Kingman Posted July 13, 2017 Share Posted July 13, 2017 (edited) On 2 July 2017 at 10:09, Kingman said: It's worse than regional or even nationwide it's a result of a Global threat. Slow downs are happening in Canada, Australia and parts of the US right now and we know what happens when America sneezes! Take a look at China right now, There economy is rife with crippling debt as credit grew to fast so it won't be long till our markets feel that effect. Lots of Chinese investors in the UK markets are in real estate so watch this space. And so it begins across the pond, First the FED and now the Canadians. Big 5 banks increase prime rates after Bank of Canada's interest rate hike http://www.cbc.ca/news/business/prime-interest-rate-increases-1.4201403 "Will Australia need to match overseas rate hikes?" http://www.abc.net.au/news/2017-07-13/bank-of-canada-raises-rates-but-fed-yellen-hints-at-gradual/8704670 If i was a betting man… Oz next then the UK, we all know BoE will follow the Fed. Edited July 13, 2017 by Kingman Link to comment Share on other sites More sharing options...
TrentVilla Posted July 13, 2017 Moderator Share Posted July 13, 2017 A rise in U.K. interest rates will hardly be a shock given the prolonged historic low rate, it will only be 0.25% increase if it happens. It won't trigger or even start to trigger a 40% price correction. Link to comment Share on other sites More sharing options...
peterms Posted July 13, 2017 Share Posted July 13, 2017 Don't fasten on 40%. It's just one suggestion for the possible scale of the correction. The core point is that there are housing bubbles in mnay countries, it's not sustainable, it will go tits up, and many people will suffer when it happens. See Steve Keen on this regarding Australia, and here is something on Sweden. It's not just us. And then there's the US car loan subprime market... Quote The Swedish housing market is living on borrowed time. It’s really high time to take away the punch bowl. What is especially worrying is that although the aggregate net asset position of the Swedish households is still on the solid side, an increasing proportion of those assets is illiquid. When the inevitable drop in house prices hits the banking sector and the rest of the economy, the consequences will be enormous. It hurts when bubbles burst … 1 Link to comment Share on other sites More sharing options...
markavfc40 Posted July 13, 2017 Share Posted July 13, 2017 (edited) 1 hour ago, TrentVilla said: A rise in U.K. interest rates will hardly be a shock given the prolonged historic low rate, it will only be 0.25% increase if it happens. For those of us who were used to interest rates much higher then no of course it won't be a shock. I think my first mortgage in 1998 was just over 6%. I am now on 2.19% on a 10 year fixed which will pretty much see my mortgage paid off. For anyone who first took a mortgage out over the last 7 or 8 years then they have never known anything else but low interest rates and I would imagine people have borrowed with little regard for if they will rise. I think a rate rise of 2%, which is quite feasible in increments over the next 2-5 years, would hit many people hard. It would also obviously limit the amount that first time buyers could afford to borrow as the repayments will be much higher. Obviously it goes without saying that rate rises will have an impact on house prices. Nothing like 40% but I could see drops of half that. Edited July 13, 2017 by markavfc40 Link to comment Share on other sites More sharing options...
TrentVilla Posted July 13, 2017 Moderator Share Posted July 13, 2017 24 minutes ago, markavfc40 said: For those of us who were used to interest rates much higher then no of course it won't be a shock. I think my first mortgage in 1998 was just over 6%. I am now on 2.19% on a 10 year fixed which will pretty much see my mortgage paid off. For anyone who first took a mortgage out over the last 7 or 8 years then they have never known anything else but low interest rates and I would imagine people have borrowed with little regard for if they will rise. I think a rate rise of 2%, which is quite feasible in increments over the next 2-5 years, would hit many people hard. It would also obviously limit the amount that first time buyers could afford to borrow as the repayments will be much higher. Obviously it goes without saying that rate rises will have impact on house prices. Nothing like 40% but I could see drops of half that. I envy your short mortgage.... I'm doing whatever I can to trim as many months/years of mine as I possibly can. Anyone not over paying when they can do so are insane when rates are as low as they are now. I'm fixed for 5 years at 1.29% so I'm covered for the immediate future in terms of rate rises, again if people are sensible they will be protecting themselves now with some of the fixed rates currently on offer. Even if they aren't I'd imagine many will when the rate rises start which its inevitable they will. I agree some people will have only experienced low rates and any rise will be a shock and there will likely be effects on the market from that but 20%-40%? Nah, no chance in my opinion. Currently house prices are still going up, by less I concede but up nonetheless. But there are also less houses going on the market because less people are moving, which means that because we aren't building enough properties there will be a shortage, which in some areas will have a stabilising or even positive impact on the market. I also think the times of a national market have long since gone, regional variation in markets is well established both in terms of growth and you'd imagine decline and/or stability. Growth may well stop, there may even be some decline but I doubt it will even be as high as 10% and even then it will depend entirely on regional factors. 2 Link to comment Share on other sites More sharing options...
Kingman Posted July 13, 2017 Share Posted July 13, 2017 1 hour ago, markavfc40 said: For those of us who were used to interest rates much higher then no of course it won't be a shock. I think my first mortgage in 1998 was just over 6%. I am now on 2.19% on a 10 year fixed which will pretty much see my mortgage paid off. For anyone who first took a mortgage out over the last 7 or 8 years then they have never known anything else but low interest rates and I would imagine people have borrowed with little regard for if they will rise. I think a rate rise of 2%, which is quite feasible in increments over the next 2-5 years, would hit many people hard. It would also obviously limit the amount that first time buyers could afford to borrow as the repayments will be much higher. Obviously it goes without saying that rate rises will have impact on house prices. Nothing like 40% but I could see drops of half that. Yeah The BBC report on this BOE survey but at the end of an article of the dearth of housing on the market... "Separately, the Bank of England's latest Credit Conditions Survey of banks and building societies has suggested that home buyers could find it trickier to find mortgage deals with low deposits in the months ahead. The survey found lenders were likely to rein in lending as they become more cautious about the state of the economy. Lenders expect a slight reduction in mortgage availability to house buyers with deposits of less than 25%, and "in particular" those with a deposit of below 10%" http://www.bbc.co.uk/news/business-40581912 These default figures are abysmal! http://www.bankofengland.co.uk/publications/Documents/other/monetary/ccs/2017/17q2.pdf The Currency collapse has pushed up prices by a lot, People out at the end of the risk curve ie a lot of the UK cant pay so default instead on debts. Its defaults that will see massive wealth destruction i doubt the UK will cause it but we are in a terrible mess going into it. Recession's usually cycle with interest rates going up to choke off demand, This time inflation is the interest rates increase with Boe and the government sucking the life out of the productive economy is soon about to be shown for the disaster it is. 18 months and they will be printing like never before. Link to comment Share on other sites More sharing options...
markavfc40 Posted July 13, 2017 Share Posted July 13, 2017 (edited) 16 minutes ago, TrentVilla said: I envy your short mortgage.... I'm doing whatever I can to trim as many months/years of mine as I possibly can. Anyone not over paying when they can do so are insane when rates are as low as they are now..... It is all relative mate. I imagine you're a fair bit younger than me, I'm 43, but I took my mortgage out in 1998 when I was 24 over 25 years but due to moving a couple of times over the last 19 years I will be 53 by the time I pay it off so I will have had a mortgage for 29 years by that time which is longer than I had envisaged. I agree with a lot of what you say in your post certainly in terms of regional variations. As mad as it sounds on the surface I actually want house prices to at least not go up and in an ideal world come down in price. I have two children, 18 and 10, and I want them to be able to have the same opportunity I did to buy their own home and for it to be relatively comfortably affordable. Not to have to take their first mortgage out on their first starter house over 30 years, or longer, as many seem to have to now, and not to have a mortgage that stretches them and potentially with a small rate rise pushes them over the limit. Houses are over priced and have gone up ridiculously over the last 20 years for numerous reasons. I mentioned earlier in the thread the first house I bought has gone up by 500% in 19 years. Average wages haven't got close to even doubling over that time. It can't go on like this and it does need a re-balance. Edited July 13, 2017 by markavfc40 Link to comment Share on other sites More sharing options...
Kingman Posted July 13, 2017 Share Posted July 13, 2017 2 hours ago, peterms said: And then there's the US car loan subprime market... Very much so and could even be the trigger. Auto sales in the US are something i track with restaurant traffic and both are falling fast. Most news articles are far too dismissive of the risk auto loans going bad poses to the wider economy, apparently tiny compared to the reckless subprime mortgage lending seen building up to 07. Never seem to take into account the snowballing effect on the individual's other finances (mortgage). Subprime car loans could be fuelling the next financial crash Hoards of drivers with bad credit ratings, low wages, or no job at all, are being granted massive loans to purchase brand new cars, without needing to pay a deposit up front. And the whole market looks dangerously close to veering off a cliff. Of course, the UK’s economic recovery has hinged on borrowing being cheap, but low interest rates are also largely to blame for levels of consumer credit spiraling out of control. And car finance has been the real beneficiary of this debt binge, racing ahead of credit cards and personal loans. The City watchdog, the Financial Conduct Authority (FCA), is currently investigating the car financing sector, as concerns mount about the size of the debt bubble, which is casting a shadow over our economy. The FCA is worried about irresponsible lending, conflicts of interest, and a lack of transparency in the sector, and is now assessing how these products are sold. The issue has been brewing for the past 10 years, and now two thirds of new car buyers rent their vehicles through loans known as personal contract purchase (PCP) plans. Last year, UK households borrowed £31.6bn to buy cars, and if lenders are hit with large losses then the knock-on effect on businesses across the industry will be severe. City am 1 Link to comment Share on other sites More sharing options...
TrentVilla Posted July 13, 2017 Moderator Share Posted July 13, 2017 7 minutes ago, Kingman said: Very much so and could even be the trigger. Auto sales in the US are something i track with restaurant traffic and both are falling fast. Most news articles are far too dismissive of the risk auto loans going bad poses to the wider economy, apparently tiny compared to the reckless subprime mortgage lending seen building up to 07. Never seem to take into account the snowballing effect on the individual's other finances (mortgage). Subprime car loans could be fuelling the next financial crash Hoards of drivers with bad credit ratings, low wages, or no job at all, are being granted massive loans to purchase brand new cars, without needing to pay a deposit up front. And the whole market looks dangerously close to veering off a cliff. Of course, the UK’s economic recovery has hinged on borrowing being cheap, but low interest rates are also largely to blame for levels of consumer credit spiraling out of control. And car finance has been the real beneficiary of this debt binge, racing ahead of credit cards and personal loans. The City watchdog, the Financial Conduct Authority (FCA), is currently investigating the car financing sector, as concerns mount about the size of the debt bubble, which is casting a shadow over our economy. The FCA is worried about irresponsible lending, conflicts of interest, and a lack of transparency in the sector, and is now assessing how these products are sold. The issue has been brewing for the past 10 years, and now two thirds of new car buyers rent their vehicles through loans known as personal contract purchase (PCP) plans. Last year, UK households borrowed £31.6bn to buy cars, and if lenders are hit with large losses then the knock-on effect on businesses across the industry will be severe. City am Now I agree entirely on all of that. Link to comment Share on other sites More sharing options...
Kingman Posted July 14, 2017 Share Posted July 14, 2017 (edited) Yeah and throw in Rising inflation, Potential rate rise, Unstable Global Market, Stagnating economy, Brexit Uncertainty, Unrealistic house prices, Mass baby boom die off, hefty stamp dutys, political unrest, foreign buyers/investors disappearing, BTLeters heading for the exit over new taxation laws, US interest rates, Canadian interest rates, Australian bubble, Chinese market on brink of collapse, GBP at 10 year low etc... All this coming together to form the perfect storm! Edited July 14, 2017 by Kingman Link to comment Share on other sites More sharing options...
itdoesntmatterwhatthissay Posted July 14, 2017 Share Posted July 14, 2017 13 hours ago, TrentVilla said: Now I agree entirely on all of that. @Kingman @TrentVilla I heard a few podcasts on the subject over the last 12 months but can't remember exactly what was said, not very helpful I know. Speakers seemed to agree that it won't be anywhere near as bad as the housing crash because the loans in say the US, aren't wrapped up over here like housing was. As I remember, podcast disagreement came on the scale of the crash. Some people said it shouldn't matter because not enough people have bet against the market and the loans are fairly small; others thought the estimation of 'numbers of default loans' was wrong and it will create grave knock on problems within the financial sector.....can't remember the exact reason why...will try and find the podcast. When you consider how deep we've gone into a new system of car ownership and the now noticeable increase in credit debt, who really knows! It's a worryingly fascinating topic. Link to comment Share on other sites More sharing options...
Xela Posted July 14, 2017 Share Posted July 14, 2017 Have prices dropped 40% yet? 4 Link to comment Share on other sites More sharing options...
Kingman Posted July 14, 2017 Share Posted July 14, 2017 (edited) Recent months we've seen global credit impulse collapsing, concerted moves to tighten monetary policy, BoE warnings about systemic risk from household debt, sharp increases in defaults, yet only the UK mass media suddenly reporting crash narrative when its been bubbling for months and months, (anchoring expectations of a floor, of course), collapsing instructions, sales and falling prices. Im expecting huge debt defaults/liquidation, I think the house price declines will be faster than ever before in our history, there is a very good chance the US equity markets see a big fall, The entire market depends on lending because apparently there's demand at any rate for credit when it comes to housing at any price. Yesterday the BoE spelt it out in black and white for anyone who's not been paying attention - banks will be lending less because they've created another systemic risk to the economy through cheap credit, by doing exactly what the BoE itself encouraged. Remember the Fed tightened already, Even if they ran off the balance sheet a bit it wont help main street, Gold has popped a bit but the equity markets continue to ignore the facts in front of them. Wont be long before they roll over i expect, The dollar index is on its way to 88 as i expected at 103 but i had thought gold would run up to $1450ish on the sell off in the dollar, hasn't happened though it might need the equity markets to sell off a bit to get going. The Fed has boxed itself into a corner and will be key because they will be slow to accept they need to act, If Yellen tightens again she will just ensure the collapse is even bigger than huge. House prices here in the UK will be one of the hardest hit assets i expect. The next 6 months into late autumn will be critical for how this plays out. Edited July 14, 2017 by Kingman Link to comment Share on other sites More sharing options...
Popular Post Risso Posted July 15, 2017 Popular Post Share Posted July 15, 2017 We finally exchanged contracts today, so if the 40% crash could hold off for a while. Ta 11 Link to comment Share on other sites More sharing options...
wilko154 Posted July 15, 2017 Share Posted July 15, 2017 Finally exchanging contracts next week. 5% deposit with the mortgage spread over 35 years, hardly ideal at all but as a first time buyer I wanted to get out of renting. The house I have gone for I managed to get for a really good price, it's in dire need of a cosmetic work as the guy I am buying from has been there 40 years without modernizing. Looking to sell when my fixed term ends in 2 years for a profit and I can then remortgage and amend to 20 - 25 years at a much lower rate. All in all it's been a bit of a nightmare saving up a deposit whilst renting, the government schemes are all set up so badly for first time buyers. The main scheme they have is set up for first time buyers to buy new builds. 3 Link to comment Share on other sites More sharing options...
Risso Posted July 15, 2017 Share Posted July 15, 2017 Good luck with it Wilko, sounds to me like you've approached things in a sensible way. 1 Link to comment Share on other sites More sharing options...
Genie Posted July 18, 2017 Share Posted July 18, 2017 We're about to chuck our house on the market, had 3 agents around last week to value it and talk fee's. Agent 1: Came across as useless and wants 1% + VAT. Its going on about £290,000 so that's just under £3,500. No chance. Agent 2: Very nice guy and seems to know his stuff. Said usually charges 1% + VAT but offered us £1900 + VAT. Agent 3: Again, seemed very good came in at £1595 + VAT. next day, Agent 2 comes back without any prodding from us... £1500 + VAT. We verbally give him the ok. Yesterday Agent 3 asks us about his quote and we say we're going with Agent 2. He drops his price to £1200 +VAT... I can't believe how they are fighting like this. I'd like to honour my 'word' to Agent 2 but its a save of £360 which can't be sniffed at when we're staring at all the costs of moving house. I've got to ring Agent 2 at 9 and tell him the change of plan... Link to comment Share on other sites More sharing options...
TrentVilla Posted July 18, 2017 Moderator Share Posted July 18, 2017 Just ask him to match it. It is outrageous that they work on a percentage, it's not like they do any more or less work depending upon the value of your house. It is though the reason agents do so many dodgy things and constantly try to push prices up. If they worked to set fees then the market would be a lot better for it as would their reputation. Although in a few years time it's hard to believe estate agents in their current format will exist. Link to comment Share on other sites More sharing options...
Genie Posted July 18, 2017 Share Posted July 18, 2017 54 minutes ago, TrentVilla said: Just ask him to match it. It is outrageous that they work on a percentage, it's not like they do any more or less work depending upon the value of your house. It is though the reason agents do so many dodgy things and constantly try to push prices up. If they worked to set fees then the market would be a lot better for it as would their reputation. Although in a few years time it's hard to believe estate agents in their current format will exist. Just made the call, guy matched it on the spot at £1200 plus VAT so all steam ahead . All 3 agents have said the same thing, that demand is outstripping supply hence they fighting like this. Link to comment Share on other sites More sharing options...
TrentVilla Posted July 18, 2017 Moderator Share Posted July 18, 2017 Well the inflation news should delay any move to increase interest rates. Will be interesting to see what if any impact that has on the market. 1 Link to comment Share on other sites More sharing options...
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