Falling house prices means more affordable homes/ moving house with negative equity.

I would use your latter definition. If the article implied numbers of property I would go for your former definition. Amount is a noun which I associate with magnitude that can't be expressed directly in numbers.

Given that we're now building smaller houses than built in Eastern Euope during communism, it doesn't say much for capitalism!!

Reply to
Fredxx
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"Andy Pandy" wrote

Then perhaps your problem is that you just don't understand the small print?

Andy kerbside: "Sorry, officer, you see it was just so easy for me to put my foot on the accelerator and speed along at 120mph that surely it must be OK to do?" !!

"Andy Pandy" wrote

How would you "pay off the card in full", if you had used the money in the bank for something else instead?

Reply to
Tim

"M Holmes" wrote

How do they use that extra half-percent to lay-off the risk?

Or do they just take half-percent extra profit, hope that prices don't fall, but if they do then they just go under - or cry to the govt to bail them out?

Reply to
Tim

"Andy Pandy" wrote

How much will the lenders allow them? There's your answer... [But anyone's guess could be right!]

Reply to
Tim

"M Holmes" wrote

What makes you think that the "extra salary" will be any more guaranteed than anything else?

If the economy shrinks substantially, then the "extra salary" could easily not be enough to pay off the debt...

Reply to
Tim

But the other factor as I wrote elsewhere is people extending existing properties, so just because new houses are smaller doesn't means the average property is smaller than it was. There aren't many houses round here which haven't had some sort of extension built on them.

Reply to
Andy Pandy

Then it gets written off. Unlike debt from negative equity...

Reply to
Andy Pandy

Yeah and some idiots max out their credits cards cos "that's what the lenders allowed them".

Reply to
Andy Pandy

I haven't got a problem.

Tim kerbside: "doing business love?" ;-)

I always pay my statement in full, I always have debt on my CC. As do most people.

Reply to
Andy Pandy

"Andy Pandy" wrote

Why would that be written off any more readily than NE?

Reply to
Tim

Erm, because that's the rules for student loans. You pay nothing until your salary reaches a certain level and then it's a %. After so many years it's written off.

Reply to
Andy Pandy

Has any proper study been done about this?

Around here there has been quite a few extensions but most of those were done by growing families who, owning to ridiculous house price inflation, cannot afford to move to a larger house as planned.

And of course there are many houses that have too small a plot of land to build a useful extension.

Reply to
Mark

In which case many potential students will look at the numbers, add in what the studying is worth to them personally, still come out down and eschew university.

Then, if there aren't enough graduates in certain subjects, the salary will rise in order to persuade them back to their studies.

FoFP

Reply to
M Holmes
[method of avoiding negative equity in housing...]

It's just a climb up the risk/reward curve. Since they're taking more risk, they demand a higher price to do so.

Even when prices fall, most borrowers will continue to pay off their loans. The lenders can average their money across various loans a lot more easily than most borrowers can average theirs across many houses.

FoFP

Reply to
M Holmes

Don't know.

Indeed - so they make their existing house bigger.

You'd be surprised. I know someone in a newish house with virtually no land who managed to build an extension on it, incorporating what was the garage.

Reply to
Andy Pandy

"M Holmes" wrote

Of course, but that doesn't mean they'd be able to afford to deal with the risk (unless of course their "risk premium" covered the entire risk, but no-one would buy into a deal like that!).

For instance, if the issue at risk turns bad, the lender may lose the entire amount at risk, but have only received 0.5% risk premium. How would they afford that without going bust?

"M Holmes" wrote

But according to your proposed method, the borrowers won't pay off *all* their loan, just effectively 90% of it ("The homeowner then buys 100 grand in face-value of mortgage-backs for 90 grand and settles the mortgage with the bonds.").

"M Holmes" wrote

Maybe so, but will "averaging" go far enough?

Reply to
Tim

"Andy Pandy" wrote

I can't say I've ever found the need to say that. You seem to know all about it, though, eh? ;-)

"Andy Pandy" wrote

How about now answering my question? If you use the money (that you're keeping onside to pay off the CC bill) for something else, then how will you pay off the CC bill?

Reply to
Tim

"M Holmes" wrote

... and thus push prices back up again!!

Reply to
Tim

Erm, you don't keep the money onside. You pay the CC out of next month's salary. So if you're a regular user of your CC you'll always have outstanding debt due to spending between your statement date and payment date.

Should you declare that debt to the mortgage company?

Reply to
Andy Pandy

"Andy Pandy" wrote

In that case, you wouldn't be able to use that money to go towards the deposit on the house! [You said: "For instance instead of buying a fridge, take out a loan for the fridge and then the money you would have spent on the fridge use towards your deposit."]

"Andy Pandy" wrote

Well, all the mortgage company is concerned about is where your deposit came from (eg from savings and not a personal loan!).

Reply to
Tim

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