Negtive Equity and all that

[davido140]

weLex said:

Yeah I thought as much, the misses said you could take the outstanding debt and transfer it to a new mortgage but it sounded unlikely.

Oh dear, probably time your introduced the other half to the real world.

[scotal]

selmahoos said:

I can't see much problem with a loan of 100% of the price of a property which a proper and accurate valuation shows to be worth considerably more.

And from whence does this derive? Bearing in mind the recent mortgage frauds in Gravesend, Thamesmead and I suspect the £40mio one in Sussex, hinge on bent valuations. (I know there are bent developers, brokers and solicitors involved as well)

[spikeyhead]

I've just put my postcode into Zoopla and it has identical houses next door to each other at £105k and £159k. What effing use is that?

[darronwall]

ride it out

[princeperch]

scotal said:

selmahoos said:

I can't see much problem with a loan of 100% of the price of a property which a proper and accurate valuation shows to be worth considerably more.

And from whence does this derive? Bearing in mind the recent mortgage frauds in Gravesend, Thamesmead and I suspect the £40mio one in Sussex, hinge on bent valuations. (I know there are bent developers, brokers and solicitors involved as well)

I have heard about the goings-on you mention in Sussex and believe me it is very bad indeed...

Edited by princeperch on Thursday 19th March 22:17

[scotal]

princeperch said:

I have heard about the goings-on you mention in Sussex and believe me it is very bad indeed...

9 arrested, 500 properties.one lender. The brokerage involved sounded pretty smal....... I'd love to know the ins and outs.

[silver.fox.2008]

scotal said:

princeperch said:

I have heard about the goings-on you mention in Sussex and believe me it is very bad indeed...

9 arrested, 500 properties.one lender. The brokerage involved sounded pretty smal....... I'd love to know the ins and outs.

Links to story?

[scotal]

http://www.ftadviser.com/FinancialAdviser/Mortgage...

[NoelWatson]

NoelWatson said:

mickken said:

jdw1234 said:

Why would anyone want to lend at a high LTV in a falling market?

IMHO the Brown is making the banks lend out high LTV mortgages as part of "his" rescue plan.

This as anyone knows is stupidity, as it will not be enough to kick start the housing market. Dropping VAT to 15% achieved fk all and the interest rate fiasco will cause more harm than good in the medium to distant future too.

It will earn the UK a downgrade. Trying to artificially support a bubble is a dangerous game.

http://news.bbc.co.uk/1/hi/business/7952923.stm

"Many commentators expect house prices to fall by at least another 10% this year, and quite probably by more.

Figures from the NAO show half of Northern Rock's mortgage loans will be in negative equity if that happens.
"

So if house prices fall another 30%, the vast majority of their book will be underwater. Wonderful.

[NoelWatson]

NoelWatson said:

NoelWatson said:

mickken said:

jdw1234 said:

Why would anyone want to lend at a high LTV in a falling market?

IMHO the Brown is making the banks lend out high LTV mortgages as part of "his" rescue plan.

This as anyone knows is stupidity, as it will not be enough to kick start the housing market. Dropping VAT to 15% achieved fk all and the interest rate fiasco will cause more harm than good in the medium to distant future too.

It will earn the UK a downgrade. Trying to artificially support a bubble is a dangerous game.

http://news.bbc.co.uk/1/hi/business/7952923.stm

"Many commentators expect house prices to fall by at least another 10% this year, and quite probably by more.

Figures from the NAO show half of Northern Rock's mortgage loans will be in negative equity if that happens.
"

So if house prices fall another 30%, the vast majority of their book will be underwater. Wonderful.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/5018160/2m-homeowners-to-fall-into-negative-equity-FSA-warns.html


"The Financial Services Authority (FSA) said that if property prices fall by 30 per cent from their peak - as is likely - two million homeowners and 500,000 buy-to-let investors will be in negative equity"

"This would mean that one in four homeowners with mortgages and half of buy-to-let borrowers may be unable to sell their properties or remortgage until property prices rise."



So even a very optimistic outlook has 25% of homeowners underwater

[Jasandjules]

selmahoos said:

I can't see much problem with a loan of 100% of the price of a property which a proper and accurate valuation shows to be worth considerably more.

But the problem is that there is never a True Worth valuation. It's worth what someone will pay for it, and in a falling market, that may change rapidly. So a 100% LTV mortgage is not a good idea, and the lenders won't do it.

A valuation for mortgage terms, IME, says Price of house = X, Valuation of house = X.

[eliot]

I bought my first place in 1990 for £60k at the age of 19, I was only earning £10,250 at the time. My dad sponsored the mortgage (but didn't pay anything towards it), I had to work my socks off to keep things going. Meanwhile the 90's crash kicked in and the price slumped to £40k. Fortuntely my salary increased quite well and I just started saving like mad and managed to knock £10k of the mortgage. 10 Years later I sold it in 2000 for....drumroll please.... £60k !!.
Of course the mortgage was now £50k, so I had my £10k in hand to put towards the next house - so it was worthwhile excercise IMO.

So if you dont HAVE to move, then sit tight and ride it out - And start saving money.

[Dave_ST220]

Zoopla, pointless.

Has ours at over £10k less than i've sold it for and next doors £15k less than it sold for in THREE DAYS. It then has an identical property valued at over £20k MORE than both out sold prices. It's an esitmate but a bloody poor one.

[NoelWatson]

eliot said:

I bought my first place in 1990 for £60k at the age of 19, I was only earning £10,250 at the time. My dad sponsored the mortgage (but didn't pay anything towards it), I had to work my socks off to keep things going. Meanwhile the 90's crash kicked in and the price slumped to £40k. Fortuntely my salary increased quite well and I just started saving like mad and managed to knock £10k of the mortgage. 10 Years later I sold it in 2000 for....drumroll please.... £60k !!.
Of course the mortgage was now £50k, so I had my £10k in hand to put towards the next house - so it was worthwhile excercise IMO.

So if you dont HAVE to move, then sit tight and ride it out - And start saving money.

In the early 90s, there was a fair bit of (wage) inflation to reduce the burden of the debt - it averaged 6% between start of 1990 and end of 1994. The equivalent number last week was 1.8%.

[GreatGranny]

Chim Chim said:

My Mum heard about it first and called me to see if I knew "Helen had died" and I said "Helen who?". I really didn't think she ment her! She's now refered to as the "dead one". Not that I'm bitter at all. Just because she left me for a DJ from Birmingham she met while on holiday on a Greek island. nah. Just wish I knew where her grave was so I could get my dancing shoes out.

I laughed out loud whilst reading this!

[selmahoos]

Jasandjules said:

selmahoos said:

I can't see much problem with a loan of 100% of the price of a property which a proper and accurate valuation shows to be worth considerably more.

But the problem is that there is never a True Worth valuation. It's worth what someone will pay for it, and in a falling market, that may change rapidly. So a 100% LTV mortgage is not a good idea, and the lenders won't do it.

A valuation for mortgage terms, IME, says Price of house = X, Valuation of house = X.

Usually surveyors ask clients what they're paying prior to doing the valuation, and base valuation on/around that. But if you say "well I'd prefer you to tell me what it's worth BEFORE I decide what I'll offer", and DON'T tell them, you'll find it's rare for valuation to be the same as price. There are innumerable reasons why they needn't necessarily be the same.