MikeCardiff

iTrader: (2)

Who cares if people are in negative equity?

The mortgage company generally ! - miss one payment when you've got NE and they'll be straight on your back.

The problem is that people have borrowed against the equity the house had, which means as well as paying the mortgage, they have loan payments as well - a LOT of people in this country have borrowed to the hilt, and can only just afford to pay it back each month - NOT a 'manageable debt' !

Work out how much a 1% interest rate rise will add to the monthly payments for a £150K mortgage - you'd be surprised.

Its the people NOT living within their means that need to worry

Deep Singh

Recession is coming over the next couple of years. How bad it is only time will tell.

DaveGTT, I don't think you really grasp how negative/no equity drives and perpetuates a recession. It has a knock on effect everywhere in a country like ours where people borrow money against paper profit and then spunk it on cars/holidays.

It will be interesting

dpb

Daves got it right ..spend all you want, borrow as much as you like.!!....

Ill be ready to mop up when it all goes pear-shaped......

pslewis

I'm ready too!!!!

I hope there are MANY financial derrrr brains out there like Dave - oh yes!!!

Pete

davegtt

yeah yea, Am I saying borrow what you want? no!!!! I said people who have took out a morgage and a loan and can eaily pay it back.... just because they might have a house in negative equity doesnt mean they cant afford to pay it back you know some people have alot of money and dont buy the biggest and best thing they can, they get sometimes leave themselves some leeway....

Lewis, give it a rest, as I said if we all took your financial advise we'd all have sold up 4 years ago hoping for a crash and be living in cardboard boxes at the minute.... prat

unclebuck

Not too many of those around these days. Borrowing is at record levels, as are house prices. What's coming will make the previous recession at the end of the 80s look like a picnic.

davegtt

lol... I know but its nice to know some people can actually quote stuf from their own brain rather than talk about negative equity which plays a small part in it all....

As been mentioned before by only a couple of people in the thread, majority of it all is all interest rate dependant.... if that stays down most people will carry on living as they are.... Others posting here are just hopers

davegtt

Ohh yeah and all this stereo typical rubbish about the X5 owners Im sure they'll sell their cars before missing payments on the house.... Well most people would, saying that though they are BMW drivers and can be that thick I suppose

Petem95

Yes pete youve been conned! Theyve made the economy look artificially good by:

* keeping interest rates artificially low (wage inflation was the biggest factor in calculating interest rates - as that would make them high, then simply removed that from the calculation!!). This also fueled a house price boom and credit boom, leading to massive high street spending.

* Theyve removed massive amounts from company pensions to the point where they will never recover. This money has been spent larging on creating government jobs to keep unemployment low. A good idea some would say, but its like using your savings to fund an expensive lifestyle - you can only do it for so long....

Sooner or later the house of cards falls down and we'll be left with 1.1trillion of consumer debt, negative equity (mainly unfortunate FTB's who bought in the last few yrs on the belief that prices would always rise), millions with inadequate or no pension and significantly higher unemployment.

Edit: and pslewis, Im surprised u acknowledge that house prices are falling, a true Labour follower would be denying this is happening!

Henrik

iTrader: (5)

The long term average of interest rates must be about 7-8%, right?
Let's be conservative and say that interest rates only rise to 6%. If people have an interest only mortgage that they took out when the interest rate was 4%, those 2% represent a 50% (!!!) increase in payments (obviously, this would affect repayment mortgages also).

Why would you want to buy a house today when they are so ridicilously overpriced? Why not just wait a couple of years after the madness has subsided and pay a considerably smaller amount each month (as in probably 30-35% less every month)? This would mean that you could pay off your mortgage a lot quicker, and in the end you would be a lot richer and probably have a nicer house.


Here's an illustrative example:
Someone I know earns twice the national average. The only thing he can afford to buy in London is a studio flat in a rough council estate. Don't you think that sounds out of whack?
If someone on that kind of money can't find anywhere to live, what will people on average salaries buy?

As a side note, could you buy the house you live in today, at todays price?

I don't understand why people can't see that it's all a speculative bubble... are you all blinded by your paper wealth?


Oh and also, I'm not sure that if you buy today, your house will be worth more in 25 years time (when it would be paid off if you decided not to rent it off the bank (i.e. an interest only mortgage))... Maybe in nominal terms (as in number of pounds), but I don't think that it will be worth more if you adjust for inflation...

Henrik

iTrader: (5)

What happens to a family where both adults work full time and one of them loses their job? If they have bought any time in the last couple of years, they will be screwed, that's what!

davegtt

We dont all live in London with massive paid wages, Some people can afford to lose a job and go out and get another.... its not hard work finding a job you know... Just depends on how much you want to earn lol

Henrik

iTrader: (5)

or how big your mortgage repayment is, no?

Henrik

iTrader: (5)

oh and also, property outside of london is exactly as overpriced as the rubbish in London, it's just that people earn less, but if you compare the average salary to the average house price, i'm pretty sure the ratio is about the same.

davegtt

To be fair, Im only working on my area BUT I seriously doubt what you say, if a friend in london (which you quoted) is earning Double the average salary and cant afford a property. I know that someone earning double this areas salary should cover a FTB type home....

pslewis

WHY??

Cheaper houses benefit most people ..... I want to buy some more property, but its stupid money at the moment!! Driven up by muppets paying silly money with silly mortgages!!

I will lose no sleep if I buy some repos from those that had ideas above their station!

Pete

J4CKO

iTrader: (1)

Mines all paid for and in a nice area, 4 beds, big garden, No debt whatsover.

Oh dear, I have slipped into the British 'Im all right jack' mentality, I will order an X5 with spike on the front and completely opaque black windows, I will bray loudly about it and how I am thinking of buying a charming holiday cottage in France, I will shun wine under a tenner a bottle and protest loudly about any own brand produce that comes into the house.

Oh bugger, thats great but what about my 3 kids, they aint staying here until they are 40, best get saving again.

My point being is that I see people spending on flash stuff when they havent got the basics right, things like Life Insurance, SAVINGS, decent pension provision, I know of someone with a pension pot of 100 grand living the high life thinking he will get twenty grand a year when he retires, durr.

You can always tell when somebody is turning into a money '****' they stop staying grand or thousand and talk in K.

KiwiGTI

The only people who benefit from increased house prices are those that are exiting the UK property market completely, usually people who emmigrate.

Echo

We've got a very small mortgage by today's standards with 5 years to go but with two new kids our two bedrooms aren't really enough. To get another bedroom around here would mean about 100,000 mortgage. Stuff that! I can't wait for prices to drop so that differential closes.

Leslie

Only a rabid N Labourite would rub his hands at making money out of the misfortune of others!

Especially when it is down to NL policies, ie borrow and borrow for as long as you can get away with it, like Brown has been doing.

Les

Diablo

Yes they will indeed be screwed. And it will be no ones fault but their own.

If they had bought sensibly in the last couple of years they will be fine.

If they have gone straight in over their head (and means) they will not.

Of course if they have adequate redundancy cover (as anyone who is absolutely dependent upon two incomes to fund their lifestyle should) they will be fine.

Moving on, there is affordable housing all over the UK. There always has been and there always will be. People are becoming greedy and the "want it all now" mentality prevails among many.

Whatever happened to buying what you could afford, not what you want?

Yes, some blame must be placed at the feet of the lenders. yes, some blame must be placed at the feet of government.

But the biggest blame rests with the buyers. they need to stop wanting it all now and buying what they can afford.

If a 1 bed flat is all you can afford, buy a 1 bed flat. If you cannot afford that, stay at home, save some money, build a decent deposit and then buy. Its really not that difficult if you are prepared to make the effort.

Just because a lender is prepared to offer 100% of value @ 4 times joint income doesn't mean you should be so bloody stupid as to take it.

MikeCardiff

iTrader: (2)

Good point - this is what I meant about people overstretching themselves - people were taking out mortgages at 5 times their joint income, or the self certifying ones where you just made up any figure you wanted.

So many people were desperately jumping on the property ladder, not because they wanted to own a home, but because they thought the prices would keep going up and they could sell it and make a fortune - these are the people who are going to get caught out.

I know lots of people who are happier renting at the moment - they can rent a house for half what it would cost them to buy per month, and they can sit back and wait for prices to fall or a bargain to come up.

I dont know whats happened over the past few years, but Britain seems to have gone borrowing mad - how many young kids do you see driving around in 1 and 2 year old cars now ? people buying new cars every year, sticking an extension on the house, taking two holidays per year - all of it on the never never.

Speaking as someone who only recently ( for the first time since leaving school pretty much ) has absolutely no debts, no loans, all credit cards have nil balance or are paid in full each month, business runs 100% in the black with no credit, everything is paid for up front, then the last thing I want to do is get myself into more debt for things I dont really need.

Knowing you could walk away from everything ( or die ) tomorrow without owing a penny is such a nice feeling that the thought of borrowing is totally out - much as I may like a brand new Impreza, until I have the cash there saved up and spare, I'm quite happy sticking with the one I've got.

Must be peoples greed and 'want it now' attitude - people seem to think that their life isnt complete until they have a better car, better holiday, better clothes than other people - is our country really getting that insecure ?

unclebuck

Blair's Britain I'm afraid. People have been fooled into believing they are 'entitled' to all this stuff. When the 'great realignment' comes and the smokescreen of success vanishes these sorts are going to be in for a hell of a rude awakening.

Deep Singh

They'll be some people ready to buy their repos though

Henrik

iTrader: (5)

But hang on a sec... where will a family of say four (two adults, two kids) on average incomes find an adequate house?
Are you saying they should all live in a studio flat and not want it all now?

Just as an exercise, can you point out some affordable, adequate housing in and around your area for a family as above (use e.g rightmove)? Maybe the couple should move in with their parents or something...


I'm sorry, but the truth is of course, that the younger generation (under 30's) have been well and truly shafted by the government and the bank of england (interest rates too low for too long). Mr Brown has encouraged house price inflation of astronomic proportions and a house is now more expensive in relation to average salaries than it was before the crash in the early 90's and in the mid 70's. The only thing the under 30's did wrong was being born too late.

Why do you think child birth rates are going down so much? Is it because people can't afford to have a kid, partly because of rampant HPI?

I'm not worried for myself at the moment, I don't own a property and renting is cheaper than paying an interest only mortgage anyway + prices are falling. However, there are many families that have bought into the "dream of being home owners" (as spouted by the media + vested interests) because of lies from e.g. estate agents ("prices can't go down" etc).

Remember that the more the young generation get shafted, the fewer children are born and they are the ones who pay for your pension when you're old.

unclebuck

Indeed. And the market will be flooded with cheap second hand SUVs that nobody can afford the repayments on.

davegtt

Thats Bullsh!t Im afraid. Im only 25, got a decent house and lifestyle because thats what I chose as a priority when I was 21. Instead of going out every weekend and pi55ing my wage up the wall like my mates did... Now Im the only 1 out of the group that owns a house and is reasonably well off whilst they all moan how they cant afford to buy a house (some even earn more than me and the misses in a joint wage) yet still go out every weekend complaining..... If they wanted they should be able to save at least £1k a month without having to make too many sacrifices but their choice is to go out and enjoy their youth. cant go out and spend every penny you have enjoying yourself then complain that you cant afford to live in your own place....

dpb

sorry dont fancy a gas-guzzler....................

Leslie

Not a bad thing to use a bit of common sense is it davegtt. You will reap the rewards for all that later when your mates are still scratching around.

I was taught that if I wanted something that I should save up for it. That was good advice from my parents. You appreciate something much more that way and it does not cost you all that interest. Its a nuisance having to keep paying out for something long after the personal interest in it has waned too.

Les

Henrik

iTrader: (5)

Well, I'm sorry, but most people are still at uni at 21. This government encourages people to go to university and run up a load of debt in doing so, and then as a double whammy they have not disencouraged HPI.

I'm happy that you are doing alright, but most people are not.