Is housing market set to crash ?

[Moominsweetie]

Talk to me, clever people - what’s the outlook over the next 6-12 months?

propertyindustryeye.com/mortgage-rates-set-for-another-big-rise-today-as-major-lenders-revise-deals/#comments

"This could be the beginning of the end of the current market. Prices as of today are based on mortgage rates of between 2 and 3 %. Not around 6% and at those rates the number of buyers is going to decrease dramatically until House values and people’s borrowing ability come back into alignment."

Fantastic news!

Just simple supply and demand. Doesn't mean houses are any more affordable than they were last year unless you have a large deposit.
What it does mean though, if you buy in the dip and can ride out your mortgage payments, when and if interest rates are cut you will be able to switch to cheaper mortgage payments and your house will increase in price again.
The never ending cycle continues

This tweet would suggest a crash is imminent. The days of cheap money are over.

I wouldn't say imminent. At that time no one was on a fixed rate mortgage. The impact of rate rises was immediately felt by everyone. People were forced to sell, this led to the very rapid decline in house prices.
The landscape is different today, people have more time to prepare. The damage will be done if interest rates keep rising as more and more people come off their fixed rates.

The housing market moves changes at a similar pace to an oil tanker in the ocean.

there is virtually no doubt that prices in the future will be lower given what has happened to the cost of mortgages. How much, and how quickly nobody really knows and is always the subject of much speculation.

Those that have borrowed to their limits and not taken advantage of long-term low fixed rates will be most affected.

A surprising number of homeowners have no mortgage at all, another chunk will be either able to wear the current increase or are tied in to a fix for a while yet.

what tends to happen in an uncertain/falling market is that supply reduces. There will be opportunities for people to buy from forced sellers, but there is unlikely to be a large increase in the number of properties available for sale.

moves/changes direction* that was meant to say

100,000 fixed mortgages ending each month is a fair number though. You do have to wonder how many are now going to really struggle.

Stress testing only looked at could you afford it if the mortgage rate went up, not if everything else also shot up at the same time (plus people may have had kids since, so have nursery fees / are down to one wage etc).

Uncertain times ahead.

"The housing market moves changes at a similar pace to an oil tanker in the ocean."

No, that describes trying to sell a house in a downturn, the market can change at lightening speed, that is why you should never "have all your money/pension" in the most illiquid asset of them all, everything for the housing market has turned on it`s head in a matter of a few days.

"what tends to happen in an uncertain/falling market is that supply reduces."

What actually happens is that the value of your house reduces, there will ALWAYS be people who need or want to sell, they make the market not people in debt up to their eyeballs sitting on their hands.

The value of my house is largely irrelevant until the point i need to sell it. It could double tomorrow, or halve tomorrow, neither makes a lot of difference to me as I’m not selling.

if you think the housing market moves at lightening speed you clearly don’t know as much as you think you do.

I think we can agree that it isn`t going to double tomorrow? If it halves before you sell it I think to most people that would be a problem. Remember we are talking about the "housing market", not just your house.

The value of my house is largely irrelevant until the point i need to sell it. It could double tomorrow, or halve tomorrow, neither makes a lot of difference to me as I’m not selling.

Surely it depends if you have a mortgage or not? Because if you need to remortgage then the LTV does matter.

Not necessarily.

Most lenders offer a product switch or product transfer option. This involves remaining with the same lender, not increasing the outstanding balance, and switching to another mortgage product.

Typically this isn't viewed as new lending and as such won't involve checking income or the property value.

Although, if a lender really wanted to avoid this I've no doubt there is enough room within the t's & c's to not offer a switch.

But staying with the same lender doesn't mean you will get access to the best deals?

and of course lots do like to remortgage & borrow more for renovations etc

The lender is likely to treat the LTV% the same as the original application. So, if the borrower was on a 75%LTV product previously then they could do a product switch to another 75% LTV deal.

Then that would involve a fresh application.

The point I was making to your earlier point is that it is not always relevant what your LTV is.

The lender is likely to treat the LTV% the same as the original application. So, if the borrower was on a 75%LTV product previously then they could do a product switch to another 75% LTV deal.

But would that necessarily be the best deal in the market?

Quite possibly not.

So imo it matters 😆

I think they still check the value of your property. If the value of your home halved then it would affect your LTV. We did just this yesterday. Whilst our bank did not do credit checks or affordability checks or even whether we are still working, they did use HPI to value our house to confirm LTV.

I haven't come across this one. We have switched with the same lenders several times and whilst they didn't do any checks, they valued our houses at the time of switching to check LTV. Our first switch showed that we had dropped LTV from 90% when we bought to 65% LTV which meant we got a more competitive rate. This was with Nationwide who I believe have their HPI.

The switch we completed yesterday with a different lender used a HPI that I didn't recognise showing our LTV dropped from 60%LTV when we bought this house 2 years ago to 54% now. Whilst obviously this didn't affect the rate as they are as low as they get once at 60 LTV, they still completed this check.

www.housepricecrash.co.uk/forum/index.php?/topic/246074-boe-staff-agree-that-lending-and-rates-determine-house-prices-not-supply-and-demand/

Not anymore.