership, as opposed to ridiculous 100% mortgages in a wobbly economy where the job market that remains unstable.

 

[Simster]

And if it was so clear to all Nigel why did the FSA do the square root of f*ck all about 125% mortgage, self certs etc for the 5 years they were being offered and arranged on their watch from 2004-2009 ?.

Totally agree. This should *never* have been allowed, but then the problem is that New Labour were in the pocket of big business as much as the Tories always have been.

 

[Uncle Spielberg]

I don't believe a word of this. The day a government succumbs to housewife economics is the day the economy contracts.

What I suspect is more likely is that the government is insisting that banks lend responsibly to potential home owners, perhaps more like the way they lend to start up businesses. If you start up a business and ask for a chunk of cash to finance it, the banks have always expected:
* you to put up a chunk of collateral yourself, to show commitment
* a proper business plan, including income projection

I'm fairly sure the government will simply demand similarly tight control when it comes to home ownership, as opposed to ridiculous 100% mortgages in a wobbly economy where the job market that remains unstable.

We will see Simster.

 

[Badger]

There is a real unspoken whisper that the Banks have been directed by the government to lend very little for the next 5 years. This is to bring down National debt. At the moment more is being paid back on mortgages, credit cards and loans than lent. On mortgages we are in net lending or close to it. I am afraid for the next 5 years only the privieldged case iron certainties will get a mortgage. This will drive forward the BTL sector and landlords will snap up properties that are possibly falling in price and create a new generation of renters, who cannot get a mortgage or a place of their own.

This is a very real possibility and is already happening. I think the growth area in the next 3 years will be buy to lets on the mortgage side and that is going to be a key area of growth as new lenders return to the market as there is no competition and the rates and fees charged are sky high so the profit margins are huge. The residential mortgage market will continue to be dire for 3-5 years with the few lenders left ( mainly high street banks ) cherry picking the best 60% loan to value clients and offering token 90% mortgages at rates over 5% above BBR and turning down 8 in 10.

I've just got a 90% mortgage with Nationwide at 4.19% above the base rate

 

[Simster]

We will see Simster.

We will indeed, Gav.

I've just got a 90% mortgage with Nationwide at 4.19% above the base rate

Oh look, my brother got one.

 

[Uncle Spielberg]

I've just got a 90% mortgage with Nationwide at 4.19% above the base rate

You are the 1 in 4. Well done.

 

[Badger]

You are the 1 in 4. Well done.

It was 2 in 10 a minute ago at 5% above BBR, it's a fast moving World!

 

[Uncle Spielberg]

I in 4 , 1 in 5 , most 90% mortgages are at or above 6% so you did well. Still obviously you know more about all this.

 

[Bozza]

Still obviously you know more about all this.

That's your same old line when it comes to this sort of subject US. It's very childish.

I don't think anyone disputes your industry knowledge, I certainly don't. But I do think that you're too close to it all and being an emotional 'heart on your sleeve' sort of chap means you're simply unable to provide a neutral clear-headed commentary on this. You've proven this time and time again, unfortunately.

Simply if I was Mr LBG or Ms Barclays or Mrs HSBC and I saw a shaky, fragile property market and Mr Borrower wanted 90% LTV, I wouldn't be lending because I'd have a very real fear that the value of the asset would be less than the value of the debt in the very near future. And then everyone involved is in a bit of trouble. Multiply that scenario up to tens of thousands of similar cases and it all gets horrible again.

I'm afraid it's simply not as easy as saying "relax your lending criteria and it'll be happy days for all again".

 

[Badger]

I in 4 , 1 in 5 , most 90% mortgages are at or above 6% so you did well. Still obviously you know more about all this.

Yes that's exactly what I said isn't it?



Grow up

 

[Uncle Spielberg]

No one is saying that. Prices have risen 15% in the last 2 years so any lender then who lent a 90% mortgage 2 years ago it would now be a 79% mortgage. That has been the reason used for the last 2 years when prices ROSE. Now I agree a 90% mortgage is far more likely to tip into negative equity but the whole marketplace is in danger of completely imploding and to a large extent it already has.

 

[drew]

There is a real unspoken whisper that the Banks have been directed by the government to lend very little for the next 5 years. This is to bring down National debt. At the moment more is being paid back on mortgages, credit cards and loans than lent. On mortgages we are in net lending or close to it. I am afraid for the next 5 years only the privieldged case iron certainties will get a mortgage. This will drive forward the BTL sector and landlords will snap up properties that are possibly falling in price and create a new generation of renters, who cannot get a mortgage or a place of their own.

This is a very real possibility and is already happening. I think the growth area in the next 3 years will be buy to lets on the mortgage side and that is going to be a key area of growth as new lenders return to the market as there is no competition and the rates and fees charged are sky high so the profit margins are huge. The residential mortgage market will continue to be dire for 3-5 years with the few lenders left ( mainly high street banks ) cherry picking the best 60% loan to value clients and offering token 90% mortgages at rates over 5% above BBR and turning down 8 in 10.

Can you just explain how people paying off their mortgages and credit cards is going to reduce the National Debt!!!!

 

[Uncle Spielberg]

Personal debt fair point.

 

[The Antikythera Mechanism]

House prices will not CRASH, they will FLUCTUATE as they've always done. If there was a sudden sharp drop there would soon be a glut of buyers forcing prices back up again. It's supply and demand, nothing else.