House prices 25 % down by 2010
10 September 2008, 12:39 PM
#61
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There seems to he a lot of grief centred on the ending of short term fixed rate mortgages.
Would it help if HMG obliged mortgage companies to keep to those fixed rates for say another 5 years but allowed them to extend the mortgage repayment period for another couple of years to make up the shortfall if the mortgagee agreed? After all retiring at 60/65 when mortgages are supposed to end is a thing of the past.
Of course there would be a fuss from people who chose not to get a mortgage on the cheap but they could be accommodated somehow. dl
Would it help if HMG obliged mortgage companies to keep to those fixed rates for say another 5 years but allowed them to extend the mortgage repayment period for another couple of years to make up the shortfall if the mortgagee agreed? After all retiring at 60/65 when mortgages are supposed to end is a thing of the past.
Of course there would be a fuss from people who chose not to get a mortgage on the cheap but they could be accommodated somehow. dl
10 September 2008, 12:44 PM
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With the effect of compound interest, any short fall on the agreed repayments would add decades to the end date, not an amount of years equal to the "extended" fixed rate period.
10 September 2008, 12:51 PM
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Just giving my thoughts on why I think it might not happen
10 September 2008, 02:28 PM
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When these discounted rates end. If people can't get another mortgate due to neg equity can't they just move to an interest only mortgage with there current lender? I realise this isn't ideal but it's certainly better than being repossessed.
10 September 2008, 02:40 PM
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Because I suspect, that many of these borrowers are *already* on an interest only mortgage.
11 September 2008, 08:57 AM
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I see that Barratt have announced that they are paying the Stamp Duty on all their new homes.
BIG DEAL!
Why don't they just slice the required 30% off the asking prices and be done with it!?
Makes me mad the way they treat people like idiots - surely noone will fall for it?
BIG DEAL!
Why don't they just slice the required 30% off the asking prices and be done with it!? Makes me mad the way they treat people like idiots - surely noone will fall for it?
11 September 2008, 09:13 AM
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BTW how refreshing it is to see a proper thread on SN!
11 September 2008, 09:55 AM
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While, by luck more than judgement, I managed to choose a 5yr rate remortgage just before the market plummetted, this is a subject close to my heart.
A very good friend of mine bought his first house around the peak of the market, with very little available deposit. It is a humble three-bedroom ex-council property, which was the minimum he needed and was keenly priced at the time (a repossession). He has a young family, with three kids. He's never been a big spender and isn't bothered about living it up with flash TVs or cars. By my estimation, though, he's at the end of his discounted period and staring at negative equity. Of course, he's got no chance of remortgaging and can only take the increased repayments on the chin, while hoping for the best. With five hungry mouths to feed, coupled with rising food and fuel bills, this isn't going to be easy.
Not the most exciting story, I know, but I just wanted to paint some middle ground to balance the talk of greedy buy-to-letters and the must-have-it-alls. This is a guy who works as a kitchen fitter (not a financial expert) and wanted to do best by his family. His situation is probably typical of a lot of the people currently at risk of losing their homes because of irresponsible lending, rather than personal greed.
A very good friend of mine bought his first house around the peak of the market, with very little available deposit. It is a humble three-bedroom ex-council property, which was the minimum he needed and was keenly priced at the time (a repossession). He has a young family, with three kids. He's never been a big spender and isn't bothered about living it up with flash TVs or cars. By my estimation, though, he's at the end of his discounted period and staring at negative equity. Of course, he's got no chance of remortgaging and can only take the increased repayments on the chin, while hoping for the best. With five hungry mouths to feed, coupled with rising food and fuel bills, this isn't going to be easy.
Not the most exciting story, I know, but I just wanted to paint some middle ground to balance the talk of greedy buy-to-letters and the must-have-it-alls. This is a guy who works as a kitchen fitter (not a financial expert) and wanted to do best by his family. His situation is probably typical of a lot of the people currently at risk of losing their homes because of irresponsible lending, rather than personal greed.
You could call it suvival of the fittest , or you could just call it downright bad government
At the end of the day if there were a heavy tax on making money on propeties a la Francais - this fiasco wouldnt exist
11 September 2008, 11:00 AM
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But why were people taking interest only mortgages in the first place unless they too were gambling.
My (dated) view is that you took out mortgage (that you could afford).You paid your instalments for the next 25 years,Your mortgage was paid off.You owned the house.
If you moved house,you didn't overstretch yourself and you didn't extend your mortgage term (though I accept I messed up on that one!)
Anyway,people having 30 year mortgage terms and paying interest only shows how people's mentality changed totally and the day they didn't think would arrive has arrived.Everything done on the limit with no cushion and no thought of ever paying the mortgage off
My (dated) view is that you took out mortgage (that you could afford).You paid your instalments for the next 25 years,Your mortgage was paid off.You owned the house.
If you moved house,you didn't overstretch yourself and you didn't extend your mortgage term (though I accept I messed up on that one!)
Anyway,people having 30 year mortgage terms and paying interest only shows how people's mentality changed totally and the day they didn't think would arrive has arrived.Everything done on the limit with no cushion and no thought of ever paying the mortgage off
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