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?

Well that attitude will kill ftb. My daughter and boyfriend have been saving regularly for a deposit. The amount required went up overnight from 5 per cent to 10-15 per cent. And now we can't help them?
Can they not even it out on the basis that if you can rent (ie some one else mortgage,) for 5 years you can probably pay the same amount on a feckin mortgage?

I think the banks must be worried about negative equity. Which means they are expecting a house price drop.

A few of my friends are first time buyers. They have saved a fortune in lockdown (professional jobs, no outgoings, saved commuting costs, no kids yet). Some have managed to save 4x what they were a month before lockdown to use as a deposit.

Unfortunately as soon as the government sees any sign that there is a problem with the housing market they will pump billions of tax payers money into it via various prop up schemes to keep prices artificially high and home owners richer, there was the help to buy scheme which has been proven that all it did was push up prices as people could borrow more money and house builders walked away with tens of millions pound bonuses of tax payer cash each year, the rent stamp duty holiday people have put their prices up as they now know people have more money to spend, the bank of mummy and daddy should have of been banned along time ago, people who have failed in their adult life needing mummy and daddy to come and bail them out, it's pathetic, no pride anymore, hopefully prices will come down and teach them all a lesson.

The bank of mum and dad has always been around. But not to the extent it is today.

Over here the banks are stating to stop people who are on furlough from getting loans. I think it’s safe to say that the gears are in motion, but it’ll take time for the reality to truly reflect this.

@jimmyjammy001 spot on.

Isnt this more about bank profits being down rather than an imminent crash in the market?

Banks are supposed to hold a certain amount of money for every £1 they lend. The ratio is higher for mortgages where the mortgage borrower owes a greater percentage because the risk is deemed higher.

The banks are reducing their risk levels to protect their income. Younger people who are gifted money from parents are higher risk because their incomes are lower.

Younger people on lower incomes are currently the people most at risk from being made redundant due to covid.

You are more likely to be at risk and need the bank of mum and dad if your job isnt a high status professional.

To protect profit levels, reigning in on these type of mortgages seems prudent.

Especially since the newspapers tonight are reporting up to a million people have lost their jobs in the uk.

House prices around us are falling (expensive west London, zone 3).

In the last couple of weeks I’ve seen lots of 3-4 bed houses drop 100-150 off the asking price. There are 3 kids in my DDs class at school who are leaving London permanently before the beginning of the school year. They all live in rented flats so I expect that those will all come on the market cheaply when the landlords can’t find renters willing to pay enough rent to cover the mortgage and tax...

Just to add, 100-150 is typically a reduction of about 8-10% of the asking price of those houses.

That makes no sense, where will all the renters live then?

Where I live we are absolutely surrounded by blocks of flats and housing estates being built on every available bit of land.
A couple of friends are local estate agents and they predict a fall of around 20% between now and February, partly due to the effects of covid, but also due to sheer over supply of over priced properties.
That is just my local area though, so I don't know what is predicted elsewhere.
A lot of these flats are being bought by overseas investors, then left empty. There must be a way of stopping this IMO.
For example, in Malaysia, non-citizens are allowed to buy one property, no more.