How far will house prices fall? [Volume 3]
Discussion
anonymous said:
[redacted]
I've said this elsewhere & I have to agree with Tonker. In the last month I've secured a mortgage for the place I'm buying from a high street bank, on interest only terms. The mortgage was agreed subject to survey in 30mins over the phone. I'd heard all the scare stories about mortgage unavailability, so was pleasently surprised. With the LTV I'm on I'm a good risk for the bank. Good risks they are still happy to lend to; 90% LTV on 4x salary to a public sector employee I wouldn't be lending either!GT03ROB said:
[In the last month I've secured a mortgage for the place I'm buying from a high street bank, on interest only terms. The mortgage was agreed subject to survey in 30mins over the phone.
This is always the case; for the right individuals/companies, credit is almost always available. For ther rest, the banks have the classic approach of offering an umbrella when the sun is shininig and taking it away when the rain falls.I can get credit, my companies can get credit, but it isn't really about you and I. I the UK economy is being held back by credit shortage - some of which is unquestionably justified - because all of the banks have followed each other 'out' in the same was as they all followed each other into the market. Herd mentality is killing viable lending along with unviable stuff.
I don;t actually see this will improve in the short term. As I've already said, QE makes little difference. The econommy can survive the credsit drought, but growth will be glacially slow.
Digga said:
I can get credit, my companies can get credit, but it isn't really about you and I. I the UK economy is being held back by credit shortage - some of which is unquestionably justified - because all of the banks have followed each other 'out' in the same was as they all followed each other into the market. Herd mentality is killing viable lending along with unviable stuff.
I don;t actually see this will improve in the short term. As I've already said, QE makes little difference. The econommy can survive the credsit drought, but growth will be glacially slow.
I tend agree with you, but I wonder also how many people are being disuaded from even applying for credit by scaremongering about credit being unavailable, when it clearly is in the right circumstances. Classic case of too much negativity worseninig a potential slump or slowing growth.I don;t actually see this will improve in the short term. As I've already said, QE makes little difference. The econommy can survive the credsit drought, but growth will be glacially slow.
I'd heard all the scare stories & frankly expected it to take forever to secure the mortgage.
Well it took me about 4.5 minutes to renew the mortgage on my house, and the bank are only to happy to offer o/d facilities to our property maintenance company, and a guy on PH put me in touch with a broker who got me terms - very good terms actually - for the purchase of a commercial property, and far poorer terms for the purchase of a leisure club, etc etc blah blah blah, but I CANNOT get a deal for BTL money. I had a deal in place for some years. It was very lucrative for both me and the bank. The bank withdrew it. The deal allowed me to borrow up to 70% of the value of the portfolio. The current LTV on the portfolio is about 30% and dropping as I continue cap and int payments and add properties bought cash (about £500k's worth this year), and also sell properties and further reduce the burden. Lately I tried to buy a flat for £20k. No-one would lend £15k. In fact noone would lend LESS THAN £25k. And my bank wouldn't lend at all! So I bought it with cash and it currently rents at £350pcm. I'm disheartened so I'm not applying for any more loans. Which means that I grow more slowly - about 75% more slowly - and the banks make the centre of a doughnut.
If YOU are a banker and you'd like to make money on a deal whose downside risk is that the letting industry will collapse and vanish, PM me.
If YOU are a banker and you'd like to make money on a deal whose downside risk is that the letting industry will collapse and vanish, PM me.
No relief for house prices next year, Bank warns
House prices will fall next year, the Bank of England has warned, as home loans become harder to secure amid government spending cuts.
The warning will add to growing fears about fragile house prices after values dropped by their ever biggest monthly amount in September.
The massive job cuts in the public sector and the squeeze on household budgets announced by the Chancellor this week are expected to make it even harder for buyers to secure finance.
The Bank revealed yesterday in its Trends in Lending report that lenders expect house prices to remain little changed or to decline slightly in 2011.
It said mortgage approvals had been lower than expected recently amid a lack of confidence among home buyers and uncertainty about the effects of Government spending cuts.
Lenders do not expect a significant improvement in the number of mortgages approved for those buying a new home before the end of the year, with approvals to fall or remain broadly unchanged, it said.
Mortgage lending dropped to a 10-year low last month, extinguishing any sign of a traditional post summer bounce in mortgage activity.
Gross lending fell to £12 billion in September, down 1 per cent on the previous month and the lowest September total since 2000, according to the Council of Mortgage Lenders.
Mortgage experts warned that securing an affordable home loan will become even tougher for buyers.
Melanie Bien, of mortgage brokers Private Finance, said: Swingeing public sector job cuts are set to have a significant impact on house prices. In those parts of the country where many are at risk of losing their jobs, getting a mortgage is going to become increasingly difficult because of the uncertainty, which will have a negative impact on prices.
Jonathan Cornell, of First Action Finance, said: Theres a chronic lack of funding in the market and with the austerity measures kicking in, the situation is going to get a lot worse. Anyone hoping for house price rises is going to be bitterly disappointed.
While mortgage rates have dropped in recent weeks, banks are continuing to tighten their lending criteria amid fears of rising unemployment and home owners defaulting on their loans.
The Bank of England warned last month that lenders had "tightened credit scoring criteria" and were expect to tighten them even further as they adopted a more "cautious approach".
Further strain was placed on borrowers after the CML warned that interest-only mortgages could vanish amid concern about borrowers ability to repay them.
The City regulator, the Financial Services Authority, said banks should be even stricter with borrowers, carrying out regular checks to ensure that they can afford interest-only mortgages.
House prices in towns, such as Oxford and Hastings, where there is a high proportion of public sector workers will be worse hit as the Governments cuts take hold, property experts have said.
More finance stories from telegraph.co.uk
House prices will fall next year, the Bank of England has warned, as home loans become harder to secure amid government spending cuts.
The warning will add to growing fears about fragile house prices after values dropped by their ever biggest monthly amount in September.
The massive job cuts in the public sector and the squeeze on household budgets announced by the Chancellor this week are expected to make it even harder for buyers to secure finance.
The Bank revealed yesterday in its Trends in Lending report that lenders expect house prices to remain little changed or to decline slightly in 2011.
It said mortgage approvals had been lower than expected recently amid a lack of confidence among home buyers and uncertainty about the effects of Government spending cuts.
Lenders do not expect a significant improvement in the number of mortgages approved for those buying a new home before the end of the year, with approvals to fall or remain broadly unchanged, it said.
Mortgage lending dropped to a 10-year low last month, extinguishing any sign of a traditional post summer bounce in mortgage activity.
Gross lending fell to £12 billion in September, down 1 per cent on the previous month and the lowest September total since 2000, according to the Council of Mortgage Lenders.
Mortgage experts warned that securing an affordable home loan will become even tougher for buyers.
Melanie Bien, of mortgage brokers Private Finance, said: Swingeing public sector job cuts are set to have a significant impact on house prices. In those parts of the country where many are at risk of losing their jobs, getting a mortgage is going to become increasingly difficult because of the uncertainty, which will have a negative impact on prices.
Jonathan Cornell, of First Action Finance, said: Theres a chronic lack of funding in the market and with the austerity measures kicking in, the situation is going to get a lot worse. Anyone hoping for house price rises is going to be bitterly disappointed.
While mortgage rates have dropped in recent weeks, banks are continuing to tighten their lending criteria amid fears of rising unemployment and home owners defaulting on their loans.
The Bank of England warned last month that lenders had "tightened credit scoring criteria" and were expect to tighten them even further as they adopted a more "cautious approach".
Further strain was placed on borrowers after the CML warned that interest-only mortgages could vanish amid concern about borrowers ability to repay them.
The City regulator, the Financial Services Authority, said banks should be even stricter with borrowers, carrying out regular checks to ensure that they can afford interest-only mortgages.
House prices in towns, such as Oxford and Hastings, where there is a high proportion of public sector workers will be worse hit as the Governments cuts take hold, property experts have said.
More finance stories from telegraph.co.uk
groak said:
House prices in towns, such as Oxford and Hastings, where there is a high proportion of public sector workers will be worse hit as the Governments cuts take hold, property experts have said.
I live near Stafford, which has recently been used by the BBC as an example of a 'Soviet State' town. The crap some of these analysts come out with is unreal; one agency stated that an 8% cut in public sector spending would directly correlate to an 8% fall in the towns house prices. b
ks.Not to say it won't be tough though, but some of the 'analysis' stinks.
I see "C3P0 made of ham" is expecting the private sector to pick up the baton on the one hand, but on the other "But he acknowledged that lending to small businesses -- crucial to any private sector recovery -- was "still a major problem" and said the government would do more to improve the flow of credit." http://uk.reuters.com/article/idUKTRE69N1WI2010102...
NoelWatson said:
groak said:
Jobbo said:
The big problem is lack of first time buyers, is it not? There's some churn in the market as people downsize but that's the only factor driving sales, as I see it.
In my corner of the woods the biggest problem is credit availability not desire.
No, it's McLaren's fault for not making it fair value.Dave_ST220 said:
NoelWatson said:
groak said:
Jobbo said:
The big problem is lack of first time buyers, is it not? There's some churn in the market as people downsize but that's the only factor driving sales, as I see it.
In my corner of the woods the biggest problem is credit availability not desire. No, it's McLaren's fault for not making it fair value.NoelWatson said:
Dave_ST220 said:
NoelWatson said:
groak said:
Jobbo said:
The big problem is lack of first time buyers, is it not? There's some churn in the market as people downsize but that's the only factor driving sales, as I see it.
In my corner of the woods the biggest problem is credit availability not desire. No, it's McLaren's fault for not making it fair value.anonymous said:
[redacted]
4.5% looks really good for a 90% mortgage, to my eyes - does that exist?I think part of the problem is lenders' pet surveyors giving overly cautious valuations too. A purchase at say 75% LTV (based on the price paid) might get a good fixed rate of sub-4%, but might be nearer 90% LTV based on the valuation.
Jobbo said:
anonymous said:
[redacted]
4.5% looks really good for a 90% mortgage, to my eyes - does that exist?I think part of the problem is lenders' pet surveyors giving overly cautious valuations too. A purchase at say 75% LTV (based on the price paid) might get a good fixed rate of sub-4%, but might be nearer 90% LTV based on the valuation.
Personally I think that we'll see a further 5-10% drop over the next twelve months, with interest rates staying low well into 2011. Once interest rates start to rise, coupled with stagnant growth and pay (in general), then it is possible for even more to drop off due to distress sales.
No "facts" as such to back this up, just my general gut-feel based on the lack of activity I see in business and the fear that the public service cuts are generating.
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
No "facts" as such to back this up, just my general gut-feel based on the lack of activity I see in business and the fear that the public service cuts are generating.
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
highway said:
I think it's simpler than made out. The banks collectively had a near extinction level event. They now only want to lend to people who are viewed as a minimal risk. Hence the lending isn't available at the levels it was. what's hard to follow?
This is not my experience. A bank reneged on an agreement it made with me because it was in crisis. The business it made the agreement with has not missed a step throughout the "crisis"/"recession" and continues to progress and grow. The bank reneging inhibits the speed of the growth of the business. That's ALL it does. It used to annoy me because it's a waste. Now it doesn't. I've moved on. To a place where funding, and the bank and its views, aren't of any importance. The bank could withdraw its funding entirely now. Not much would change. I'd lose 30% of a property portfolio. And 0% of the unburdened businesses that have grown up all around the property portfolio since the bank was identified as the single biggest threat to my business and its prosperous survival.
groak said:
The City regulator, the Financial Services Authority, said banks should be even stricter with borrowers, carrying out regular checks to ensure that they can afford interest-only mortgages.
More finance stories from telegraph.co.uk
And what exactly are they going to do when they find out they can't and the borrower has no way of repaying the loan?More finance stories from telegraph.co.uk
Or is it to evaluate risk on the books?
Edited by Road Pest on Monday 25th October 22:19
mondeoman said:
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
^Multiply this precise experience accross hundreds of thousands of SMEs and you being to see why the economy is to royally fked. I've lost count of the numbers of customers and suppliers who've been through similar issues with their banks since 2008 - some survived, some didn't - but this is the real elephant in the room as far as I'm concerned.I must stress that I can understand qwhy the banks did it - to reduce gearing, shore-up reserves, survive their own crises in some cases - but that doesn't change the fact that when the government talk about growth, especially in the private sector, I wonder which planet they've been on for the last eighteen months.
Which makes this:
groak said:
the bank was identified as the single biggest threat to my business and its prosperous survival.
a very sound piece of advice for any small business owner. Know your enemy!There's customer risk and supplier risk - too many eggs in one basket etc. etc. - but the bank is usually not factored as such. For many now extinct businesses, this was a grave error.
Digga said:
mondeoman said:
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
^Multiply this precise experience accross hundreds of thousands of SMEs and you being to see why the economy is to royally fked. I've lost count of the numbers of customers and suppliers who've been through similar issues with their banks since 2008 - some survived, some didn't - but this is the real elephant in the room as far as I'm concerned.I must stress that I can understand qwhy the banks did it - to reduce gearing, shore-up reserves, survive their own crises in some cases - but that doesn't change the fact that when the government talk about growth, especially in the private sector, I wonder which planet they've been on for the last eighteen months.
Which makes this:
groak said:
the bank was identified as the single biggest threat to my business and its prosperous survival.
a very sound piece of advice for any small business owner. Know your enemy!There's customer risk and supplier risk - too many eggs in one basket etc. etc. - but the bank is usually not factored as such. For many now extinct businesses, this was a grave error.
"It may be that lending is somehow artificially scarce – as opposed to more prudent, rational and expensive – but I have yet to be shown any real proof of this (surveys of wannabe borrowers, such as small firms, don’t count as they are not objective). Please email me if you have some real proof that banks are curtailing lending en masse for the “wrong” reasons, as opposed to making the odd stupid mistake or pricing loans more expensively to reflect the increased risk of default and the increased cost of capital and liquidity requirements."
NoelWatson said:
Digga said:
mondeoman said:
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
^Multiply this precise experience accross hundreds of thousands of SMEs and you being to see why the economy is to royally fked. I've lost count of the numbers of customers and suppliers who've been through similar issues with their banks since 2008 - some survived, some didn't - but this is the real elephant in the room as far as I'm concerned.I must stress that I can understand qwhy the banks did it - to reduce gearing, shore-up reserves, survive their own crises in some cases - but that doesn't change the fact that when the government talk about growth, especially in the private sector, I wonder which planet they've been on for the last eighteen months.
Which makes this:
groak said:
the bank was identified as the single biggest threat to my business and its prosperous survival.
a very sound piece of advice for any small business owner. Know your enemy!There's customer risk and supplier risk - too many eggs in one basket etc. etc. - but the bank is usually not factored as such. For many now extinct businesses, this was a grave error.
"It may be that lending is somehow artificially scarce – as opposed to more prudent, rational and expensive – but I have yet to be shown any real proof of this (surveys of wannabe borrowers, such as small firms, don’t count as they are not objective). Please email me if you have some real proof that banks are curtailing lending en masse for the “wrong” reasons, as opposed to making the odd stupid mistake or pricing loans more expensively to reflect the increased risk of default and the increased cost of capital and liquidity requirements."
What proof is he expecting? A missive on bank letterhed paper saying "Dear Mr Small Business Owner Don't know why, but we won't give you any money. Now p
s off. Love from, The Bank"?What an utter t
t.If he got his shiny arse up from his desk, descended from his ivory tower and deigned to visit the many and various business parks and industrial estates of the nation and spoke to businesses, he'd get the idea soon enough.
Edited by Digga on Tuesday 26th October 08:22
Digga said:
NoelWatson said:
Digga said:
mondeoman said:
I'd agree that the QE isn't filtering into the economy though. 3 years ago, I could lay my hands on £50-£70k of personal credit (cards, loans, overdraft), no problem at all. Now I'm struggling to get a £2k credit card, O/D has been slashed in half on an account I've held for over 20 years that has made the bank (now spanish..) a fair fortune in interest and charges (which in general I don't have a problem with) and not offered at all for a new account.
^Multiply this precise experience accross hundreds of thousands of SMEs and you being to see why the economy is to royally fked. I've lost count of the numbers of customers and suppliers who've been through similar issues with their banks since 2008 - some survived, some didn't - but this is the real elephant in the room as far as I'm concerned.I must stress that I can understand qwhy the banks did it - to reduce gearing, shore-up reserves, survive their own crises in some cases - but that doesn't change the fact that when the government talk about growth, especially in the private sector, I wonder which planet they've been on for the last eighteen months.
Which makes this:
groak said:
the bank was identified as the single biggest threat to my business and its prosperous survival.
a very sound piece of advice for any small business owner. Know your enemy!There's customer risk and supplier risk - too many eggs in one basket etc. etc. - but the bank is usually not factored as such. For many now extinct businesses, this was a grave error.
"It may be that lending is somehow artificially scarce – as opposed to more prudent, rational and expensive – but I have yet to be shown any real proof of this (surveys of wannabe borrowers, such as small firms, don’t count as they are not objective). Please email me if you have some real proof that banks are curtailing lending en masse for the “wrong” reasons, as opposed to making the odd stupid mistake or pricing loans more expensively to reflect the increased risk of default and the increased cost of capital and liquidity requirements."
What proof is he expecting? A missive on bank letterhed paper saying "Dear Mr Small Business Owner Don't know why, but we won't give you any money. Now p
s off. Love from, The Bank"?What an utter t
t.If he got his shiny arse up from his desk, descended from his ivory tower and deigned to visit the many and various business parks and industrial estates of the nation and spoke to businesses, he'd get the idea soon enough.
We must learn that the new business order is ruled by charts and people at desks telling other people what to think and do, and dismissing evidence that these desk sitters are talking out of the shiny seat of their pants because only desk jockies and sundry anal-ysts have objectivity.
In other words yes what a nutter t
t.Absolutely tt. He's happy to tke the opinions of the "who us, not we're not 'not lending' to business" banks as objective, but somehow, the opinion from the other side of the deal is dismissed as purely subjective.
City A. M.
Business with personality
Someone should tell them that being a gobste does not a personality make.
t. He's happy to tke the opinions of the "who us, not we're not 'not lending' to business" banks as objective, but somehow, the opinion from the other side of the deal is dismissed as purely subjective.City A. M.
Business with personality
Someone should tell them that being a gobs
te does not a personality make.Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff