Are we heading for another credit crunch?

[MegsLevante]

I have a vested interest as I’m trying to buy a house and require a mortgage.

Given all the news about the banks, how likely is another credit crunch ie banks stop lending?

there is a bit of market panic so it does seem uncertain

F

Of course. The last one started in USA due to poor financial regulation, it was tighten-up after that then Trump rolled-back a lot of it.

https://www.reuters.com/markets/us/fed-sees-looming-credit-crunch-whats-that-2023-03-24/

Articles like this have been in the news all week.

I think there is volatility with inflation and International political concerns, so there is a sense of caution (from what I can gather from speaking to various financial advisors), so banks are being more stringent with mortgage assessments.

On the one hand house prices are more negotiable due to increased mortgage fees (as people can afford less), but equally rates are particularly high but are expected to lower in the longer term.

It depends on you circumstances... do you need to buy now or can you wait for rates to lower? Are you happy to buy a property that may be lower priced due to higher rates? Also, given the uncertainty and potential further increases in living costs can you absorb these costs comfortably?

You may find it a bit trickier to find a good deal, but there are not signs that banks are panicking on lending.

I’m in a decent position. Flat sale completed, good credit rating, key worker job (not the highest earner but stable public sector employer), not overstretching on mortgage. Also renting from parents, so not a huge rush but it’s a 1.5 bed house and it’s feeling a bit cramped (thought we’d only be there for a couple of months, it’s now been 7 months).

The house I’m planning on buying will be a forever / until retirement home so could ride out ups and down in prices. My concern is that I can’t really negotiate a pay increase due to collective bargaining, so would have to apply to go up a band and not sure the workload would work with childcare - my aim was to get DD to school before applying for promotions.

My concern is that banks just stop lending. I need a mortgage to buy at current prices.

Have you found the house you want?

If so you can get a mortgage in principal very quickly - maybe speak to a broker as well?

I think it unlikely banks will stop lending - if this is your forever home you can take a shorter fixed term or go for the variable rate then renegotiate.

Ultimately if you are in a good position then your happiness is the most important thing!

Also following!

Sold flat last year and forward purchase fell through. Then the mortgage mayhem started and there’s not been much on the market since then. Took a few months off and intend to look again after the Easter holidays. Hoping that spring will mean more coming on the market. Wasn’t really in a rush but thinking if it looks like the banks may stop lending then maybe I should get my finger out. That said, can’t see anything I want to buy on Rightmove.

https://www.theguardian.com/business/live/2023/mar/24/bank-of-england-chief-warns-further-rate-hikes-firms-raise-prices-council-tax-retail-sales-business-live?CMP=Share_iOSApp_Other

Same sort of news in the Guardian. Financial Journalists seem to think a credit crunch is likely but disagree on what shape it will take.

We’re buying a house, applied for mortgage on Thursday so hopefully will get the deal we applied for. Higher monthly than we hoped but still ok. We are not in a position to wait and the house should be fine for longer enough to see out a downturn. We need to get on with our lives!

I don’t know if you remember 2008? The banks just stopped lending overnight and withdrew mortgage offers. Guess who was in the process of buying a flat? Perhaps that experience is why I’m having a bit of a panic now…. It worked out in the end - vendor of flat couldn’t find a cash buyer, the banks freed up lending again a few months later and houseprices dropped. So I ended up buying a very similar flat, a few months later at about 10% less than the one I tried to buy when the credit crunch hit.

In the process of getting a mortgage and feeling quite worried as I have to move. The Deutsche news doesn’t look good - feels like we are teetering on something major.

It’s a bank a week at the moment.