Go  |
New |
Find |
Notify |
|
Reply |
|
Admin |
New PM! |
|
Lightyyy, it depends on how far prices fall, and what happens when your fix lapses in 5 years. THere is a lot of water to go under the bridge between now and then, it will depend upon what % LTV's they are offering. Otherwise, you will have to go on the SVR, whatever that is then. If you decide to move however if prices drop, you were in neg. equity from day one (as you had a 102% mortgage), you will have a shortfall between what you will get if you sell and the outstanding mortgage. So, for example, if prices were 10% lower in 5 years than they are now, you would be short of 12% if on an interest only mortgage, or 12%-(monthly capital repayment X 5 X 12). If you are concerned, speak to an IFA ( I think you can get financial advice through the CAB). Thats what they are there for. I am not an advisor and you would be best placed to speak to an IFA to allay any concerns.
Negative equity sucks!
|
| |
|
|
Lightyyy there isn't any point worrying about it now, you've 5 years before you have to think about a new rate - that's quite a long time in economic terms. Bear in mind also there is potential for your earnings to go up in that time. If you can, save regularly, with a view to paying a lump sum off if it should come to that after 5 years. But really, there's no point in trying to predict what will be happening in 5 years time. From my point of view, well my house didn't rise in price AT ALL over the first 5 years that I had it. But that compares to when I first bought it people were 'oooooh but what if you end up with negative equity'. Nothing happened for a long time but at least the downturn was over by then.
*It is not necessary to understand things in order to argue about them. -- Pierre De Beaumarchais
|
| |
|
|
quote: From my point of view, well my house didn't rise in price AT ALL over the first 5 years that I had it.
Ooh, a boy can dream.... 
Negative equity sucks!
|
| |
|
|
Citywire Doomsday article about house prices.... Article by David Campbell. quote:
Recent house price falls represent just a fraction of the potential 50% downside shown when growth is measured against historical data stretching back almost 60 years.
The analysis, compiled for not-for-profit agency the Debt Advice Bureau, stripped the effects of retail price inflation out of house prices to produce a long-term trend and then compared this to nominal price figures.
Against almost 60 years of data and three major house price corrections, house price growth showed a sustainable floor at between 20% and 25% below the long-term trend.
Recent price gains have been at between 20% and 25% above the long-term trend. Each previous boom of the last 50 years was followed by a 50% correction in price growth.
Once adjusted for the effect of the retail price index measure of inflation on spending power, house prices have already lost 5.5% since their £186,043 peak in October as measured by Nationwide, added the bureau.
The downside could be potentially more severe than previous house price booms which have occurred against a backdrop of high inflation, said bureau director Stephen Rose.
In the late 1980s overall inflation was running in double figures, offering some support to house prices, in comparison to recent RPI inflation which peaked last year at 4.8%.
The lower the inflation and interest rates preceding the correction, the bigger the drop in nominal terms,’ said Rose.
In the early 1970s house price inflation hit 120% of the trend. This prompted a slump where house price growth fell to just under 80% of GDP growth in late 1977 and to 78% in June 1982.
Richard Woolnough, manager of the M&G Optimal Income fund, said comparison with previous crashes was difficult because the 12 years of growth to 2007 was unprecedented. The figures were broadly in line with his expectations of nominal price falls of at least 25% to 30%, however.
‘Given that UK house prices rose about 270% from 1995 to the end of 2007, there is a risk that this crash could be worse,’ said Woolnough, adding falls would be self-reinforcing.
A substantial erosion of spending power would inevitably lead to a recession, he said. He added that he supported recent efforts to provide more liquidity to lenders but it would only be passed on to consumers if interest rates fell further.
Negative equity sucks!
|
| |
|
|
quote: Originally posted by Pflusk: Citywire Doomsday article about house prices.... Article by David Campbell. quote:
Recent house price falls represent just a fraction of the potential 50% downside shown when growth is measured against historical data stretching back almost 60 years.
The analysis, compiled for not-for-profit agency the Debt Advice Bureau, stripped the effects of retail price inflation out of house prices to produce a long-term trend and then compared this to nominal price figures.
Against almost 60 years of data and three major house price corrections, house price growth showed a sustainable floor at between 20% and 25% below the long-term trend.
Recent price gains have been at between 20% and 25% above the long-term trend. Each previous boom of the last 50 years was followed by a 50% correction in price growth.
Once adjusted for the effect of the retail price index measure of inflation on spending power, house prices have already lost 5.5% since their £186,043 peak in October as measured by Nationwide, added the bureau.
The downside could be potentially more severe than previous house price booms which have occurred against a backdrop of high inflation, said bureau director Stephen Rose.
In the late 1980s overall inflation was running in double figures, offering some support to house prices, in comparison to recent RPI inflation which peaked last year at 4.8%.
The lower the inflation and interest rates preceding the correction, the bigger the drop in nominal terms,’ said Rose.
In the early 1970s house price inflation hit 120% of the trend. This prompted a slump where house price growth fell to just under 80% of GDP growth in late 1977 and to 78% in June 1982.
Richard Woolnough, manager of the M&G Optimal Income fund, said comparison with previous crashes was difficult because the 12 years of growth to 2007 was unprecedented. The figures were broadly in line with his expectations of nominal price falls of at least 25% to 30%, however.
‘Given that UK house prices rose about 270% from 1995 to the end of 2007, there is a risk that this crash could be worse,’ said Woolnough, adding falls would be self-reinforcing.
A substantial erosion of spending power would inevitably lead to a recession, he said. He added that he supported recent efforts to provide more liquidity to lenders but it would only be passed on to consumers if interest rates fell further.
Negative equity sucks!
|
| |
|
 | Please Wait. Your request is being processed... |
|
