Abbey have just pulled another load of mortgages.

quote:

Abbey has reduced its SVR by the full 0.25% to 7.09% - max LTV 95%

Our 2 year fixed rates are now up to 90% LTV
red arrow Best 2 year fixed rate 5.99% at 75% LTV

We have removed the 2 year fixed rate at 95% - 7.34%.

They have made IO completely unaffordable.

quote:

The maximum LTV

Without a repayment vehicle will be 50%

With a repayment vehicle will be 75%

If any part of the loan is on an interest only basis, the maximum LTV is 90%

For all loans over 90% LTV, at least one month's bank statement for each borrower must be supplied.

Wonder how long before the other lenders follow suit? Certainly looks as if the BOE bailout isnt working...

Well I borrowed 3x my salary, had to provide 3 months payslips, plus a letter from my part time employer, plus a reference from my landlord at the time. Have they not been asking for proof of income?

quote:

Originally posted by queenstomper:
Well I borrowed 3x my salary, had to provide 3 months payslips, plus a letter from my part time employer, plus a reference from my landlord at the time. Have they not been asking for proof of income?

So did I in 1999. Which was sensible

Since then I have 1 friend who has a more than a 6x mortgage - IO only on a flat. He's screwed once his fixed rate expires! - NOT SENSIBLE!!!

One months bank statement - is that it??!!
Absolutely ridiculous.

Pflusk I was airing a lot of pent-up frustration, it needn't make sense, I admit I know jack about economy and go off how I would run things.

I'm interest only. This is because I'm only 27 and plan to get a very good job eventually within ten years or so. i'll still be only 40 and even though I plan to be well off I'm the sort to keep a bit down to earth so any house I have will be nothing spectacularly expensive so still 25yrs to pay it off repayment.
This house now that we're selling I see as a means of getting on house market. Lucky we did as we got a very good deal till end 2011 and I don't think we'd have found such a good deal so easily now. The next house we hope to get soon, I see as a stayer while I graduate etc. The one I buy when I've been working a while will be a keeper. And it will be beautiful.

A crash is not in my children's interests. They are 2 and 4. How is a crash now, forcing mummy and daddy to remain in Morecambe such a good thing?
We moved here as a major step down in environment to afford a house. Instead of moaning and waiting for crashes I'll be working my way out of here and up and beyond.
When I see the people resigned to living round here and the state of some of their houses I will be glad to look back and think of myself as the one that got away
But, it got us on the property market.

It's not all doom and gloom on interest only. I didn't jack my endowment policy in when it first came about they weren't performing well. I did't claim either as my IFA quite clearly stated nothing was guaranteed. Now granted I have a small mortgage, but then most of the people who were missold didn't have huge mortgages back then anyway.

I am about to cash in and use the money to pay off some of my mortgage. When I've done that I will still have the same term left (12 years) and the recalculated payments mean I will be paying the same as I am now. Seeing as I won't be paying into the plan any more it works out equal.

quote:

Have they not been asking for proof of income?

Oh yes, but just google "Payslips Plus" and you will see how internet technology has got round that little hurdle...

It may not be legal to supply a fake payslip, or as their advertising states

"Established in 1992 we pride ourselves on our fast, reliable and confidential replacement payslip and P60 service. Also as a member of Trust Guard you can be confident that you are ordering from a reputable company.

We offer a wide range of payslips and P60's all produced on Inland Revenue approved forms. Our computerised payroll system ensures accurate results. All client information is deleted after 5 working days".

Nice!

Be much easier if houses werent over 5X earnings dont you think? would save an awful lot of bother!

quote:

Originally posted by malkie:
5% down by Q4 2008, 30% down from peak by Q4 2010

Perfect, thank you. I'm glad someone has the balls to actually give a figure and a timeframe.

Sure I'll happily give you a prediction. Against Hometracks index (which is incidently crrently -0.9% YOY)

- Dec '08 it will be -4.8% YOY
- Dec '09 it will be -5.2% YOY
- Dec '10 it will be -6.2% YOY

So over the 3 years we will see 16.2% falls nominal, in real (inflation adjusted) terms that equals around 25% drop. However I do not think Dec '10 will be the bottom, which will probably come around '12.

I'd do similar predictions against Halifax or Nationwide which will be in similar ballpark.

quote:

Originally posted by Pflusk:

quote:

Have they not been asking for proof of income?

Oh yes, but just google "Payslips Plus" and you will see how internet technology has got round that little hurdle...

It may not be legal to supply a fake payslip, or as their advertising states

"Established in 1992 we pride ourselves on our fast, reliable and confidential replacement payslip and P60 service. Also as a member of Trust Guard you can be confident that you are ordering from a reputable company.

We offer a wide range of payslips and P60's all produced on Inland Revenue approved forms. Our computerised payroll system ensures accurate results. All client information is deleted after 5 working days".

Nice!

Be much easier if houses werent over 5X earnings dont you think? would save an awful lot of bother!

Absolutely. House prices would never have leapt so much in the first place if lenders hadn't been so keen to throw money at people.

quote:

In my view a correction of approximately one third in house prices does not seem implausible in the UK over a period of two or three years if house price to-earnings ratios are to be restored to more sustainable levels. That would mean the ratio of over six would have to come down to around four which is closer to its long run value. This is broadly in line with the projections made by the IMF (2008) who note that the UK is especially vulnerable to
house prices declines – along with France, Ireland and the Netherlands - and suggest that UK house prices are 30% higher than justified by fundamentals. I am not suggesting that such a

Thats 33% in three years, thats more bearish than even my viewpoint!

This was taken from a speech, not from an uber-bear from house price crash, but from a member of the UK's Monetary Policy Ctte, that sets Interest rates, namely David "The Dove" Blanchflower. I find it amazing how quickly sentiment has turned round from "house prices only ever go up" to "The Ceiling is falling in!"

Kirstie Allsopp isnt going to be happy, especially as her reputation has been shot to pieces (prices are falling in Kensington dear too, just like you said they wouldnt). She promised that she would eat her own hat too if prices ever did crash!

I agree they need to fall more in line with earnings etc. where they are grossly overpriced for what they are - London etc.
But what's so unaffordable about where I live in the north that we need 33% off the prices.
I think a widespread national house price crash will be the result of a load of b*llshit scaremongering. The north is perfectly affordable still. Knocking a third off the price of my home is going a bit too far IMO.
Will I be compensated accordingly by the mortgage company who valued my home at a third higher than it was apparently truly worth?

Like I keep saying - people might have to give up that holiday or TV or eating out for a bit. Boohoo, as if we need a crash because of that.

I think in this case, somebody has to be held accountable for this boom that has left people like myself with a house worth nowhere near what it is presumed to be. Because people aren't talking mere falling prices they are saying they are dropping to what they apparently should be, a correction.

So if a correction is needed who conned us into the bloody mistake in the first place?
Banks and their slapdash lending.

quote:

Originally posted by holy cheeses:
Will I be compensated accordingly by the mortgage company who valued my home at a third higher than it was apparently truly worth?

If you can prove that they "valued your home at a third higher that is was truely worth" then yes you may well have a case for recompense.

However, the reality in your instance will probably be.

"It was correctly valued against comparables at that time, but the market has since changed and your house (and all comparables) are worth a lot less".

A lot of surveyors got their fingers burnt durin gthe last crash and got sued, Rest assured most of them will have covered themselves this time with documented comparables.

Even of city centre apartments it may be difficult to prove overpricing as the use of "under the table" incentives distort the pricing of the comparables.

A national crash will not be due to some "scarmongering" but due to the bubble mania that caused the problem in the first place......Did the dotcom crash happen through scaremongering or were the "assets" just blatently overvalued?

quote:

It was correctly valued against comparables at that time

that's my point. The market was unjustifiable inflated and a massive correction is needed. All the comparables were inflated too.

Are we all due compensation for this then?
The market isn't dropping, it's correcting apparently. To me correction implies a mistake.

And no, you can't pin anything on the bank or surveyor as I dealt with a thing like this a couple of years back. And that one completely was mis-valued.

HC,

I havent been on holiday for more than 3 years.

I dont buy consumerist tat, both our cars are secondhand and are needed for work; milage claims pay for both of them including insurance.

I have no outstanding debt.

I pay off credit cards each month.

I have a large deposit.

So Why-oh-why cant I afford the house my parents bought when they started our family off then? Oh, they were on half of the wages me and my wife are on now(inflation adjusted).

I am afraid prices are coming down because they were never worth what they were valued at. From EAs gaining to increased prices to Surveyors benefitting from the huge volumes of sales, it was always in their interests to increase prices, as it was with the banks, who thought they could make almost unlimited profits through Interest on mortgages. All the baloney about supply and demand, immigration etc is being shown to be what it is; a complete pack of lies. We still have net immigration, yet prices are going down. For some people, that still does not compute does it? THey really still dont get that once things turn sour, really sour, everyone who came here as an economic migrant WILL GO HOME!!!

There were plenty of warnings, people chose to ignore them. There is no such thing in life as a free lunch and there certainly is no such thing as house prices increasing exponentially away from key fundamentals such as earnings without lots and lots of innocent people eventually getting burned. Everyone should remember this and NEVER VOTE LABOUR AGAIN.

The scaremongering is happening. Sellers are looking around as normal, putting their houses up as normal.
Buyers are running around with the bells of a crash in their ears, looking for 30% off.

The crash hasn't happened, property has lost, what, 1%? Yet try telling that to the buyers who want 10% off right now not 1%. A couple of EAs knock nearly 10k off my house valuation, admitting if it was last year I'd be looking at xxx amount for definite. Hello? 10k isn't 1%. Or 0.1% as the drop *actually* is round here. Jumping the gun a bit, no?

Buyers will cause a crash with the relentless pursuit of a third off houses just because a few sources have said it's for definite.

Imagine if the news was full of "houses stagnate, prices expected to stay completely static for two years to help bridge the wage gap."
Would everyone be hunting for the slashed bargains all of a sudden?

quote:

because they were never worth what they were valued at

that's my point above

HC, prices are down 5% from the peak, 8% if you account for wage inflation.

The 1% thing is just those in the market skewing things; anyone who bought in the last 12 months has a house worth less now (on average) than when they bought it.

quote:

So Why-oh-why cant I afford the house my parents bought when they started our family off then?

so Pflusk, inflation taken into account, are we buying any food, tobacco, drink etc. at exactly the same price too?

Is this your beef Pflusk? That you can't buy the same house your parents did?
How much would prices have to drop to bring into line with half your earnings then?

I'm seeing asking prices in my town dropping by as much as 20% !

So far we are at the infancy of this "adjustment / correction / crash" whatever you want to call it.

quote:

Originally posted by holy cheeses:
The crash hasn't happened, property has lost, what, 1%? Yet try telling that to the buyers who want 10% off right now not 1%.

Try and see the buyers point of view.....Why should a purchaser pay you full asking knowing full well it will be worth less by the time completion happens? Smart purchasers will want a deal.

1) Smart vendors will know what is happening and will "price to sell" i.e knock 5-10% off their price in order to get the deal done quick.

2) Dumb vendors re-evaluate every month and knock off 0.5% in line with the index.

3) Dumbest vendors hold their price and insist "their house is worth it".

Unless the dumb vendors can find dumb buyers they will just chase the market all the way down to the bottom.

This is the way it works inlife cars, shares, gold, commodities ..... houses are no different.

Fight it and scream at it, but you ain't going to change it. You can't buck the market.

food, tobacco and drink go up and down dependent on taxes and suply and demand. There is only one reason to explain why houses are, on average 300% of what they were worth in 2001 (and in one case on another thread 700% of its 1998 value).

Its called GREED.

And I have sour news for all those purple rinsers who were hoping for me, and millions of other middle/top-rate tax payers to fund your extravagant Royal carribean/Saga holidays though rampant HPI; It anit going to happen! Its not as if you didnt know you were goingto get old so save in an ISA like the rest of us instead of treating your home like an ATM!

quote:

Is this your beef Pflusk? That you can't buy the same house your parents did?
How much would prices have to drop to bring into line with half your earnings then?

No, its not, however, I dont think its too unreasonable to afford something a little more than a paperthin walled newbuild monstrosity bearing in mind I have been saving for three years and for obvious reasons dont want to extend to over 3.5X single earnings (just like my folks were able to), with a 20% deposit.

second half of your question,

They would have to fall 50% in order to restore the balance of joe average wage to joe average property. Now, we both know thats never going to happen across the board, lots of indicators point towards 30% average falls, with ludicrously overpriced newbuilds taking the steepest falls (circe 50% IMO), the nicest areas falling between 10-20% with your joe average 3 bed semi falling around 30%.

Timeframe? Going off the hitoric highly cyclical nature of the property market, it may be 12 years before everyone forgets how hideous this upcoming crash was and rampant HPI starts in earnest. (talking about year on year price climbs above 2X inflation here). Time to bottom? Dunno. But reckon 2010-2012 would be a good bet.

The blame for this mess sits squarely on the doorstep of one man Gordon Brown:

quote:

06/05/97: "I want to set in place a longterm framework for economic prosperity... I want to break from the boom bust economics of previous years."

02/07/97: For most people the acquisition of a house is the biggest single investment they will make. Homeowners rightly expect their investment to be protected by sensible policies pursued by Government. I am determined that as a country we never return to the instability, speculation, and negative equity that characterised the housing market in the 1980s and 1990s.

I don't quite get it to be honest. I have seen no real variation in the number of properties for sale in my area and sold over the past don't know how many years. Yet continually we see new houses going up - pubs and factories knocked down and box-like homes going up where they were.

And yet - for the first time buyer? I am not seeing any houses with less than 3 bedrooms. Never mind they are smaller than your typical 2 bed terrace in overall terms - they're more pricey because they're 'new' (yeah seems in my area this IS a pull for many) and cos they've got more 'rooms' they're priced higher.

So lenders have been throwing money at people so they think they can really and truly afford to live in a bigger place than they need, and the developers aren't even building one and two beds any more (bar luxury apartments that is).

Ridiculous.