Anyone else getting stuffed due to falling house prices?
Discussion
Doubt I'll be the only one on here, but we've just been to see mortgage advisor today who told us after 5 years that we only owe 2% of our house due to the fall in the mortgaged value of the house. We thought we would be in the 87% area but it was worse than we thought.
We'll have to default to the standard 2% above base come June when its up so not looking bad at todays rate however, anyone give any indications as to where it will be by the Summer? We are currently fixed at 5.85% so as long as it doesnt climb too high then I might just make it....
We'll have to default to the standard 2% above base come June when its up so not looking bad at todays rate however, anyone give any indications as to where it will be by the Summer? We are currently fixed at 5.85% so as long as it doesnt climb too high then I might just make it....
Reading chicken chasers post , I think he thought his LTV would be 87% but is in fact 98%
I was looking into a new mortgage and the LTV value is a massive consideration. I think you'll be better sticking with what you have on the variable rate as with some mortgage providers there is no penalty on overpayments so you chisel away at the principal if you have any spare cash.
I was looking into a new mortgage and the LTV value is a massive consideration. I think you'll be better sticking with what you have on the variable rate as with some mortgage providers there is no penalty on overpayments so you chisel away at the principal if you have any spare cash.
Chicken Chaser said:
Doubt I'll be the only one on here, but we've just been to see mortgage advisor today who told us after 5 years that we only owe 2% of our house due to the fall in the mortgaged value of the house. We thought we would be in the 87% area but it was worse than we thought.
We'll have to default to the standard 2% above base come June when its up so not looking bad at todays rate however, anyone give any indications as to where it will be by the Summer? We are currently fixed at 5.85% so as long as it doesnt climb too high then I might just make it....
If you can get 2% above base then that's very good for an SVR and it'll probably approx halve your monthly payments assuming the base rate doesn't go up. If your payments do drop you should probably try to keep them at the same level as you're paying now to clear more of the loan.We'll have to default to the standard 2% above base come June when its up so not looking bad at todays rate however, anyone give any indications as to where it will be by the Summer? We are currently fixed at 5.85% so as long as it doesnt climb too high then I might just make it....
Who knows where the rate is going? But probably not much you can do about it anyway unless you've got a chunky amount of money you can use to reduce the LTV so you can remortgage.
Yeah sorry folks, meant own not owe! Well we looked into getting rid of 2% to take it down to 85% (our 2008 valuation would have had us at 87%) but unfortunately its dire! Like its been stated, could come up trumps if the BOE base rate doesnt rise too much. We wanted to know more about overpayments (which we are now doing) so we are whacking the savings into the mortgage to hopefully sort it out!
We're lucky that the variable with Nationwide is only 2% above base rate, plus they allow £500 overpayments a month on our current deal but unlimited overpayment on the standard variable. I plan just to put the lot into the mortgage now rather than saving it in an ISA as I dont think its worth saving at present.
We're lucky that the variable with Nationwide is only 2% above base rate, plus they allow £500 overpayments a month on our current deal but unlimited overpayment on the standard variable. I plan just to put the lot into the mortgage now rather than saving it in an ISA as I dont think its worth saving at present.
No, the valuations made by nationwide are on their criteria, so no-one comes out to have a look. I think thats odd considering how individual some houses are.
Zoopla has our valuation somewhere near what we paid for it
Either way, fingers crossed for only a very steady rate rise! I'll probably have to wait 12 months before I can look to swap mortgages. Here I was thinking we could move in 18 months. No way at the moment.
Zoopla has our valuation somewhere near what we paid for it
Either way, fingers crossed for only a very steady rate rise! I'll probably have to wait 12 months before I can look to swap mortgages. Here I was thinking we could move in 18 months. No way at the moment.
Chicken Chaser said:
No, the valuations made by nationwide are on their criteria, so no-one comes out to have a look. I think thats odd considering how individual some houses are.
Zoopla has our valuation somewhere near what we paid for it
Either way, fingers crossed for only a very steady rate rise! I'll probably have to wait 12 months before I can look to swap mortgages. Here I was thinking we could move in 18 months. No way at the moment.
So your following the generic valuation given by Nationwide? Who's interest it is to keep you........Zoopla has our valuation somewhere near what we paid for it
Either way, fingers crossed for only a very steady rate rise! I'll probably have to wait 12 months before I can look to swap mortgages. Here I was thinking we could move in 18 months. No way at the moment.
Saying that, even if your valuation was at 80%LTV you wouldn't get a better rate than the Nationwide SVR...
Edited by Sarnie on Saturday 26th February 07:53
I think the whole housing market and mortgage market is poised in a knife edge which is going to fall over as rates rise.
I do not think we are anywhere near the bottom of this` recession. It is not a double dip its a continuous downward slide.
I advise many borrowers who have gone bankrupt and face repossession.
In every case so far we have been able to agree a reduction in the outstanding mortgage to the bankrupt borrower to reflect the fall in value. Typically 30% reduction. That's a hell of a saving when you keep the same property. Without penalty.
Bankruptcy in these circumstances is singularly good news. Without the bankruptcy the borrower would be liable for the negative equity in the house. With bankruptcy he is not. Nor is he liable for his unsecured debts. Total write off total gain.
I don't think situation this was ever envisaged by the Institutions but I can see huge resentment amongst borrowers who actually shoulder their responsibility. They will be seen as mugs and this cannot be right.
This must affect the market in the longer term.
Add to this the ludicrous mortgage requirements now being forced on the lending market and I see a market in free fall.
Am I alone in this view?
I do not think we are anywhere near the bottom of this` recession. It is not a double dip its a continuous downward slide.
I advise many borrowers who have gone bankrupt and face repossession.
In every case so far we have been able to agree a reduction in the outstanding mortgage to the bankrupt borrower to reflect the fall in value. Typically 30% reduction. That's a hell of a saving when you keep the same property. Without penalty.
Bankruptcy in these circumstances is singularly good news. Without the bankruptcy the borrower would be liable for the negative equity in the house. With bankruptcy he is not. Nor is he liable for his unsecured debts. Total write off total gain.
I don't think situation this was ever envisaged by the Institutions but I can see huge resentment amongst borrowers who actually shoulder their responsibility. They will be seen as mugs and this cannot be right.
This must affect the market in the longer term.
Add to this the ludicrous mortgage requirements now being forced on the lending market and I see a market in free fall.
Am I alone in this view?
Steffan said:
I think the whole housing market and mortgage market is poised in a knife edge which is going to fall over as rates rise.
I do not think we are anywhere near the bottom of this` recession. It is not a double dip its a continuous downward slide.
I advise many borrowers who have gone bankrupt and face repossession.
In every case so far we have been able to agree a reduction in the outstanding mortgage to the bankrupt borrower to reflect the fall in value. Typically 30% reduction. That's a hell of a saving when you keep the same property. Without penalty.
Bankruptcy in these circumstances is singularly good news. Without the bankruptcy the borrower would be liable for the negative equity in the house. With bankruptcy he is not. Nor is he liable for his unsecured debts. Total write off total gain.
I don't think situation this was ever envisaged by the Institutions but I can see huge resentment amongst borrowers who actually shoulder their responsibility. They will be seen as mugs and this cannot be right.
This must affect the market in the longer term.
Add to this the ludicrous mortgage requirements now being forced on the lending market and I see a market in free fall.
Am I alone in this view?
Nope. I reckon the housing market will fall further over the next few years as interest rates rise to combat inflation. It seems we are going to have slow but steady interest rate rises for at least the next 2 or 3 years. I also don't see LTV restrictions being eased anytime soon, so things will just get worse. When the housing market is in a bad way with near zero interest rates then alarm bells should be ringing. I predict a long term slump for the next 10 years, where house prices in 2021 will eventually return to 2006 levels!I do not think we are anywhere near the bottom of this` recession. It is not a double dip its a continuous downward slide.
I advise many borrowers who have gone bankrupt and face repossession.
In every case so far we have been able to agree a reduction in the outstanding mortgage to the bankrupt borrower to reflect the fall in value. Typically 30% reduction. That's a hell of a saving when you keep the same property. Without penalty.
Bankruptcy in these circumstances is singularly good news. Without the bankruptcy the borrower would be liable for the negative equity in the house. With bankruptcy he is not. Nor is he liable for his unsecured debts. Total write off total gain.
I don't think situation this was ever envisaged by the Institutions but I can see huge resentment amongst borrowers who actually shoulder their responsibility. They will be seen as mugs and this cannot be right.
This must affect the market in the longer term.
Add to this the ludicrous mortgage requirements now being forced on the lending market and I see a market in free fall.
Am I alone in this view?
Olivera said:
Nope. I reckon the housing market will fall further over the next few years as interest rates rise to combat inflation. It seems we are going to have slow but steady interest rate rises for at least the next 2 or 3 years. I also don't see LTV restrictions being eased anytime soon, so things will just get worse. When the housing market is in a bad way with near zero interest rates then alarm bells should be ringing. I predict a long term slump for the next 10 years, where house prices in 2021 will eventually return to 2006 levels!
In entirely agree.I am interested in Tonker's comment on investing in Housing for a pension. There are serious difficulties here with the Inland Revenue.
Housing is not generally regarded as a qualifying pensionable investment and does not therefore offer the safeguards and relief's that commercial property investment would offer.
May I ask you found a way around these difficulties or do you take the view that overall the risk/benefit balance makes housing investment worthwhile despite the downside taxwise?
I just hope and pray that we dont see the base rate rise too high (I would say anything above 6%) as it will start to strain a lot of us who bought at the top of the boom. I needed to get onto the housing market as I was a first time buyer and unfortunately I missed out on the property boom only 2-3 years earlier where those who were in then can now smugly complain of us on 95% LTV. Yes the equity has fell out of our home, and we now look to be starting a family in a couple of years in a 2 up 2 down property. We're both professionals so its not as if we're scraping along the breadline.
Scraggles said:
on nationwide base rate, "Base Mortgage Rate will stay at no more than 2% above the Bank of England base rate" considering their SVR is currently 3.99% and there are no fees associated with the current deal, am tempted to stay on it until the end of the mortgage
Ah, so their BMR is 2% above BoE base rate and their SVR is 1.49% above that. That's a shame - just the one lot of uplift would have been nice.Deva Link said:
Ah, so their BMR is 2% above BoE base rate and their SVR is 1.49% above that. That's a shame - just the one lot of uplift would have been nice.
Depends which deal you have. Read the paperwork. Most of their fixed rate deals have the "never more than 2% above base" promise built in.
This is not reflected by their SVR, or indeed by their newer deals which have had the 2% promise removed.
Chances are if your fixed rate is to come to an end anytime soon, you'll be on the 2% promise rate.
so will pay 2.5% provided base stays where it is now.
Depends how long you can wait.
My concern is that the dog in a manger approach to lending which the mortgage market currently exhibits will inevitably force prices in a downward spiral for as long as it lasts.
By 2008 Northern Rock and others were almost giving mortgages away, offering 120%++ willy nilly.
The market soared.
Now the same individuals require 50% deposits and both grandparents present before even looking at a case. And many lenders insist upon £1000++ 'Arrangement fees' even with a 50% deposit.
If this goes on unchecked the market will free fall for literally years.
Unchecked there could be a 50% drop in real values.
The latest case I have seen has resulted in a repo originally sold at £250,000 in 2006 (which it was never worth) SOLD for £75,000 in 2010, which is ludicrous but a fact.
This is NOT a story its a fact verified by the prices shown on the Land Registry.
Inner city buy to let property which is probably as bad as the market gets.
But a 60% drop in value?
Depends how long you can wait.
Until the bankers realise the inevitable consequences of their current approach the market will continually slide down.
Wait a year buy cheaper.
Wait two years buy cheaper.
Wait three years buy cheaper.
In the 90's crash individuals who I knew then in property development who went on extended holidays abroad and got out of UK property development lost less money than the players who remained in the UK development market.
Simple fact was this was not a market in which money could be made.
How long can you wait?
My concern is that the dog in a manger approach to lending which the mortgage market currently exhibits will inevitably force prices in a downward spiral for as long as it lasts.
By 2008 Northern Rock and others were almost giving mortgages away, offering 120%++ willy nilly.
The market soared.
Now the same individuals require 50% deposits and both grandparents present before even looking at a case. And many lenders insist upon £1000++ 'Arrangement fees' even with a 50% deposit.
If this goes on unchecked the market will free fall for literally years.
Unchecked there could be a 50% drop in real values.
The latest case I have seen has resulted in a repo originally sold at £250,000 in 2006 (which it was never worth) SOLD for £75,000 in 2010, which is ludicrous but a fact.
This is NOT a story its a fact verified by the prices shown on the Land Registry.
Inner city buy to let property which is probably as bad as the market gets.
But a 60% drop in value?
Depends how long you can wait.
Until the bankers realise the inevitable consequences of their current approach the market will continually slide down.
Wait a year buy cheaper.
Wait two years buy cheaper.
Wait three years buy cheaper.
In the 90's crash individuals who I knew then in property development who went on extended holidays abroad and got out of UK property development lost less money than the players who remained in the UK development market.
Simple fact was this was not a market in which money could be made.
How long can you wait?
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