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

[HousePriceMania]

House prices are worth less than people thing..."What's going on?!" 

Some people really do think buying a house is a one way bet !!!

 

[spunko]

1 hour ago, HousePriceMania said:

House prices are worth less than people thing..."What's going on?!" 

Some people really do think buying a house is a one way bet !!!

 

That's one thing I can't quite figure out as I've never lived through a decent house market price decline.

Can you  actually go into negative equity from a remortgage? Has it ever happened on a large scale?

[HousePriceMania]

4 minutes ago, spunko said:

That's one thing I can't quite figure out as I've never lived through a decent house market price decline.

Can you  actually go into negative equity from a remortgage? Has it ever happened on a large scale?

Surely there can only be a few 100,000 that can't afford their mortgages or have -ve equity so I'd be surprised if many were struggling.

The banks seem to bend over backward to "help" people stay in debt these days.

 

[HousePriceMania]

I do like Vicky normally.

 

 

[HousePriceMania]

Not so much this woman though

it doesn't seem to compute that prices rising 30% in 18 months off QE and 0,1% interest rates is the problem.

 

 

[afly]

29 minutes ago, spunko said:

That's one thing I can't quite figure out as I've never lived through a decent house market price decline.

Can you  actually go into negative equity from a remortgage? Has it ever happened on a large scale?

I didn't think there were any checks on a remortgage when using the original bank? It's not really in their interest to make life hard for the debtor as they're on the hook either way

 

 

[spunko]

16 minutes ago, afly said:

I didn't think there were any checks on a remortgage when using the original bank? It's not really in their interest to make life hard for the debtor as they're on the hook either way

 

 

I thought they had to reapply the stress tests etc?

[belfastchild]

4 minutes ago, spunko said:

I thought they had to reapply the stress tests etc?

Some do now.

Its why I mentioned anecdotal (neighbour is a mortgage advisor for one of the big uk mortgage lenders) of people locally selling up 2 years after buying a house for more or less the same money (which will be a loss overall).

Particularly hard if they had bomad for the first loan and the house price hasnt gone up (or has fallen as they overbid due to bomad/affordability etc).

As the fixed rates end and they want a new deal some lenders are re-applying affordability (or a big setup fee which has to be paid in full, not lumped on the mortgage), otherwise its SVR for you and up it goes for sale.

 

Heard the same story when buying my car last year, people coming in wanting the same car but paying less or 0% deal. Only options you have are a smaller car and pay less or keep the same car and lump it. Reality is starting to bite, although rates did drop slightly. The ones paying in the interim hoping for rates to come down to remortgage/buy a new car might be in for a shock.

[Boon]

23 minutes ago, afly said:

I didn't think there were any checks on a remortgage when using the original bank? It's not really in their interest to make life hard for the debtor as they're on the hook either way

 

 

Anecdotally I don't think there was are if no more borrowing is required, of course in the small print they reserve the right to.

One chap I knew of when remortgaging the flat, they simply asked him what the value was, however this was in 2021 and low interest rates etc. 

I am sure they are gonna be more prudent today, but then again its in their interest not to. For instance I see a lot of London flats where the current selling price must be 20%+ off the peak now, and some people are gonna be remortgaging. If they downvalue that then they will have to downvalue a lot of similar ones. 

TBH though I don't think it's widespread yet, otherwise it'd be all over MSE forums. A bit like the cladding thing, people like exaggerating how many people are suffering in the hope of government intervention.

[HousePriceMania]

7 minutes ago, belfastchild said:

Some do now.

Its why I mentioned anecdotal (neighbour is a mortgage advisor for one of the big uk mortgage lenders) of people locally selling up 2 years after buying a house for more or less the same money (which will be a loss overall).

Particularly hard if they had bomad for the first loan and the house price hasnt gone up (or has fallen as they overbid due to bomad/affordability etc).

As the fixed rates end and they want a new deal some lenders are re-applying affordability (or a big setup fee which has to be paid in full, not lumped on the mortgage), otherwise its SVR for you and up it goes for sale.

 

Heard the same story when buying my car last year, people coming in wanting the same car but paying less or 0% deal. Only options you have are a smaller car and pay less or keep the same car and lump it. Reality is starting to bite, although rates did drop slightly. The ones paying in the interim hoping for rates to come down to remortgage/buy a new car might be in for a shock.

The prices people were paying were set off the back of 0.85% mortgage rates and Term Funding fuelled lending.

Anyone who bought in 2022 is probably so far under water than bankruptcy might be the only way out.

BOMAD just lost their deposit.

[belfastchild]

20 minutes ago, Boon said:

TBH though I don't think it's widespread yet, otherwise it'd be all over MSE forums. A bit like the cladding thing, people like exaggerating how many people are suffering in the hope of government intervention.

The one case Im now aware of was quite borderline. The EA may as well have used the photos from 2 years previous. They had obviously stretched themselves pushing the street price up at the time of the covid highs. Literally nothing done to the house in 2 years, not even external painting (which it needed). If it wasnt for the grass being cut you couldnt tell the difference in the external photos. Internal ones still had the same wallpaper from 2 years (and more) previously.
So, yes, probably still the margins, but like the car dealer ones, its starting to play on peoples minds, particularly with end of fixed deals coming up at some point if their pay doesnt rise accordingly.

[Boon]

Ah yeah, maybe a bit like this one:

https://www.mumsnet.com/talk/property/5026913-no-viewingsoffers-since-failed-open-day-what-would-you-do

It's funny on that forum, anyone looking for real advice, there isn't much, but they love a fucking pile-on as soon as someone posts their Rightmove link, 100s of replies in a few hours.

Haven't read all of it but it just goes to show how people view their paid house price, ie selling it for more than they paid is 'profit' but it just ignores all the associated expenses, stamp duties, etc. It is very hard to sell unless forced as it crosses that psychological barrier of taking a loss.

[sancho panza]

1 hour ago, spunko said:

That's one thing I can't quite figure out as I've never lived through a decent house market price decline.

Can you  actually go into negative equity from a remortgage? Has it ever happened on a large scale?

I dont know ehetehr youve followd the detail in the banking thread Spunko but long story short,.... a disproportionate amount of nat wests stage 2/3 laons (ie deteriroating/default) are from before 2010.

that was in the data for their 2022 full years.will tdo 2023 when I get time.the data is the data.

if thats the case then it does beg the question of how many laons are still in neg eq from that time.I would imagine msot would be flats/terraces in norht and nroth east where prices havent moved since.

big issue is people take out 25 year mrotgages when they're generally in peak health,peak work and without kids.things go downhill from there nromally.espceailly given ave age FTber now 38.

‘I paid my mortgage for 36 years – and still lost my home to the bank’ (msn.com)

Yorkshireman Chris Fleming has been paying the mortgage on his family home since 1987. Despite decades of repayments, his house was repossessed last year and sold at a £100,000 discount by his lender.

The father-of-three is just one of 200,000 borrowers who have been stuck on interest-only mortgages that were sold off by the Government’s state bank UK Asset Resolution (UKAR) after the financial crash.

The companies servicing the loans have charged customers high standard variable rates ever since – for some, their loan rates have soared to 10pc following 14 successive Bank Rate rises.

MPs have renewed calls for the Government to compensate these borrowers – many of whom are now receiving repossession orders. Some can’t even sell, because if they do they will fall into negative equity.

‘Loans sold to the highest bidder’

The Government oversaw the sale of at least four big batches of mortgages after it assumed ownership of loans left behind by the collapse of Northern Rock and Bradford & Bingley in 2010. 

The goal was to repay £44bn of debt to the Treasury “as soon as possible” and “maximise value for the taxpayer”. The sales took place in October 2014, November 2015, April 2019 and February 2021.

[HousePriceMania]

6 minutes ago, belfastchild said:

The one case Im now aware of was quite borderline. The EA may as well have used the photos from 2 years previous. They had obviously stretched themselves pushing the street price up at the time of the covid highs. Literally nothing done to the house in 2 years, not even external painting (which it needed). If it wasnt for the grass being cut you couldnt tell the difference in the external photos. Internal ones still had the same wallpaper from 2 years (and more) previously.
So, yes, probably still the margins, but like the car dealer ones, its starting to play on peoples minds, particularly with end of fixed deals coming up at some point if their pay doesnt rise accordingly.

I know of someone who paid top whack in the south and took on a massive debt in July 2022 for their forever home ( which was their second forever home IIRC ).

They have text our group chat 2 or 3 times now to tell us how joyous they are at the news interest rates will fall.

I had hoped they'd taken out a 10 year fixed rate mortgage , but given the desperate messages then I think it must be a 2 year deal and they must be facing some hefty price increase, we are talking a 7 figure mortgage here !!!

They bought saying "the mortgage deal is too good to be true" and their parents warned them against it.

Running some numbers they could be looking at £3,000 per month ( at 0.85% ) increasing to £6,000 (5%) per month.

They are one job loss from bankruptcy.

They have a lot of equity so could down size but they'd need to find a buyer willing to take on a massive debt....

 

[HousePriceMania]

4 minutes ago, Boon said:

Ah yeah, maybe a bit like this one:

https://www.mumsnet.com/talk/property/5026913-no-viewingsoffers-since-failed-open-day-what-would-you-do

It's funny on that forum, anyone looking for real advice, there isn't much

They're not really looking for advice, they are looking for comfort.

[Boon]

9 minutes ago, sancho panza said:

 

‘I paid my mortgage for 36 years – and still lost my home to the bank’ (msn.com)

Yorkshireman Chris Fleming has been paying the mortgage on his family home since 1987. Despite decades of repayments, his house was repossessed last year and sold at a £100,000 discount by his lender.

 

I wonder what the backstory to this was? I still think you'd have to be quite bad to get repo'd.

In 1987 how much would a property on the outskirts of Hull have cost, £20k or something? So obviously lots of borrowing against the house, where the fuck did all that money go?

It annoys me how the press seek to mislead for headline inches.

The valuation was in 2019 when the market was at low interest rates, for a regular transaction. 
The final sell price was in 2023 when the markets had higher interest rates, and auctions aren't regular transactions because regular buyers can't finance it, and it was a repo.

Yet they try and present this disparity of price as some kind of unfairness. TBH in the circumstances you could argue that £400k in 2019 to an auction £300k in 2023 is a fairly regular result, and might even be pretty decent.

[HousePriceMania]

1 minute ago, Boon said:

I wonder what the backstory to this was? I still think you'd have to be quite bad to get repo'd.

In 1987 how much would a property on the outskirts of Hull have cost, £20k or something? So obviously lots of borrowing against the house, where the fuck did all that money go?

 

Would guess he borrowed against his massive house prices gains to buy up investment properties in Belfast.

[sancho panza]

7 minutes ago, Boon said:

The valuation was in 2019 when the market was at low interest rates, for a regular transaction. 
The final sell price was in 2023 when the markets had higher interest rates, and auctions aren't regular transactions because regular buyers can't finance it, and it was a repo.

Yet they try and present this disparity of price as some kind of unfairness. TBH in the circumstances you could argue that £400k in 2019 to an auction £300k in 2023 is a fairly regular result, and might even be pretty decent.

My apologies boon,I didnt read as far as you.Think the auction sale price was prob about right.

sounds like they remoed equity out circa 2007 I'd guess.and then never had a plan to pay the piper.it says he would have more than the £50k profit he eventually got if he hadnt raised so many specious objections,so looks like he could easily have sold 2019 to 2021 and bought a small hosue for cash.

natWests and the like will have loads of alons like this jsut sat there waiting till someone retires for it to go sour.

 

 

'Landmark went on to sell their home for £310,000, more than £100,000 less than a valuation Mr Fleming had got on the house just three years prior. The company then subtracted £60,000 in legal and bailiff fees, leaving Mr Fleming with just a £50,000 profit.

He and his family are now renting a bungalow, and all he and his wife have to rely on is the state pension. At his age, he can no longer fund a new mortgage and did not have enough equity in the house to take out equity release.

A spokesman for Landmark said proceeds from the sale “would have been significantly greater” had Mr Fleming “not raised a number of objections, which the courts determined to be without foundation, resulting in significant legal costs”. '

Edited March 13 by sancho panza

[Bus Stop Boxer]

48 minutes ago, sancho panza said:

My apologies boon,I didnt read as far as you.Think the auction sale price was prob about right.

sounds like they remoed equity out circa 2007 I'd guess.and then never had a plan to pay the piper.it says he would have more than the £50k profit he eventually got if he hadnt raised so many specious objections,so looks like he could easily have sold 2019 to 2021 and bought a small hosue for cash.

natWests and the like will have loads of alons like this jsut sat there waiting till someone retires for it to go sour.

 

 

'Landmark went on to sell their home for £310,000, more than £100,000 less than a valuation Mr Fleming had got on the house just three years prior. The company then subtracted £60,000 in legal and bailiff fees, leaving Mr Fleming with just a £50,000 profit.

He and his family are now renting a bungalow, and all he and his wife have to rely on is the state pension. At his age, he can no longer fund a new mortgage and did not have enough equity in the house to take out equity release.

A spokesman for Landmark said proceeds from the sale “would have been significantly greater” had Mr Fleming “not raised a number of objections, which the courts determined to be without foundation, resulting in significant legal costs”. '

IO going back years, on sod all debt in the first place.

He and his Mrs have been back to the MEW well many many times methinx.

[darkmarket]

1 hour ago, HousePriceMania said:

BOMAD just lost their deposit.

Seeing a few such cases these days. I keep an eye all over but here's one from 'resilient' Edinburgh:

https://www.rightmove.co.uk/properties/144598481#/?channel=RES_BUY

Bought in 2021 at £343,815. Asking price reduced yesterday to £300,000. Assuming they get 10% under that, the loss would be just over 20% before costs, but I don't see many people trying to catch that particular falling knife. Deposit gone, bank's problem now.

[HousePriceMania]

1 minute ago, darkmarket said:

Seeing a few such cases these days. I keep an eye all over but here's one from 'resilient' Edinburgh:

https://www.rightmove.co.uk/properties/144598481#/?channel=RES_BUY

Bought in 2021 at £343,815. Asking price reduced yesterday to £300,000. Assuming they get 10% under that, the loss would be just over 20% before costs, but I don't see many people trying to catch that particular falling knife. Deposit gone, bank's problem now.

+ 20% inflation

 

40% real term crash right there.

[Axeman123]

Signs of lending standards tightening:

Halifax to impose new age limit on thousands of older mortgage borrowers

Quote

Halifax is imposing a new 70-year age limit on thousands of homebuyers as banks seek to rein in risky mortgage lending.

The lender is reducing the maximum age at which it will allow many borrowers to say they intend to retire from 75 to 70 – meaning that in many cases it will not lend to someone older than this limit.

It risks forcing thousands of borrowers to reduce the length of their terms in future, increasing their monthly mortgage payments as a result. The changes are likely to particularly affect people in their 40s and 50s seeking to maximise the length of their loan.

Darryl Dhoffer, an adviser at The Mortgage Expert, said: “Halifax appears to be tightening the screws on the very borrowers who need them the most.”..

That has to mean nearly all loans will be less than a 30 year term, since average first time buyer age is IIRC over 40 now.

https://uk.finance.yahoo.com/news/halifax-impose-age-limit-thousands-143302970.html

[sancho panza]

Just now, Axeman123 said:

Signs of lending standards tightening:

Halifax to impose new age limit on thousands of older mortgage borrowers

That has to mean nearly all loans will be less than a 30 year term, since average first time buyer age is IIRC over 40 now.

https://uk.finance.yahoo.com/news/halifax-impose-age-limit-thousands-143302970.html

was jsut posting about this in banking thread.

lot of new ledning over 35 years to people at peak employment,peak health.

someones clearly looked at some pension funds actuarial data and reaslised it maybe wasnt the best idea.

[Axeman123]

Summary of the rest of the article:

[spygirl]

2 hours ago, sancho panza said:

I dont know ehetehr youve followd the detail in the banking thread Spunko but long story short,.... a disproportionate amount of nat wests stage 2/3 laons (ie deteriroating/default) are from before 2010.

that was in the data for their 2022 full years.will tdo 2023 when I get time.the data is the data.

if thats the case then it does beg the question of how many laons are still in neg eq from that time.I would imagine msot would be flats/terraces in norht and nroth east where prices havent moved since.

big issue is people take out 25 year mrotgages when they're generally in peak health,peak work and without kids.things go downhill from there nromally.espceailly given ave age FTber now 38.

‘I paid my mortgage for 36 years – and still lost my home to the bank’ (msn.com)

Yorkshireman Chris Fleming has been paying the mortgage on his family home since 1987. Despite decades of repayments, his house was repossessed last year and sold at a £100,000 discount by his lender.

The father-of-three is just one of 200,000 borrowers who have been stuck on interest-only mortgages that were sold off by the Government’s state bank UK Asset Resolution (UKAR) after the financial crash.

The companies servicing the loans have charged customers high standard variable rates ever since – for some, their loan rates have soared to 10pc following 14 successive Bank Rate rises.

MPs have renewed calls for the Government to compensate these borrowers – many of whom are now receiving repossession orders. Some can’t even sell, because if they do they will fall into negative equity.

‘Loans sold to the highest bidder’

The Government oversaw the sale of at least four big batches of mortgages after it assumed ownership of loans left behind by the collapse of Northern Rock and Bradford & Bingley in 2010. 

The goal was to repay £44bn of debt to the Treasury “as soon as possible” and “maximise value for the taxpayer”. The sales took place in October 2014, November 2015, April 2019 and February 2021.

Back to my - IO mortgages are a big thing.

This one is nuts though.

Bought 87  so prime Endowment.

Yet hes had the fucker for 3 fuckign 6 years.

Why in fuck was the cretin not payng off the capital

And it must have been some fucking mortgage - 

In Mr Fleming’s case, his interest-only mortgage repayments nearly tripled after his mortgage was sold in 2015 – from £670 a month to as much as £1,760 some months. Life became centred around scraping enough money together to meet his monthly payments.

Thats after 20 years FFS. 

IO of 670 most be some  fuckign huge mortgage - several 100k. On a house bought in 87