Housing market collapse on the way

[Whathastheworldbecome]

I see Nationwide and Lloyd’s have tightened restrictions on the “bank of mum and dad.”
There seems to be a degree of speculation that they are tightening the shoe strings as they know a collapse is on its way.

Does this sound likely?

The property prices have gone up here. No crash on the way as far as I can see. A boom in country houses and locations looks most likely given many more can WFH

No, it’s just to make sure folks can afford it as so many are trying to buy right now due to the stamp duty break.

Well the Lloyds "bank of mom and dad" mortgage wasn't exactly a gifted deposit, it was offering the buyer a 100% mortgage where the equivalent of a 10% deposit was held in a locked account for 3 years or so banking on the property prices rising enough to gain equity in the purchased property. I can fully understand that the banks are tightening up on this kind of lending with possible uncertainty with house values. I would not imagine they are refusing to lend (affordability aside) if the buyer has been gifted the money to use as a deposit

@Tolleshunt

bluebluezoo a deposit gifted by others gives no indication of the assets, income or savings ability of the buyers. It enables buyers to buy properties that are more expensive than they could otherwise afford.

True for some -

But for others, the deposit is gifted to help them by the bare minimum house they could afford. They couldn’t afford a house at all, with the help

buy

without

@DonLewis
Agree 100%
We lived in a London rentals that took half our income..I was never late with rent, and nor was partner.
We were given the equivalent of £20k today as a deposit by kindly In-laws.

In turn, I gave some £ to son and his partner so he could avoid the hassle of renting for as long as we did.

Mortgages are cheaper than renting, but it is crazy to overstretch.

I hated renting..but much less stressful than living in family home. I left at 18 for good.

I am very sceptical of a plummet. C19 has made a huge chunk of the working population spend far more time at home than ever before and has pushed forward home working. I don't think either of those things will revert. This means people value their home space more and need it to double up as work space and leisure space. Gardens are also more important.

I think this will follow through to new trends in the housing market. There will be a slight fall on the piles and piles of apartments that have been built in town centres but a rise on larger properties and a small equalisation between cities and more rural areas.

I bought my old house in 2008 two months before the crash.

I'm just about to buy again. So I reckon you've got about 2 months.

The restrictions are only on 90% mortgages and a lot of 90% ones have been done away with anyway

There is a lot of frantic activity with people trying to buy at the moment, the cynic in me thinks this is people trying to get on the ladder before they get made redundant thinking they can find another job easily (I think people are that stupid). But I don't think there will be a crash, maybe a dip in the first 6 months of next year

Panicky thread titles with no evidence in the main message are so in right now...

Property selling like hot cakes round here. Been quite baffled by it tbh given state of the economy, not sure what’s fuelling it ?

I think if people have been stretching themselves over the last few years to buy houses, plus interest rates go up, and then a lot of people are made redundant as is being predicted, then we may end up with a lot of houses on the market if people can no longer afford their mortgages. So supply suddenly increases and prices drop. It surely can't stay the same as it is now if there are very large numbers of redundancies IMO.

IMO there is (and will continue to be) a lack of bank liquidity so banks will be less willing/able to lend. If people can’t borrow as much then they can’t buy as expensive a house.

If the bank can discourage people from encashing savings/investment (eg by discouraging gifts of deposits) then bank liquidity improves (partly because people leave savings and partly because they can turn down some mortgage applicants) without looking like the “bad guys”. They are able to claim they are “making sure people can afford repayments” rather than looking after No 1.

The interest rates are so very low just now that they don’t have to pay much out to savers. They don’t get to charge that much on mortgages either. So banks don’t get any financial reward for making any kind of risky lending decisions, but people have a huge incentive to gift their offspring their savings (that aren’t earning any real interest) and the offspring a huge incentive to then take out a mortgage (cheap borrowing).

It has nothing whatsoever to do with protecting borrowers or savers, and everything to do with protecting bank profits.

If i were looking to move just now i would sell my property at the moment while the market is very strong and the demand outweighs the houses available, move into rented for a few months and look to buy in the spring when the predicted fall in house prices kicks in.

I am no expert but locally it is a sellers market not many houses for sale and those that are for sale are getting a good price from buyers.

Sad to say but I expect the crash will only come further into recession if many people are forced to sell as unable to keep up payments. Hopefully doesn't get to that stage.

I really doubt there'll be a big fall. The current climate has focussed people's minds as to what is truly important. A safe , pleasant place to live. I think anyone who can possibly buy will want to do so. Renting in overpriced areas to be close to work will now be seen as both undesirable and unnecessary.

No sign of it around us yet, property selling very quickly - the tail end of the year could be a different story.

I agree Table, and from a societal point of view that’s awful. But from the building society’s point of view that’s a higher risk for them and they want to stop it, even if by doing so they stop those people buying at all. It’s all about risk to them.

The mortgages mentioned as being 'bank of mum and dad' were specific products that were 100 per cent mortgages, as Bellain said.

It it more to do with high loan to value ratio than an impending crash IMO. Lots of mortgage companies are looking for a larger deposit at the moment. They are not barring deposits from family.

Well the houses around me are selling within days of going up, so people obviously aren't twitchy about a crash here!

@fdgdfgdfgdfg

I bought my old house in 2008 two months before the crash.

I'm just about to buy again. So I reckon you've got about 2 months.

@Tolleshunt

I don’t know. The housing market is incredibly resilient. People will still need somewhere to live and in a time where other assets are in free fall bricks and mortar is usually seen as a safe and solid investment.

Which ‘other assets’ are in ‘free fall’ exactly?

There seems to be a degree of speculation that they are tightening the shoe strings as they know a collapse is on its way.

People will always speculate, usually without any basis.

For those saying gifted deposits allow someone to buy a house they otherwise couldn’t afford, this isn’t strictly true. My last flat (rented) was £800 a month whereas the same sort of property on a mortgage costs me less than £600. There is a vicious cycle of high rent = inability to save for a deposit = unable to buy = unable to live more cheaply. If I’d been able to rent at the price I have a mortgage for I’d have been able to save the same deposit by myself as I was gifted by my parents.

I've just sold in Sutton Coldfield and am buying in Shropshire. Both areas are absolutely booming, my house had 12 offers in 3 days. I've bought and sold loads but never had that level of interest so quickly.

@Saz12 has got it spot on.
It's about the banks making a profit. Not about the housing market.