Property crash, just maybe it really is different this time

[No One]

1 hour ago, Rhines said:

Hi, I use this one with Chrome + Rightmove, there may be others https://chrome.google.com/webstore/detail/property-log/jccihedpilhidcbkconacnalppdeecno?hl=en-GB

 

1 hour ago, Bobthebuilder said:

That's the one I use.

 

1 hour ago, onlyme said:

The property bee tool?

 

51 minutes ago, Formerly said:

Don't know who you are referring to but Patma does the job for rightmove and zoopla.

That's brilliant thank you, very very useful now I have begun to look with the intention of getting something after the crash.

[HousePriceMania]

41 minutes ago, dnb24 said:

@HousePriceManiaHuge increase this week (and it’s only Tuesday)- now over 1300

Thanks @dnb24

I kicked off a new run of the Property Lion index yesterday so will have an update wed/thursday 

It's getting interesrting!!!

[spunko]

Apologies if this is a slightly naive question, I was thinking earlier though, if interest rates go to to 5%, and as fixed rate terms come to an end (as mine will do in about 3 years), I'll have to go through the remortgage application process again..

Which will include affordability checks. If you cannot afford the repayments and fail the affordability test, what happens?

I'm luckily not in that position but a lot of folk will be, and I'm not saying I have sympathy etc, just wondered what happened in the past...

[sancho panza]

6 hours ago, Ina said:

Spoke to a colleague today who deals with new build properties.  He said there has been a sudden and marked decline in new instructions.  Also the developers on site has noticed a massive fall in new enquires.  I enquired whether it was a blip - August holidays etc.  He said no it was due to the cost of living crisis and anyone would be mad to take on a substantial mortgage right now.  
New build is very different from ordinary residential property sales as there is a 6 month time lag in that people who signed up for a new house generally do so off plan and do not complete the purchase until the house is built 6 months later.

fascinating insight.thank you

4 hours ago, dnb24 said:

@HousePriceManiaHuge increase this week (and it’s only Tuesday)- now over 1300

which area you looking dnb?

14 minutes ago, spunko said:

Apologies if this is a slightly naive question, I was thinking earlier though, if interest rates go to to 5%, and as fixed rate terms come to an end (as mine will do in about 3 years), I'll have to go through the remortgage application process again..

Which will include affordability checks. If you cannot afford the repayments and fail the affordability test, what happens?

I'm luckily not in that position but a lot of folk will be, and I'm not saying I have sympathy etc, just wondered what happened in the past...

defaultis that you fall onto your current mortgages SVR I beleive.Happy to be corrected by an expert.

[XswampyX]

1 minute ago, sancho panza said:

defaultis that you fall onto your current mortgages SVR I beleive.Happy to be corrected by an expert.

I think that's correct.

SVR = Base rate * how desperate you are.

[sancho panza]

9 hours ago, Noallegiance said:

Gets covered by Mish

https://mishtalk.com/economics/housing-starts-drop-9-6-percent-below-pre-pandemic-level-led-by-single-family

 

 

https://mishtalk.com/economics/nahb-sentiment-declines-eighth-consecutive-month-into-negative-territory

 

 

 

 

[Wight Flight]

29 minutes ago, XswampyX said:

I think that's correct.

SVR = Base rate * how desperate you are.

Happened to my brother. He became a mortgage prisoner paying several % over what everyone else was as he was unable to change lender.

[HousePriceMania]

The Chinese have the solution to the property market...why didnt we think of this....

 

 

Or maybe we did.

[sancho panza]

https://www.redfin.com/news/home-purchases-fall-through-july-2022/

 

Nationwide, roughly 63,000 home-purchase agreements fell through in July, equal to 16.1% of homes that went under contract that month. That’s the highest percentage on record with the exception of March and April 2020, when the onset of the coronavirus pandemic brought the housing market to a near standstill. It’s up from a revised rate of 15% one month earlier and 12.5% one year earlier.

7k

This is according to a Redfin analysis of MLS data going back through 2017. Please note that homes that fell out of contract during a given month didn’t necessarily go under contract the same month. For example, a home that fell out of contract in July could have gone under contract in June. This data is subject to revision.

[HousePriceMania]

10 hours ago, spunko said:

Apologies if this is a slightly naive question, I was thinking earlier though, if interest rates go to to 5%, and as fixed rate terms come to an end (as mine will do in about 3 years), I'll have to go through the remortgage application process again..

Which will include affordability checks. If you cannot afford the repayments and fail the affordability test, what happens?

I'm luckily not in that position but a lot of folk will be, and I'm not saying I have sympathy etc, just wondered what happened in the past...

interest rates or mortgage rates ? 

Some mortgage rates around over 5%

Edited August 17, 2022 by HousePriceMania

[Boon]

10 hours ago, spunko said:

Apologies if this is a slightly naive question, I was thinking earlier though, if interest rates go to to 5%, and as fixed rate terms come to an end (as mine will do in about 3 years), I'll have to go through the remortgage application process again..

Which will include affordability checks. If you cannot afford the repayments and fail the affordability test, what happens?

I'm luckily not in that position but a lot of folk will be, and I'm not saying I have sympathy etc, just wondered what happened in the past...

At this current rate if that happens SVR might be 8.5%.

What to do? Go moan to the papers and pretend that your mental health has been affected and that the government need to do something.

There will be a lot of people screaming blue murder and injustice - after all, how can they be turned down for a £1000 a month repayment because the bank says they can't afford it, but then the bank are happy to charge them, and expect them to pay £2000?

Nowhere will it be said that is kind of what they signed up for, and they had years to do a longer fix and lower rates but didn't want to pay early redemption charge. There will also be some kind of screaming that the ERC is also unfair. But it also won't be accepted that if ERC didn't exist, neither would teaser rates.

[spunko]

8 minutes ago, Boon said:

At this current rate if that happens SVR might be 8.5%.

What to do? Go moan to the papers and pretend that your mental health has been affected and that the government need to do something.

There will be a lot of people screaming blue murder and injustice - after all, how can they be turned down for a £1000 a month repayment because the bank says they can't afford it, but then the bank are happy to charge them, and expect them to pay £2000?

Nowhere will it be said that is kind of what they signed up for, and they had years to do a longer fix and lower rates but didn't want to pay early redemption charge. There will also be some kind of screaming that the ERC is also unfair. But it also won't be accepted that if ERC didn't exist, neither would teaser rates.

Well the banking industry will have its arsed covered anyway as they have supposedly 'stress tested' everyone taking out a mortgage even if interest rates hit 8% or whatever. My understanding is that they went on the basis that if you can't afford 8% interest rates you won't be getting a mortgage from us.

Only time will tell if they actually bothered with this. And it looks like it's been canned in the last year anyway so perhaps those folk will have to do some sort of "missold muh mortgage" legal action.

[spunko]

9 hours ago, Wight Flight said:

Happened to my brother. He became a mortgage prisoner paying several % over what everyone else was as he was unable to change lender.

What was the property market like at that time?

 

[dnb24]

10 hours ago, sancho panza said:

which area you looking dnb?

Midlands mate

[A_P]

10 hours ago, spunko said:

Apologies if this is a slightly naive question, I was thinking earlier though, if interest rates go to to 5%, and as fixed rate terms come to an end (as mine will do in about 3 years), I'll have to go through the remortgage application process again..

Which will include affordability checks. If you cannot afford the repayments and fail the affordability test, what happens?

I'm luckily not in that position but a lot of folk will be, and I'm not saying I have sympathy etc, just wondered what happened in the past...

AIUI affordability checks are not guaranteed with a mortgage fix renewal using the same lender.

[onlyme]

6 minutes ago, spunko said:

Well the banking industry will have its arsed covered anyway as they have supposedly 'stress tested' everyone taking out a mortgage even if interest rates hit 8% or whatever. My understanding is that they went on the basis that if you can't afford 8% interest rates you won't be getting a mortgage from us.

Only time will tell if they actually bothered with this. And it looks like it's been canned in the last year anyway so perhaps those folk will have to do some sort of "missold muh mortgage" legal action.

LOL stress tested, what based on cost of living 3, 5, 10 years ago, real inflation or the manipulated especially made up to provide cheap funding for the banks/govt? Did they run the numbers with 30-50% inflation under the bridge and 10-20% salary increase over a small number of years, if that?

[Frank Hovis]

7 minutes ago, spunko said:

Well the banking industry will have its arsed covered anyway as they have supposedly 'stress tested' everyone taking out a mortgage even if interest rates hit 8% or whatever. My understanding is that they went on the basis that if you can't afford 8% interest rates you won't be getting a mortgage from us.

Only time will tell if they actually bothered with this. And it looks like it's been canned in the last year anyway so perhaps those folk will have to do some sort of "missold muh mortgage" legal action.

 

If you fail the affordability tests then you won't be offered another mortgage however your expiring mortage is now repayable so either you sell your house to repay it or allow the Bank / Bsoc to possess it and auction it; giving you any surplus from the sale.

Whne this happened in the 1990s the very strong advice was to sell the house yourself as it would fetch far more than it would at auction.

In the 1990s the primary reason for this happening was not fixed term mortgage expiry but people being unable to meet their required payments on their normal 25 year mortgages owing to interest rate rises and oftne job losses.

People literally handed the keys into BSocs / Banks and said "have it" because, as prices had fallen, they were in negative equity.

There was however a sting in the tail because if the auction proceeds didn't pay off the mortgage then the Bank / BSoc would pursue the borrower for the balance, plus interest, and often several years later when they thought it was all settled.

[spunko]

1 minute ago, Frank Hovis said:

 

If you fail the affordability tests then you won't be offered another mortgage however your expiring mortage is now repayable so either you sell your house to repay it or allow the Bank / Bsoc to possess it and auction it; giving you any surplus from the sale.

Whne this happened in the 1990s the very strong advice was to sell the house yourself as it would fetch far more than it would at auction.

In the 1990s the primary reason for this happening was not fixed term mortgage expiry but people being unable to meet their required payments on their normal 25 year mortgages owing to interest rate rises and oftne job losses.

People literally handed the keys into BSocs / Banks and said "have it" because, as prices had fallen, they were in negative equity.

There was however a sting in the tail because if the auction proceeds didn't pay off the mortgage then the Bank / BSoc would pursue the borrower for the balance, plus interest, and often several years later when they thought it was all settled.

Are you sure that you won't be offered a new mortgage as unfixed and at SVR?

[spunko]

7 minutes ago, onlyme said:

LOL stress tested, what based on cost of living 3, 5, 10 years ago, real inflation or the manipulated especially made up to provide cheap funding for the banks/govt? Did they run the numbers with 30-50% inflation under the bridge and 10-20% salary increase over a small number of years, if that?

Sometimes the memes are real.

 

It is going to get interesting, to say the least.

[A_P]

unemployed was able to transfer to a better product...

https://forums.moneysavingexpert.com/discussion/6033492/mortgage-renewal-unemployed

 

[spunko]

Main news this morning is again about rocketing inflation.

[Boon]

9 minutes ago, spunko said:

Well the banking industry will have its arsed covered anyway as they have supposedly 'stress tested' everyone taking out a mortgage even if interest rates hit 8% or whatever. My understanding is that they went on the basis that if you can't afford 8% interest rates you won't be getting a mortgage from us.

Only time will tell if they actually bothered with this. And it looks like it's been canned in the last year anyway so perhaps those folk will have to do some sort of "missold muh mortgage" legal action.

That requirement has gone now.

But even in the past it was +3% over the SVR I think, because it was unthinkable it could drift any further than that.

This being said on paper even 8.5% is theoretically affordable if you have borrowed within your means. ie £40k borrowing 4.5x is borrowing £180k on a £300k house.

8.5% SVR on a 30 year is £1385 on takehome of c.£2600. It just won't be very pleasant and effectively living month-to-month.

 

[Frank Hovis]

Just now, spunko said:

Are you sure that you won't be offered a new mortgage as unfixed and at SVR?

 

No I'm not sure that they won't.  Though that in itself is a hostage to fortune as interest rates climb.

I was outlining what happened last time when people were unable to pay the mortgage: the bank will without question take your house.

People didn't really believe that that would happen then and they don't now; but oh yes they did and it will again.

I may be conflating real and read memories but IIRC my receptionist's nephew handed back the keys on his first house.

[Boon]

5 minutes ago, Frank Hovis said:

 

If you fail the affordability tests then you won't be offered another mortgage however your expiring mortage is now repayable so either you sell your house to repay it or allow the Bank / Bsoc to possess it and auction it; giving you any surplus from the sale.

 

This happened to me in the the GFC. Also negative equity. I knew I had no chance of remortgaging anywhere as I was on the self-cert product which had dropped out of fashion.

Thing is if you don't apply for another mortgage, say nothing and just allow the product to drift onto the SVR you get a letter telling you , nothing else happened. In theory I could have been margin called.

I doubt a bank would repo someone who is paying SVR, that's great money for them.

[Frank Hovis]

6 minutes ago, Boon said:

This happened to me in the the GFC. Also negative equity. I knew I had no chance of remortgaging anywhere as I was on the self-cert product which had dropped out of fashion.

Thing is if you don't apply for another mortgage, say nothing and just allow the product to drift onto the SVR you get a letter telling you , nothing else happened. In theory I could have been margin called.

I doubt a bank would repo someone who is paying SVR, that's great money for them.

Sorry to hear that.