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What's the housing market like at the moment?

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Bonds. Which are gauranteed pots of cash.

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Bonds. Which are gauranteed pots of cash.

 

Swapping something for money....isn't that buying ? Anyway, how much are we ( the tax payer) buying? Enough for the banks to start lending again?

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Swapping something for money....isn't that buying ? Anyway, how much are we ( the tax payer) buying? Enough for the banks to start lending again?

 

Not exactly. We the tax payer are going to make a profit on this one according to the big wigs. They are swapping mortgage loans for bonds but not at 1:1 ratio. IE 100K of mortgage loan will be around 95k in bonds.

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Not exactly. We the tax payer are going to make a profit on this one according to the big wigs. They are swapping mortgage loans for bonds but not at 1:1 ratio. IE 100K of mortgage loan will be around 95k in bonds.

 

How much are we buying - I think I heard a figure of £15Billion on the radio, but I didn't catch all of the piece. what are the bank's estimated bad debts? Got to be a lot more than £15Billion. Presumably the banks want to identify the bad business, sell it on, call it a one time write off and start with a clean sheet...does this plan allow them to do this?

 

I knocked £10k off my house for sale yesterday.....hmmm..good move?

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I'm not overly keen on this plan. It's basically a license for the banks to publicise losses and privatise gains. Sounds like a guaranteed looser for the tax payer and is effectively just handing money to the banks to reward them for their own stupidity.

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Aren't these just effectively long term loans (i.e. bonds) against part (say 80%) of the value of an asset. Therefore just adding more liquidity into the market.

 

If the bank folds then I guess they end up being owned by the government, which they would then have to sell to recoup - but as they are already exchanged at less than face value, then this risk is reduced. However, I expect the bond to be issued only on high quality (i.e. AA) assets, therefore leaving more risk with the bank.

 

Of course it's only useful if it ends up helping the consumer - no point have thousands of repossesions if people can;t pay the sky high mortgage costs at the mo. At the moment I can;t see it haveing teh opposite effect of very cheap criet, but reasonable credit costs should be ok for most people to aborb (although they may have to forgo that expensive car or holiday)..

 

Delay the enevitable, or try and introduce a softer landing?

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There's an article in the FT about Bradford & Bingley but it has some interesting conclusions about the state of the BTL market:

 

"...But most worrying perhaps is this:

 

Supply has clearly becoming more constrained with the withdrawal of several competitors from the UK mortgage market. However, demand for buy-to-let remains robust, with landlords reporting continuing tenant demand and rising rents.

 

The great British property adventure continues unabated then. As competitors exit such niche markets, B&B’s already leading position will be extended.

 

One analyst summed up the prospects for these markets thus:

 

B&B is the market leader in Buy-to-Let mortgages which offer customers 100-1000% gearing into a declining asset class where none of the risks of leverage have been explained. BTL also offers investors a huge negative carry trade with average net property yields in the UK being 3.75% and mortgage finance now coming at almost double that. Self Certified mortgages (liar loans as the Americans appropriately call them) where B&B takes no income verification at all are at best going to see the income of the borrower be at its weakest when the collateral value is at its weakest as overtime and bonuses diminish with a weakening economy.

 

If the squeeze on margins and structured finance writedowns are coming to a conclusion, another drama is only just beginning to play."

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Hi there,

 

I will not be able to help you in any way with that question. But I do feel that if you try convex they might be able to give you very good and professional advice. They are able to solve all my conveyancing doubts and I do have a great deal of trust in their advice. You could try them out too. Bye and all the best.

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sham71

 

It seems from your previous posts and threads you have some kind of

of need to talk down and scare people about the housing market at the moment and I see from your posts you have been doing this since 2005.

 

Spelling out the doom and gloom with an "end is nigh" attitude Is a carless thing to do. You were advising people 3 years ago not to invest in this and that, because prices may fall out of bed, did you then apologise when prices rose between 2005 and 2008?

 

Yes the Market is slow and there are credit problems. That is obvious.

 

I will be honest with you my house is on the market and I've had an offer 5k below the asking price. But if I had sold 3 years ago when advised to by some commentors said I should have, I'd have been much worse off.

The house I would like to buy(the owners) will not budge on price and they are prepared to stay if they cannot get what they believe the house is worth, thats their choice and they are in no hurry. They too have to buy further up the ladder.

 

Please remember that for a lot of people a house is a home and all this gloomy talk will just cause more misery if people are already in trouble.

 

No one really knows how things will pan out, the fact that the market is slow now and that prices will stay flat with no growth(in real terms) for possibly quite a while will make the market healthy in the long term as wages in this period will catch up e.t.c. and it is exactly what is needed to stabilize and help FTB. So maybe the current conditions are just the lower side of a natural peak and trough type movement through the decades.

 

I appreciate that you may think you are helping people and I find your comments interesting, but your comments have scared me and when I speak to vendors (whose houses I am viewing) these people don't echo your point of view and I just can't see a family with 2-3 children dropping their house price by 30-40%, they will just stay put and not bother moving. This has come across very strongly to me and my wife whilst looking.

 

I read you sold a while ago, is it not in your own interest to try and talk the market down to bag a bargain?

 

Please be careful what you say, you may be ok and as you said in one thread your money may be in the bank earning you interest, what makes you so sure its so safe there?

 

shadow08

 

I think that sums up the situation pretty well, so well said! Folks have got used to their houses being worth X amount, so will not shift if someone makes a ridiculously low offer. Folks not moving creates a shortage, so good old fashioned supply and demand come into play IMO.

 

A friend of mine said she wouldn't buy a house until the crash came. That was 4 or 5 years ago. Yes, prices have come down a tad recently, but consider this:

 

A typical house she would have bought then for say £150,000 would maybe have cost £200,000 a few months ago.

 

The same house may have dropped now to £190,000 for example. She would still have to pay £40,000 more than if she'd just got on with it then!

 

Even if it dropped another £20,000 to £170,000 she's still £20,000 worse off! And she's going to be 4 years older when paying off the mortgage.

 

Also, she'd have to live somewhere in the meantime, at a rent of (conservative estimate) £500.00 per month. Four years of this is £24,000! Dead money!

 

To take it further. Even if the house dropped to £20,000 below the original £150,000 to £130,000, she will still have paid out £24,000 in rent! Still £4,000 down, and 4 years "behind" on the mortgage.

 

Unless you're planning to buy and sell very quickly, property will usually serve you well. and when all is said and done, it's your home.

 

Happy house hunting to one and all!!

 

:)

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sham71

 

It seems from your previous posts and threads you have some kind of

of need to talk down and scare people about the housing market at the moment and I see from your posts you have been doing this since 2005.

 

Spelling out the doom and gloom with an "end is nigh" attitude Is a carless thing to do. You were advising people 3 years ago not to invest in this and that, because prices may fall out of bed, did you then apologise when prices rose between 2005 and 2008?

 

Yes the Market is slow and there are credit problems. That is obvious.

 

I will be honest with you my house is on the market and I've had an offer 5k below the asking price. But if I had sold 3 years ago when advised to by some commentors said I should have, I'd have been much worse off.

The house I would like to buy(the owners) will not budge on price and they are prepared to stay if they cannot get what they believe the house is worth, thats their choice and they are in no hurry. They too have to buy further up the ladder.

 

Please remember that for a lot of people a house is a home and all this gloomy talk will just cause more misery if people are already in trouble.

 

No one really knows how things will pan out, the fact that the market is slow now and that prices will stay flat with no growth(in real terms) for possibly quite a while will make the market healthy in the long term as wages in this period will catch up e.t.c. and it is exactly what is needed to stabilize and help FTB. So maybe the current conditions are just the lower side of a natural peak and trough type movement through the decades.

 

I appreciate that you may think you are helping people and I find your comments interesting, but your comments have scared me and when I speak to vendors (whose houses I am viewing) these people don't echo your point of view and I just can't see a family with 2-3 children dropping their house price by 30-40%, they will just stay put and not bother moving. This has come across very strongly to me and my wife whilst looking.

 

I read you sold a while ago, is it not in your own interest to try and talk the market down to bag a bargain?

 

Please be careful what you say, you may be ok and as you said in one thread your money may be in the bank earning you interest, what makes you so sure its so safe there?

 

shadow08

 

I think that sums up the situation pretty well, so well said! Folks have got used to their houses being worth X amount, so will not shift if someone makes a ridiculously low offer. Folks not moving creates a shortage, so good old fashioned supply and demand come into play IMO.

 

A friend of mine said she wouldn't buy a house until the crash came. That was 4 or 5 years ago. Yes, prices have come down a tad recently, but consider this:

 

A typical house she would have bought then for say £150,000 would maybe have cost £200,000 a few months ago.

 

The same house may have dropped now to £190,000 for example. She would still have to pay £40,000 more than if she'd just got on with it then!

 

Even if it dropped another £20,000 to £170,000 she's still £20,000 worse off! And she's going to be 4 years older when paying off the mortgage.

 

Also, she'd have to live somewhere in the meantime, at a rent of (conservative estimate) £500.00 per month. Four years of this is £24,000! Dead money!

 

To take it further. Even if the house dropped to £20,000 below the original £150,000 to £130,000, she will still have paid out £24,000 in rent! Still £4,000 down, and 4 years "behind" on the mortgage.

 

Unless you're planning to buy and sell very quickly, property will usually serve you well. And when all is said and done, it's your home.

 

Happy house hunting to one and all!!

 

:)

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I think that sums up the situation pretty well, so well said! Folks have got used to their houses being worth X amount, so will not shift if someone makes a ridiculously low offer. Folks not moving creates a shortage, so good old fashioned supply and demand come into play IMO.

 

A friend of mine said she wouldn't buy a house until the crash came. That was 4 or 5 years ago. Yes, prices have come down a tad recently, but consider this:

 

A typical house she would have bought then for say £150,000 would maybe have cost £200,000 a few months ago.

 

The same house may have dropped now to £190,000 for example. She would still have to pay £40,000 more than if she'd just got on with it then!

 

Even if it dropped another £20,000 to £170,000 she's still £20,000 worse off! And she's going to be 4 years older when paying off the mortgage.

 

Also, she'd have to live somewhere in the meantime, at a rent of (conservative estimate) £500.00 per month. Four years of this is £24,000! Dead money!

 

To take it further. Even if the house dropped to £20,000 below the original £150,000 to £130,000, she will still have paid out £24,000 in rent! Still £4,000 down, and 4 years "behind" on the mortgage.

 

Unless you're planning to buy and sell very quickly, property will usually serve you well. and when all is said and done, it's your home.

 

Happy house hunting to one and all!!

 

:)

 

Your figures are good until the last bit.

 

If the house dropped to 130,000 now, she's paid out £24,000 in rent, but (I'd estimate) saved more than that in interest payments for the first four years of a £150,000 mortgage. She's not £4,000 down, but she is 4 years behind. But the 20k drop more than makes up for 4 years on a 25 year term.

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