House prices to crash

[Uncle Spielberg]

Who wrote that as you didn't!

Ray Bolger. Of course Darren I could not anything so clear and concise don't be silly.

 

[The Antikythera Mechanism]

Well thats where you and I differ. Do you have a graph to prove this?

No, I cited a personal example in post #62, based on a FTB property in Worthing. I think that it has to be accepted that the ability to purchase a property will not be within the reach of everyone, it never has been, or towns like Crawley would never have been built.

Having said all that, if I had had to find a 25% deposit in 1980, which would have been equivalent to a years salary, then I would have been bolloxed. Banks now have cash, and lots of it, so should be offering 90% mortgages to FTB who can demonstrate their ability to afford it.

 

[beorhthelm]

The period selected (not by me) is the period since the bubble started. Why would anybody select anything else. Nobody would have expected a bubble to last 160 years!

but they would expect 30 years? why doesnt the bubble cycle begin in the mid 90's after the last blow off? the problem with bubbles is you only really know there is one once you get to the heights, or to be sure just afterwards. we could for example be in the bear trap feature of a much longer trend. having said that, 22-25% drop does sound about right (in the other graph, the graph taken literally would suggest a 70% drop).

 

[Uncle C]

No, I cited a personal example in post #62, based on a FTB property in Worthing. I think that it has to be accepted that the ability to purchase a property will not be within the reach of everyone, it never has been, or towns like Crawley would never have been built.

Having said all that, if I had had to find a 25% deposit in 1980, which would have been equivalent to a years salary, then I would have been bolloxed. Banks now have cash, and lots of it, so should be offering 90% mortgages to FTB who can demonstrate their ability to afford it.

Not sure one personal example stands up against National statistics

Regarding Banks with loads of dosh. Why would they return to the scenario that caused the last bubble and the collapse of the Worlds financial markets?

If they lend at 90% and house prices fall any more than 10%, every new lender would be in negative equity. Is that a good situation?

 

[Uncle C]

we could for example be in the bear trap feature of a much longer trend.

Of course there can be lots of bear traps, but the one defined in the DNA of a Bubble only occurs after a massive rise, not before, as you are suggesting.

 

[The Antikythera Mechanism]

Regarding Banks with loads of dosh. Why would they return to the scenario that caused the last bubble and the collapse of the Worlds financial markets?

If they lend at 90% and house prices fall any more than 10%, every new lender would be in negative equity. Is that a good situation?

I said "so should be offering 90% mortgages to FTB who can demonstrate their ability to afford it". The crunch was caused by the Sub-Prime market where 120% mortgages were given to people who clearly couldn't afford it, and ended up being repossessed. Quite a difference

 

[Mr Burns]

This is one of the most mature and interesting threads I think I've ever seen on NSC. Even more amazing considering I've taken part in it

 

[Mr Burns]

I said "so should be offering 90% mortgages to FTB who can demonstrate their ability to afford it". The crunch was caused by the Sub-Prime market where 120% mortgages were given to people who clearly couldn't afford it, and ended up being repossessed. Quite a difference

Exactly. When I got my mortgage, to get the best rate I could I had to put down a 25% deposit. In affordability terms, I'm quite lucky in that I could have had a 200% mortgage at least, and still been able to afford it comfortably now and in the future.

But I had to put down a sizeable chuck as a deposit to get the lowest rate available, but if I got a 90% mortgage, I would have had to pay a hefty whack each month on top of what I am paying now, but affordability wise, it would not have made no difference to me.

I think rates should reflect more on what the borrow can afford to pay, more than how much of a deposit they can put down.

The problem with the old 100-120% mortgages, is people where lieing about teir incomes to get the large loans. Fraud in my book. I would love to see people that did it, as well as brokers or advisors that encourged it, brought up on charges if they default on their mortgages.

Its those people that have helped towards putting the market where it is today, and at the moment if they went for a fixed tracker, they have had it off!!For the moment!

 

[Uncle Spielberg]

Exactly. When I got my mortgage, to get the best rate I could I had to put down a 25% deposit. In affordability terms, I'm quite lucky in that I could have had a 200% mortgage at least, and still been able to afford it comfortably now and in the future.

But I had to put down a sizeable chuck as a deposit to get the lowest rate available, but if I got a 90% mortgage, I would have had to pay a hefty whack each month on top of what I am paying now, but affordability wise, it would not have made no difference to me.

I think rates should reflect more on what the borrow can afford to pay, more than how much of a deposit they can put down.

The problem with the old 100-120% mortgages, is people where lieing about teir incomes to get the large loans. Fraud in my book. I would love to see people that did it, as well as brokers or advisors that encourged it, brought up on charges if they default on their mortgages.

Its those people that have helped towards putting the market where it is today, and at the moment if they went for a fixed tracker, they have had it off!!For the moment!

I am sorry but are you a mortgage advisor ?. You are peddling a lot of mistruths. You COULD NOT ever get a 100-125% mortgage on self cert, income had to be proved and verified. Self certs were limited to 90% at the highest. Also do you know how many repossessions have occured for the people who took out the 100% plus mortgages ?. Not very many at all.

The credit crunch and recession was not and never has been down to mortgage lending in the UK.

 

[Uncle Spielberg]

The problem with the old 100-120% mortgages, is people where lieing about teir incomes to get the large loans. Fraud in my book. I would love to see people that did it, as well as brokers or advisors that encourged it, brought up on charges if they default on their mortgages.

Not true.

 

[Uncle Spielberg]

Also I know this is an old fashioned concept in this country of " if it goes wrong blame someone else its nothing to do with me " but where is the personal responsilbily of the individual ?.

 

[Chicken Runner61]

The credit crunch and recession was not and never has been down to mortgage lending in the UK.

Don't be silly US they are linked as many people finance their businesses using their houses as collateral.

There are lots of businesses that were set up and running on money from their homes. People saw that house prices would only go up and if they needed money to fund their business they could borrow it using self cert morgages basedon what their house was worth in five years time. They think that in five years they will have made a million and their house will be loads more in value.

When the crunch came it fed the recession as not only were those businesses losing money but the owners then found their houses were not worth what they needed to borrow to keep their business alive.

Its the same story for other lending people borrowed money on their houses expecting that their loan would be free as their house value would go up.


Its all linked

 

[Chicken Runner61]

The problem with the old 100-120% mortgages, is people where lieing about teir incomes to get the large loans. Fraud in my book. I would love to see people that did it, as well as brokers or advisors that encourged it, brought up on charges if they default on their mortgages.

Not true.

It is true - The broker may not have directly encouraged it but many also glossed over detail they must have known was not strictly correct.

Some brokers knew which self certs would be checked and what wouldn't or what the chances were that only 1 in a hundred would be checked.

When I got my self cert I was staggered at how easy it was. I knew I could afford it and it got me out of a hole but it was easy to see how the system could be abused.

 

[Uncle Spielberg]

Self certs at 90% where not checked. They were self cert. But you could not and never have been able to self cert at 100% plus so I am correcting that incorrect information.

 

[Uncle Spielberg]

It is true - The broker may not have directly encouraged it but many also glossed over detail they must have known was not strictly correct.

Some brokers knew which self certs would be checked and what wouldn't or what the chances were that only 1 in a hundred would be checked.

When I got my self cert I was staggered at how easy it was. I knew I could afford it and it got me out of a hole but it was easy to see how the system could be abused.

Did you declare your actual income ?.

 

[Mr Burns]

I am sorry but are you a mortgage advisor ?. You are peddling a lot of mistruths. You COULD NOT ever get a 100-125% mortgage on self cert, income had to be proved and verified. Self certs were limited to 90% at the highest. Also do you know how many repossessions have occured for the people who took out the 100% plus mortgages ?. Not very many at all.

The credit crunch and recession was not and never has been down to mortgage lending in the UK.

Of course its not the whole reason, but it's part of the reason.

Do enlighten us?

 

[Mr Burns]

The problem with the old 100-120% mortgages, is people where lieing about teir incomes to get the large loans. Fraud in my book. I would love to see people that did it, as well as brokers or advisors that encourged it, brought up on charges if they default on their mortgages.

Not true.

Why?

So writing down that you earn 100k a year for example when you only earn 30k a year to obtain a loan is not fraud? What is it then?

 

[Chicken Runner61]

Did you declare your actual income ?.

Not really, its a long story but basically I was getting divorced and needed to borrow a lump to buy the ex out. My income had dropped due to the divorce.

House prices had fallen - I guessed it was only a minor slump and gambled that way. Luckily I guessed right and the following year I made up the difference by working hard and because my house went up in value.

I did another self cert and borrowed an extra £60k and stuck it away @ 7.64% for three years and £30k premium bonds. I've paid most of the mortgage off now and still have most of what I borrowed as extra left.

It was luck, judgement and getting the timing right that paid off but it was close and I wouldn't recommend trying it if you have a lot to lose family wise, but as I had just got divorced and lost £150k I was determined to make it work.

 

[Uncle Spielberg]

Why?

So writing down that you earn 100k a year for example when you only earn 30k a year to obtain a loan is not fraud? What is it then?

Please READ what I have stated for the 3rd time. You COULD NOT self cert at 100% and above as you have highlighted.

 

[Uncle Spielberg]

Not really, its a long story but basically I was getting divorced and needed to borrow a lump to buy the ex out. My income had dropped due to the divorce.

House prices had fallen - I guessed it was only a minor slump and gambled that way. Luckily I guessed right and the following year I made up the difference by working hard and because my house went up in value.

I did another self cert and borrowed an extra £60k and stuck it away @ 7.64% for three years and £30k premium bonds. I've paid most of the mortgage off now and still have most of what I borrowed as extra left.

It was luck, judgement and getting the timing right that paid off but it was close and I wouldn't recommend trying it if you have a lot to lose family wise, but as I had just got divorced and lost £150k I was determined to make it work.

So you admit you committed mortgage fraud knowingly but its just the brokers fault. Also you have had no problem with self cert and millions of self cert clients have had no problem maintaining their mortgages.