Property crash, just maybe it really is different this time

[Stuey]

25 minutes ago, JoeDavola said:

6.43% means you'll have paid double the mortgage amount over 25 years:

and over 35 years....

I think you've missed the boat.

Might as well forget about houses until the 2030s. 

[JoeDavola]

2 minutes ago, Stuey said:

I think you've missed the boat peak.

Fixed that for you.

[Noallegiance]

38 minutes ago, JoeDavola said:

6.43% means you'll have paid double the mortgage amount over 25 years:

and over 35 years....

In that case it's inevitable that prices must decrease sharply.

[Boon]

Since when the average Joe Public ever start looking at the total repaid back? The monthly payment is all that matters.

That has been the case since forever.

Pretty soon you'll see people on mumsnet MSE saying how they extended their term and 'saved' money.

[A_P]

1 hour ago, JoeDavola said:

6.43% means you'll have paid double the mortgage amount over 25 years:

 

and over 35 years....

 

doesn't change much from an affordability perspective for the average couple. is the the death of the 25 year mortgage for most going forward?

is it easy to extend the term of an existing mortgage at renewal with the same provider? eg those already five to ten years in adding on a few extra years to keep the monthly amount similar to what they are paying.

[JoeDavola]

8 minutes ago, A_P said:

doesn't change much from an affordability perspective for the average couple. is the the death of the 25 year mortgage for most going forward?

Well anedotally 30-35 year mortgages seemed the norm for the last few years for young folk.

[A_P]

2 minutes ago, JoeDavola said:

Well anedotally 30-35 year mortgages seemed the norm for the last few years for young folk.

I would agree, but i was more referring to existing borrows whom would be on a traditional 25 year term. Do you keep on term of say the remaining 20-15 years or do you now push it back? Banks will take state retirement age (or maybe even one you pick).

I can well envisage most will take the extra term versus sacrificing, taking on extra work and cutting out a lot of the spend

[JoeDavola]

29 minutes ago, A_P said:

I would agree, but i was more referring to existing borrows whom would be on a traditional 25 year term. Do you keep on term of say the remaining 20-15 years or do you now push it back? Banks will take state retirement age (or maybe even one you pick).

I can well envisage most will take the extra term versus sacrificing, taking on extra work and cutting out a lot of the spend

Agreed.

[sancho panza]

SOunds extreme but I'd put nothingpast a banker defending their leverage ratio

https://www.telegraph.co.uk/personal-banking/mortgages/banks-pulling-mortgage-offers-costing-homebuyers-thousands-legal/

Prospective homebuyers have lost thousands of pounds in deposits and legal fees after lenders pulled mortgage offers in anticipation of a market downturn. 

Estate agents reported a rise in banks cancelling offers in the past two weeks – after a backlash to Chancellor Kwasi Kwarteng’s tax cuts caused markets to price in higher interest rates. 

It is rare for banks to renege on an offer – the measure is usually reserved for when there has been a significant change in affordability or a legal problem has arisen. 

However, Marc von Grundherr, of London estate agency Benham and Reeves, said banks were even U-turning on offers after contracts between the buyer and seller had been exchanged. 

He said: “In my 25 years, I have never seen a lender pull a mortgage offer but we have heard of at least 10 cases. To go back on a firm mortgage offer is pretty awful and very stressful for everyone involved.” 

In one instance a buyer purchasing a property worth just under £3 million in London had secured a mortgage offer at 2.2pc with a 35pc deposit. Mr von Grundherr said: “The property was off-plan and he had already exchanged and paid the deposit, then just under two weeks ago the lender, who is a major high street name, pulled the offer and hiked the rate to 4.8pc. 

 

“It has more than doubled the financing costs and the buyer could lose their deposit and be sued by the seller for legal costs.” 

The average two-year fixed rate has soared to 6.43pc, up from 4.74pc on the day of the mini-Budget just under three weeks ago. Meanwhile the average five-year fixed rate has jumped from 4.75pc to 6.29pc, according to analyst Moneyfacts. 

The Telegraph spoke with one estate agent who had 20 sales fall through in the week following Mr Kwarteng’s mini-Budget, some because lenders withdrew offers and agreements in principle. 

Banks are more likely to pull the latter, which is a less formal indication of how much a buyer can borrow and a precursor in the application process. 

Mr Lamdin added: “This is just the beginning. I have been contacted by concerned parents desperate to talk their children out of buying because of the risk that comes with a large mortgage. 

Edited October 12, 2022 by sancho panza

[One percent]

I know it’s not exactly the right county but one for @Frank Hovisand all those in tourist hotspots. Bring. It. On. 

https://www.dailymail.co.uk/news/article-11308033/House-prices-Cornwall-plunge-mortgage-rates-soar-second-home-buyer-demand-dries-up.html

House prices in Cornwall could plunge as the county recorded one of England's largest drops in demand from second home buyers amid turmoil in the mortgage market.

The end of the Covid 'staycation' trend coupled with higher mortgage rates since the government's mini budget announcement has threatened the second home market.

Demand has reportedly fallen in every UK county between June and September - but rural and coastal holiday properties have been hit the hardest, data shows. 
 

 

[sancho panza]

https://propertyindustryeye.com/eye-newsflash-liz-truss-confirms-government-plans-to-press-ahead-with-abolishing-section-21/

Liz Truss has within the past few minutes confirmed that the government is not backtracking on their plans to scrap Section 21 so-called ‘no fault’ evictions and will press ahead with the policy.

https://propertyindustryeye.com/sharp-rise-in-number-of-rental-applications-rejected-by-agents/

There has been a significant increase in the number of rental applications which are not being approved by agents, according to data from Vouch.

Data collected throughout 2022 has shown a massive spike in letting agents cancelling tenancy applications. Between January and April of this year, there were an average of 509 tenancies being cancelled by agents each month. The figures have then steadily risen with each passing month. In August, a huge 1,959 applications were voided – nearly quadruple the rate recorded in the first months of 2022.

This means that as many as 19% of all tenancy applications across England were cancelled during August, compared to just 4% during January.

Tenancies can be cancelled for a range of reasons, including tenants failing reference or credit checks, having insufficient funds to cover prospective rental costs, or if applications are suspected of fraud.

This data only includes tenancies cancelled by letting agents and excludes incidences where the tenant themselves pulled out of the process.

Experts at Vouch believe the rising cost of rent and wider increases in the cost of living mean more tenants are unable to meet the financial obligations of their preferred tenancies. In addition, the introduction of sophisticated anti-fraud measures are picking up on suspicious tenancy applications before they are approved with greater accuracy.

[Chewing Grass]

Just checked my first 3 digit postcode search and only 1 new property has been listed in the last 14 days which is mind-boggling really with 228 still on sale. It infers nothing is really moving.

[No One]

20 minutes ago, Chewing Grass said:

Just checked my first 3 digit postcode search and only 1 new property has been listed in the last 14 days which is mind-boggling really with 228 still on sale. It infers nothing is really moving.

The constant uptick in listings has flatlined at 350, up from 250 in summer. Interesting development.

I expect as IR rise we might see the numbers shooting up again in desperation. The repos will be when it gets interesting.

[HousePriceMania]

41 minutes ago, sancho panza said:

SOunds extreme but I'd put nothingpast a banker defending their leverage ratio

https://www.telegraph.co.uk/personal-banking/mortgages/banks-pulling-mortgage-offers-costing-homebuyers-thousands-legal/

Prospective homebuyers have lost thousands of pounds in deposits and legal fees after lenders pulled mortgage offers in anticipation of a market downturn. 

Estate agents reported a rise in banks cancelling offers in the past two weeks – after a backlash to Chancellor Kwasi Kwarteng’s tax cuts caused markets to price in higher interest rates. 

It is rare for banks to renege on an offer – the measure is usually reserved for when there has been a significant change in affordability or a legal problem has arisen. 

However, Marc von Grundherr, of London estate agency Benham and Reeves, said banks were even U-turning on offers after contracts between the buyer and seller had been exchanged. 

He said: “In my 25 years, I have never seen a lender pull a mortgage offer but we have heard of at least 10 cases. To go back on a firm mortgage offer is pretty awful and very stressful for everyone involved.” 

In one instance a buyer purchasing a property worth just under £3 million in London had secured a mortgage offer at 2.2pc with a 35pc deposit. Mr von Grundherr said: “The property was off-plan and he had already exchanged and paid the deposit, then just under two weeks ago the lender, who is a major high street name, pulled the offer and hiked the rate to 4.8pc. 

 

“It has more than doubled the financing costs and the buyer could lose their deposit and be sued by the seller for legal costs.” 

The average two-year fixed rate has soared to 6.43pc, up from 4.74pc on the day of the mini-Budget just under three weeks ago. Meanwhile the average five-year fixed rate has jumped from 4.75pc to 6.29pc, according to analyst Moneyfacts. 

The Telegraph spoke with one estate agent who had 20 sales fall through in the week following Mr Kwarteng’s mini-Budget, some because lenders withdrew offers and agreements in principle. 

Banks are more likely to pull the latter, which is a less formal indication of how much a buyer can borrow and a precursor in the application process. 

Mr Lamdin added: “This is just the beginning. I have been contacted by concerned parents desperate to talk their children out of buying because of the risk that comes with a large mortgage. 

Has Mr Lamdin not worked out him and his bubble blowing self serving commission based, thick, 2nd hand house salesmen mates are reaping what they sowed? 

[Axeman123]

46 minutes ago, sancho panza said:

It is rare for banks to renege on an offer – the measure is usually reserved for when there has been a significant change in affordability

47 minutes ago, sancho panza said:

The average two-year fixed rate has soared to 6.43pc, up from 4.74pc on the day of the mini-Budget just under three weeks ago. Meanwhile the average five-year fixed rate has jumped from 4.75pc to 6.29pc

Yes.

[Bear Hug]

11 minutes ago, Axeman123 said:

Yes.

Renting is half price of buying in my house right now!! Guess it will have to fall in price by 50%, because no way they can double the rent

[Axeman123]

Just now, Bear Hug said:

Renting is half price of buying in my house right now!! Guess it will have to fall in price by 50%, because no way they can double the rent

With no more no fault eviction you might be able to get it for a song.

[No One]

 

[roundhouse]

Thank you 1%! You've made my day!

 

1 hour ago, One percent said:

I know it’s not exactly the right county but one for @Frank Hovisand all those in tourist hotspots. Bring. It. On. 

https://www.dailymail.co.uk/news/article-11308033/House-prices-Cornwall-plunge-mortgage-rates-soar-second-home-buyer-demand-dries-up.html

House prices in Cornwall could plunge as the county recorded one of England's largest drops in demand from second home buyers amid turmoil in the mortgage market.

The end of the Covid 'staycation' trend coupled with higher mortgage rates since the government's mini budget announcement has threatened the second home market.

Demand has reportedly fallen in every UK county between June and September - but rural and coastal holiday properties have been hit the hardest, data shows. 
 

 

 

[Wight Flight]

47 minutes ago, Bear Hug said:

Renting is half price of buying in my house right now!! Guess it will have to fall in price by 50%, because no way they can double the rent

A mortgage on my place would be £3,500.

Rent is £1,200.

Both numbers are nuts.

[Frank Hovis]

1 hour ago, Bear Hug said:

Renting is half price of buying in my house right now!! Guess it will have to fall in price by 50%, because no way they can double the rent

 

I have noted before that I bought in London in the mid nineties because buying was half the price of renting.

[Bear Hug]

7 minutes ago, Frank Hovis said:

 

I have noted before that I bought in London in the mid nineties because buying was half the price of renting.

It's difficult to read that a not think about early retirement and plans what to do with all that money! 

[Frank Hovis]

23 minutes ago, Bear Hug said:

It's difficult to read that a not think about early retirement and plans what to do with all that money! 

At the time my expectation was that prices would continue to fall but that the rent money saved would more than offset those falls.

I wasn't patting myself on the back for buying!

[Bear Hug]

15 minutes ago, Frank Hovis said:

At the time my expectation was that prices would continue to fall but that the rent money saved would more than offset those falls.

I wasn't patting myself on the back for buying!

Did they continue to fall? 

I fully expect buying to be a disappointment, as it will be a slow grind to get there. Sure, drop it by 50%, it will feel like a bargain; when it's low and going lower, then it's probably a very different experience 

Edited October 12, 2022 by Bear Hug

[Frank Hovis]

7 hours ago, Bear Hug said:

Did they continue to fall? 

I fully expect buying to be a disappointment, as it will be a slow grind to get there. Sure, drop it by 50%, it will feel like a bargain; when it's low and going lower, then it's probably a very different experience 

 

No, as it happened I bought by pure chance at the nadir for London in 1996 after which they began to rise very slowly.

What was much more important however was the general expectation that they would continue to fall so even given the cheapness at the time nobody was rushing in to "bag a bargain" and I personally was a reluctant buyer but couldn't really argue against saving £325 a month by buying.

It took eight years of consecutive falls for that "property only ever goes up" mantra to entirely die a death in London.