Property crash, just maybe it really is different this time (Part 3)

[spunko]

Carrying on from Part 2:
https://www.dosbods.co.uk/topic/25340-property-crash-just-maybe-it-really-is-different-this-time-part-2/page/209/#comments

[Kendo]

Mortgages going Dutch now. Apparently, the interest rate falls as you pay off the mortgage and the lender’s risk reduces. A fixed rate mortgage where the rate actually falls - or so they say.

https://amp.theguardian.com/money/2024/feb/08/mortgages-cut-rates-april-mortgages

[spygirl]

34 minutes ago, Kendo said:

Mortgages going Dutch now. Apparently, the interest rate falls as you pay off the mortgage and the lender’s risk reduces. A fixed rate mortgage where the rate actually falls - or so they say.

https://amp.theguardian.com/money/2024/feb/08/mortgages-cut-rates-april-mortgages

Err tgat happens slready.

You remortgage for a better rate  whre the LTV reduces.

[Kendo]

13 minutes ago, spygirl said:

Err tgat happens slready.

You remortgage for a better rate  whre the LTV reduces.

Yeah, I did think that when I read it. There must be more to it.

[darkmarket]

9 minutes ago, Kendo said:

Yeah, I did think that when I read it. There must be more to it.

Reading the Telegraph's piece, the line below stood out:

Quote

In the UK, mortgages are currently funded through deposits. But in the Netherlands, an alternative funding model has grown in popularity where home loans have instead been propped up by longer-term products such as pensions and life insurance policies.

https://www.telegraph.co.uk/money/property/mortgages/dutch-style-mortgages-come-britain/

It looks like an obfuscated way of saying they found new bait for first-time buyers to take on debt they can't afford. You'll own nothing and have no pension.

[Chewing Grass]

10 minutes ago, darkmarket said:

Reading the Telegraph's piece, the line below stood out:

https://www.telegraph.co.uk/money/property/mortgages/dutch-style-mortgages-come-britain/

It looks like an obfuscated way of saying they found new bait for first-time buyers to take on debt they can't afford. You'll own nothing and have no pension.

They trap you in over 15 years on a fix with a max 0.25% reduction, its bollox for the mentally challenged, there may well be small print as well to cover 15% interest rates etc.

Savings are in reality shit.

Edit, savings quoted are for a 250K mortgage.

On a 15-year fixed term, a borrower would save £5,127 in interest and pay off £1,330 more of the capital if their loan-to-value fell from 85pc to 60pc during that time. This equates to the rate falling from 5.29pc to 4.99pc, versus staying the same.

Edited February 8 by Chewing Grass

[spygirl]

10 minutes ago, darkmarket said:

Reading the Telegraph's piece, the line below stood out:

https://www.telegraph.co.uk/money/property/mortgages/dutch-style-mortgages-come-britain/

It looks like an obfuscated way of saying they found new bait for first-time buyers to take on debt they can't afford. You'll own nothing and have no pension.

OK, you can file tgat under - Bolloxmoron journo clueless.

BoE 'prints' most of the the money for mortgage loans.

As it stands, BoE ideally wants at least 10% customer deposit, 20% bank capital and, hopefully 20% from private credit ie the money needed to fund a bond for a 5y fix.

BoE  prints remaining  50%.

BoE money us paid as mortgage is repaid.

[Kendo]

5 minutes ago, Chewing Grass said:

They trap you in over 15 years on a fix with a max 0.25% reduction, its bollox for the mentally challenged, there may well be small print as well to cover 15% interest rates etc.

Savings are in reality shit.

Edit, savings quoted are for a 250K mortgage.

On a 15-year fixed term, a borrower would save £5,127 in interest and pay off £1,330 more of the capital if their loan-to-value fell from 85pc to 60pc during that time. This equates to the rate falling from 5.29pc to 4.99pc, versus staying the same.

Trapping you in a long-term fix but with the ‘apparent’ convenience of not having to remortgage a few times to benefit from reduced rates as you pay off the mortgage. Really not great, better to stick with the flexibility of shorter fixes and remortgage as and when - you’d probably get a better deal.

[darkmarket]

2 minutes ago, Chewing Grass said:

They trap you in over 15 years on a fix with a max 0.25% reduction, its bollox for the mentally challenged, there may well be small print as well to cover 15% interest rates etc.

Savings are in reality shit.

Edit, savings quoted are for a 250K mortgage.

On a 15-year fixed term, a borrower would save £5,127 in interest and pay off £1,330 more of the capital if their loan-to-value fell from 85pc to 60pc during that time. This equates to the rate falling from 5.29pc to 4.99pc, versus staying the same.

Similar to what spygirl mentioned except the interest rate adjustment is limited to 0.25% then?

Along with modern method of auction sales, it's becoming a trend to launch products that are shamelessly worse than anything that went before.

3 minutes ago, spygirl said:

OK, you can file tgat under - Bolloxmoron journo clueless.

BoE 'prints' most of the the money for mortgage loans.

As it stands, BoE ideally wants at least 10% customer deposit, 20% bank capital and, hopefully 20% from private credit ie the money needed to fund a bond for a 5y fix.

BoE  prints remaining  50%.

BoE money us paid as mortgage is repaid.

My understanding was the target market has a small pension but no savings and can't afford a £450k flat on a £30k salary but why not, needs must. So the new money that's created wouldn't change, but the pension is accepted as margin despite being less secure than a previous cash deposit.

[Chewing Grass]

3 minutes ago, darkmarket said:

My understanding was the target market has a small pension but no savings and can't afford a £450k flat on a £30k salary but why not, needs must.

Hate to say it but they would be better off living in France.

[darkmarket]

6 minutes ago, Chewing Grass said:

Hate to say it but they would be better off living in France.

Indeed, they could even get a viager property on a 'Dutch mortgage' bought through modern method of auction.

[Kendo]

11 minutes ago, darkmarket said:

Along with modern method of auction sales, it's becoming a trend to launch products that are shamelessly worse than anything that went before.

Spot on - and presenting them as something revolutionary.

[sancho panza]

@Democorruptcy jsut ref the report

[Royston]

7 hours ago, sancho panza said:

@Democorruptcy jsut ref the report

Well the Welsh second home tax certainly doesn't seem to be doing much to ease tenant demand so far!

[MrXxxx]

Talk about self denial:

https://www.msn.com/en-gb/money/other/why-the-spring-budget-could-be-make-or-break-for-uk-housebuilders/ar-BB1i0UVo

...not read such nonsense in ages...well, since the Covid debacle anyway!

[Democorruptcy]

2 hours ago, Royston said:

Well the Welsh second home tax certainly doesn't seem to be doing much to ease tenant demand so far!

Second homes probably turn into holiday lets, so that does nothing to increase rental supply.

[JoeDavola]

Folks went to view another house; bidding quickly went up by £15K and every bid was from a first time buyer with a "substantial deposit" (BOMAD IMO but who knows), and therefore the EA basically told them that as long as the FTB matched their bids they were still the preferred bid. Told them the vendor wanted the sale tied up quickly etc...

....however the house didn't go sale agreed. About a week later the listing was changed to put the price up i.e. the original listed price plus £15K. It then went sale agreed today.

So perhaps this is the new thing, the price listed on the website rising in real time?

So that's the last two houses they've bid on which were both 10 times the average NI wage have both gone to FTB.

The other insane thing is the prices they are bidding now are approaching twice the amount in ££ they paid for the house they're in that they bought 11 years ago, which itself was twice the amount in ££ of the house they bought 11 years before that (and that was at the bottom of the housing crash).

Edited February 9 by JoeDavola

[Wight Flight]

1 hour ago, JoeDavola said:

Folks went to view another house; bidding quickly went up by £15K and every bid was from a first time buyer with a "substantial deposit" (BOMAD IMO but who knows), and therefore the EA basically told them that as long as the FTB matched their bids they were still the preferred bid. Told them the vendor wanted the sale tied up quickly etc...

....however the house didn't go sale agreed. About a week later the listing was changed to put the price up i.e. the original listed price plus £15K. It then went sale agreed today.

So perhaps this is the new thing, the price listed on the website rising in real time?

So that's the last two houses they've bid on which were both 10 times the average NI wage have both gone to FTB.

The other insane thing is the prices they are bidding now are approaching twice the amount in ££ they paid for the house they're in that they bought 11 years ago, which itself was twice the amount in ££ of the house they bought 11 years before that (and that was at the bottom of the housing crash).

How do you know they are first time buyers, and how are they defining such?

[JoeDavola]

10 minutes ago, Wight Flight said:

How do you know they are first time buyers, and how are they defining such?

The EA is informing them that they’re first time buyers; the important thing is they don’t have any chain, any house to sell.

[Wight Flight]

2 minutes ago, JoeDavola said:

The EA is informing them that they’re first time buyers; the important thing is they don’t have any chain, any house to sell.

I thought they were known as cash buyers.

Not being pedantic, but they could be 50 year olds that have sold up in London and moving your way.

[JoeDavola]

8 minutes ago, Wight Flight said:

I thought they were known as cash buyers.

Not being pedantic, but they could be 50 year olds that have sold up in London and moving your way.

They aren’t cash buyers - the EA said they a substantial deposit and mortgage in place for the rest. Likely a BOMAD recipient with a 6 figure deposit but could also be someone like me with loads saved up.

But yes it could be someone moving back from London having sold there.

[Wight Flight]

Just now, JoeDavola said:

They aren’t cash buyers - the EA said they a substantial deposit and mortgage in place for the rest. Likely a BOMAD recipient with a 6 figure deposit but could also be someone like me with loads saved up.

Go on, Give yourself the builder gif. You know you have earned it.

[Ianb78]

Oh dear, no house price crash once again 

Looks like Fred Harrison’s 18 year cycle is still on course. Mid cycle dip complete and the “winner’s curse” surge coming soon before the inevitable collapse around 2026

Ignore Fred at your peril 

[Chewing Grass]

2 minutes ago, Ianb78 said:

Oh dear, no house price crash once again 

Looks like Fred Harrison’s 18 year cycle is still on course. Mid cycle dip complete and the “winner’s curse” surge coming soon before the inevitable collapse around 2026

Ignore Fred at your peril 

as soon as Ukraine is done with, all that money printing has some asset inflating to do.

about another +20% plus inflation to 'catch up'

[Royston]

25 minutes ago, Ianb78 said:

Oh dear, no house price crash once again 

Looks like Fred Harrison’s 18 year cycle is still on course. Mid cycle dip complete and the “winner’s curse” surge coming soon before the inevitable collapse around 2026

Ignore Fred at your peril 

I've been surprised how many I've seen go SSTC in my location in the last couple of months, especially given its a slow local market at the best of times and particularly so out of tourist season, but plenty seem to be getting snapped up.