What month will the property crash be obvious in?

[roneik]

Not doom but a question, and I would like to hear some opinions

I reckon by july

What's an IT payment? (I've got to go any min now, if so I'll come back later)

IR! Typo! Interest payment.

Just thought I'd throw this into the mix: House prices will drop across the UK in 2015, says CEBR

Issy, that article just proves why it's best to read the whole text, not just the headline - it says that the CEBR's view is not shared by many others, and also states that Halifax expects prices to RISE by 3-5%.

Not read the whole thread but isn't it July of this year that you can draw down 25% of your pension. So I would think that there is going to be a hell of a lot of cash hitting the market.

I think London went a little mad last year because it was the first signs the recession was coming to an end and everyone who had stayed put, cooped up into properties they had out grown for the last few years went out and moved. I think things will be a little calmer until the latter end of the year when things will get going again.

Heard somewhere that house prices have doubled in value every 10 years in the uk since 1000AD. Not too sure if that is true but can say that I doubt I would be able to buy my first flat for £17000 again short of a major natural disaster. No crash is going to send property prices crashing that low again.

Blackbird, I had read it (and the btl comments) before linking. I assumed others would read the article as well rather than just reading the headline, hence my comment of throwing it into the mix.

Much 'though I would love houseprices to fall, or at least stagnate, in the SE (and for proper rent controls to be brought in, LAs and HAs to build and buy back more property to end the ludicrous situations of Councils paying huge amounts of HB to private landlords who have paid LA tenents to buy their houses under right to buy and them immediately resale and rent and so on and so forth), I doubt it will happen whatever the colour of the next govt.

hereandtherex our interest rate is just under 1%, is that what you are asking?

I'm not sure that there is much of an interest only mortgage bubble at all. You might get some people who have them not realising but not enough to crash the market. As each year goes by, those that are on them have to address the issue by converting to repayment or selling up, but people seem to be dealing with that. Other people like myself are thanking their lucky stars for rock bottom interest rates and getting themselves into at least an ok position financially.

Beinghere interesting point about pensions; another new scenario being thrown into the mix.

There are 40 thousand people each year coming to the end of their interest only mortgage.One in ten of them are also 25k in debt with unsecured loans. This data is from the financial conduct authority. Interest rates only need to rise by 1.5% for the repayment on a interest rate mortgage to double.
An example here of someone who has 100k int interest only being forced to repayment. Present repayment io is one hundred and sixty seven pounds a month at the rate at the time . Wait for it the repayment would become

£1767 using a 2% example interest rate . Not my figures but the Financial conduct authority.

Edit 2% to more than double repayment io mortgage , not just double but
From £167 pm to £1767 per month
This information is freely available on the internet

If interest rates do go to just 2% there will be carnage in both repayment and interest only . T

They so easily almost overnight could go to that rate , it has all happened before.

The (base) rates only need to rise to 2% The base rate is what the banks pay to the bank of England to borrow or create this money

The cost of the (new life span) of the 100k loan would be 96k (interest) plus the balance outstanding

That's assuming rates did not progress from 2%

Interest rates are going nowhere fast.

No, I meant how much do you pay in addition to your IR payments i.e. how much of the capital are you paying off a month. That's the equiv figure you need to be looking at for comparison with a repayment mortgage.

Well done on the IR fix. I'd sell a kidney to get a deal like that. Expect the bank to be doing everything it can to get out of the contract. Make sure never miss a payment.

The IO mortgage boom was massive - IO mortgages accounted for the majority (80%+) of mortgages from 2000 onwards. They are a massive problem in London/SE - everyone (almost) has them ad not everyone can downsize to clear their mortgage.

I think we'll get a base rate of ~2%-4% - basically about ~1%/2% GDP growth + 2% real interest.

I think the banks borrowing cost spread over BoE base rates is going to be (relatively) huge - 2%-3%. The new capital rules for banks mean their borrowing costs are going to be pretty high going forward. I would expect Josephine Average's mortgage to be around 6% to 8%.

here I'm not comparing my io mortgage to a repayment, I'm comparing it to renting. At the moment we aren't paying as much as we would on a repayment, but luckily we don't have to. In the future we will have to evaluate and pay more but not for a number of years. We got our less than 1% at the back end of all the very good tracker rates; we do realise how lucky we are. And yes, they would love to get us off it but no chance.

I don't think everyone has an io mortgage in the South East; I hardly know anyone who does, and I do talk to friends/family about it.

When are you anticipating the average mortgage to be 6-8%?

Oh trust me, the majority of mortages from 2000-2010 are IO with no capital repayment.

Morgage rates are not that far off 6%. They are only to get more expensive.

Using HSBC (big, solvent, well capitialised) as my bench mark, an 80% LTV mortgage is currently 4.1%.

You might see ads for cheaper mortgages, with higher LTV but you are unlikely to qualify for them.

For comparison. Nationwide (smaller, less solvent) 80% LTV is 3.99%

Sorry, Issy, it looked like you were throwing the headline into the mix rather than the content of the article.

I'm not really seeing much sign of falling house prices, either where we're selling or where we're hoping to buy. In fact, one house we were looking at has had so much interest they've just put the price up. There seems to be more demand than supply, and no matter what your thoughts are about the general economy, interest rates, mortgages etc, on a local scale if you have competition, then prices rise. Bugger all the doom-mongers can do about it. You can tell me all you like that we should drop our house price by £50k because the peak is over, prices are crashing, but whilst I have letters coming through the door on a daily basis, from agents and from individuals looking to purchase a house in our road, I wouldn't be dropping the price at all. I'd consider dropping if we were six months down the line with no viewings...

hereandtherex forgive me if I don't just trust you on figures you are throwing out there! I have no idea, and I'm not sure you do either.

Interesting someone started a thread this morning about Cambridge desperate for a headsup on an MNer about to sell so she could get first refusal - because all properties there are selling as soon as they hit the market.

It is hard to see that a property crash is imminent.

Most people in the SE have an IO mortgage? What crap. How would you know anyway?

IO mortgages haven't been available for years. Anyone still
On them hasn't moved, remortgaged or taken the opportunity to fix at historical lows in the last 5,6 years. That's a long time in the world of 2 year fixed rates.

How could anyone be on a IO mortgage and not realised? Anyone who didn't realise they either applied for a IO mortgage of phoned up their provider and asked them to switch it is not responsible enough to have any kind of borrowing!

According to the Ft the number of interest only mortgages in 2012 was over 50%

www.ft.com/cms/s/0/f269df52-251d-11e2-86fb-00144feabdc0.html#axzz3O94Xz6js
Or if you do not subscribe google "proportion of interest only mortgages south east UK"

eltonjohnfloristSince the link was put on the net in 2012 there was an explosion of interest only
Don't be so rude to people until you know what you are talking about. The info that herandherx put up is spot on

By the way he would know because the information is published and freely available. You have to know how to navigate search engines with appropriate key words

That should read since the information was published in 2012 there followed an explosion of interest only mortgages. The south east is probably as high as 65%