How far will house prices fall? [Volume 3]

[VX Foxy]

DonkeyApple said:

Sam_68 said:

briSk said:

They have no real 'skill' as builders...

If you'd care to forward me your address, I'll send round Our Nige (Site Manager; ex-army and famed thoughout our organisation for throwing the Queen's security ferrets off one of our sites when they were snooping around without permission prior to a royal visit: 'I don't care who you work for - you don't come on my ******* site without asking me first') to debate this point with you.

318 High St
Cowdenbeath KY4 9QJ


There you go. Let Nige do his worst. Don't forget to tell him that the man who answer's the door also bummed his dad.

I see what you did there

Edited by VX Foxy on Tuesday 2nd November 14:46

[VX Foxy]

Sam_68 said:

briSk said:

They have no real 'skill' as builders...

If you'd care to forward me your address, I'll send round Our Nige (Site Manager; ex-army and famed thoughout our organisation for throwing the Queen's security ferrets off one of our sites when they were snooping around without permission prior to a royal visit: 'I don't care who you work for - you don't come on my ******* site without asking me first') to debate this point with you.

I suspect the explanations might involve imaginative uses for both bricks and 4"x2" timber.

I suppose that's as good a measure of skill as we could expect from a national house builder.

[NoelWatson]

NoelWatson said:

http://www.telegraph.co.uk/finance/economics/81027...


"Bank of England must use QE to buy 'bad mortgages', warns Fathom Consulting"

Following on from yesterday's report, some more in the Wail

http://www.dailymail.co.uk/news/article-1326040/3m...

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Mr Gabay said: ‘It is an extraordinary position to be in. Fixing government finances is important but is only part of the problem. The other, larger part, is fixing household finances, where in fact the crisis began.
‘It is very politically convenient to believe that the crisis was caused by greedy bankers but nobody made people take out mortgages of five times their income. Lots and lots of people borrowed too much.’"

So what I am confused by is that I read this in the paper/online, yet am told on here that there isn't a problem, and the numbers are skewed by the small typical sample sizes of 10, and the fact that most people in the country are self employed. I don't know who to believe


In other news

Ramseywatch

http://www.dailymail.co.uk/tvshowbiz/article-13260...


One for Tonker

http://www.dailymail.co.uk/news/article-1325950/La...

[turbobloke]

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’"

Another arbitrary number, how convincing. Clearly 35 is fundamantally meaningful and safe, much more so than 34 or 36, or 37 even, or then again 33. Maybe if they applied a speed limit of 20 (keyboard hits per minute) to processing the original mortgage application they'd get more meaning. After all 20 is plenty, according to the Speedy Services Authority.

[Bing o]

NoelWatson said:

DonkeyApple said:

We could get Noel his Surrey mansion as a parting gift?

I'm emigrating when Labour get back in

Wrong way round. Enjoy the free piss up whilst the clowns are in power, and then send off your P85 as you GTFO after the Tories come in to fix the problem. Yet again.

[DonkeyApple]

NoelWatson said:

NoelWatson said:

http://www.telegraph.co.uk/finance/economics/81027...


"Bank of England must use QE to buy 'bad mortgages', warns Fathom Consulting"

Following on from yesterday's report, some more in the Wail

http://www.dailymail.co.uk/news/article-1326040/3m...

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Mr Gabay said: ‘It is an extraordinary position to be in. Fixing government finances is important but is only part of the problem. The other, larger part, is fixing household finances, where in fact the crisis began.
‘It is very politically convenient to believe that the crisis was caused by greedy bankers but nobody made people take out mortgages of five times their income. Lots and lots of people borrowed too much.’"

So what I am confused by is that I read this in the paper/online, yet am told on here that there isn't a problem, and the numbers are skewed by the small typical sample sizes of 10, and the fact that most people in the country are self employed. I don't know who to believe


In other news

Ramseywatch

http://www.dailymail.co.uk/tvshowbiz/article-13260...


One for Tonker

http://www.dailymail.co.uk/news/article-1325950/La...

That's 1.3m properties that could be freed up for youngsters who have been smart enough to build up a deposit.

[Digga]

NoelWatson said:

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Seems a bit arbitrary if you ask me.

The 'affordability' surely depends on a lot of other factors; kids, lifestyle etc. etc. and I'd have siad that for a lot of households, spending 35% or even more of their after-tax imncome is not, necessarily any problem.

Seems a bit arbitrary.

[NoelWatson]

Digga said:

NoelWatson said:

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Seems a bit arbitrary if you ask me.

The 'affordability' surely depends on a lot of other factors; kids, lifestyle etc. etc. and I'd have siad that for a lot of households, spending 35% or even more of their after-tax imncome is not, necessarily any problem.

Seems a bit arbitrary.

The problem with affordability methodology is that over time people mysteriously are able to afford more until we get to the point in 2007. While hard rules are not prefect, it will be a lot better than the logic used in the noughties

[DonkeyApple]

Digga said:

NoelWatson said:

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Seems a bit arbitrary if you ask me.

The 'affordability' surely depends on a lot of other factors; kids, lifestyle etc. etc. and I'd have siad that for a lot of households, spending 35% or even more of their after-tax imncome is not, necessarily any problem.

Seems a bit arbitrary.

My first mortgage was certainly more than 35% of my net salary.

But, it does depend on a few factors. The three obvious ones that spring to mind are:

Career prospects of the borrower, is their income scheduled to rise well with employment gains or are they already at peak income?

The other one is whether the debt is interest only or repayment. If repayment then as you say it isn't really all that bad.

And finally, what funding rate are they on and so how exposed are they to rising rates? Obviously, if they are using 35% of salary and on a 1% funding deal they are screwed.

[turbobloke]

DonkeyApple said:

Digga said:

NoelWatson said:

"Even at the current rock-bottom rates, almost 1.3million families are already grappling with mortgage payments that eat up more than 35 per cent of their after-tax income, the level at which the Financial Services Authority classes loans as ‘unaffordable.’

Seems a bit arbitrary if you ask me.

The 'affordability' surely depends on a lot of other factors; kids, lifestyle etc. etc. and I'd have siad that for a lot of households, spending 35% or even more of their after-tax imncome is not, necessarily any problem.

Seems a bit arbitrary.

My first mortgage was certainly more than 35% of my net salary.

But, it does depend on a few factors. The three obvious ones that spring to mind are:

Career prospects of the borrower, is their income scheduled to rise well with employment gains or are they already at peak income?

The other one is whether the debt is interest only or repayment. If repayment then as you say it isn't really all that bad.

And finally, what funding rate are they on and so how exposed are they to rising rates? Obviously, if they are using 35% of salary and on a 1% funding deal they are screwed.

It's arbitrary...not much use in the nineties, noughties or now.

[NoelWatson]

DonkeyApple said:

Career prospects of the borrower, is their income scheduled to rise well with employment gains or are they already at peak income?

Don't people tend to buy a bigger place as and when they get promoted?

[Digga]

NoelWatson said:

DonkeyApple said:

Career prospects of the borrower, is their income scheduled to rise well with employment gains or are they already at peak income?

Don't people tend to buy a bigger place as and when they get promoted?

Yes. They also tend to get promoted to a level of incompetance.

[turbobloke]

Digga said:

NoelWatson said:

DonkeyApple said:

Career prospects of the borrower, is their income scheduled to rise well with employment gains or are they already at peak income?

Don't people tend to buy a bigger place as and when they get promoted?

Yes. They also tend to get promoted to a level of incompetance.

See 'Succession Planning in the Labour Party'

[Halb]

Interest rates. When do the elucidated brethren of the PH night see them going up? Will they spike or rise slowly?

[Digga]

Halb said:

Interest rates. When do the elucidated brethren of the PH night see them going up? Will they spike or rise slowly?

With Uncle Sam about to boost up the printing presses, I think we'll struggle to keep sterling at a level where exports are possible as it is, without jacking base rates up.

Then there's 'unstated' aims of current UK policy; keep sterling low and to allow inflation to reduce the real levels of personal debt (and house prices) without political pain.

[loafer123]

Digga said:

Halb said:

Interest rates. When do the elucidated brethren of the PH night see them going up? Will they spike or rise slowly?

With Uncle Sam about to boost up the printing presses, I think we'll struggle to keep sterling at a level where exports are possible as it is, without jacking base rates up.

Then there's 'unstated' aims of current UK policy; keep sterling low and to allow inflation to reduce the real levels of personal debt (and house prices) without political pain.

I agree completely.

[DonkeyApple]

Halb said:

Interest rates. When do the elucidated brethren of the PH night see them going up? Will they spike or rise slowly?

They will rise slowly and steadily with plenty of advance warnings to start with.

Then as inflation fails to be controlled you will have a series of chunky, out of the blue, rises to combat it.

Ultimately rates will overshoot the long term average before settling back down.

This is based on the fact that they have to go up at some point, we won't have printed the exact right amount of money so inflation is a given and we won't increase the rates to exactly the right level but overshoot.

As to when?

Depends on the recovery, but once that is confirmed then the rises will be playing a hard game of catch-up.

[NoelWatson]

DonkeyApple said:

Ultimately rates will overshoot the long term average before settling back down.

>8%? That will blow property experts clean out of the water.

[VX Foxy]

NoelWatson said:

>8%? That will blow property experts clean out of the water.

Nah, couldn't possibly happen. It's different this time

[martindower]

VX Foxy said:

NoelWatson said:

>8%? That will blow property experts clean out of the water.

Nah, couldn't possibly happen. It's different this time

Not so sure. House prices may drop as much as 25% by the end of next year and that's a lot of negative equity mortgages which could easily be costing over 10% in 2012 as the house-owners have only very expensive funding choices. Add high(er) rates to negative equity and you have the UK's version of the 2007 US collapse, all over again!