House Price Crash draws closer

Thats a bloody daft comment, Obviously if I cannot get a normal mortgage then I am not going to get a BTL one.

The problem is that 3 times my salary (which is pretty average) only comes to about half the value of a small house. Even if someone would give me a 6 times mortgage I would not be daft enough to take it.

For me there are only two options that I can think of. 1) Increase my income, which I am doing (but its pretty hard when you are a lone parent) 2) Wait and hope the price crash comes soon.

RaZe

There's a guy on the Motley Fool website who is also living in rented accommodation.

cd

If house prices fell by 50% then I would be able to buy, and assuming interest rates don't increase too much then I would have a significant more disposable each month than I do currently.

As for credit restrictions that shouldnt affect me much as I don't (and never have had) anything on credit, I don't even have a credit card or anysuch, and have never had any debts, so I should have a perfect credit record.

I never have, credit is for idiots who can't manage their finances. Unfortunately I would have to make an exception for a house but it is a bit different trying to save up for a house than say a washing machine, personally I can't imagine why anyone (even on low pay) would by something like a washing machine on credit, but many do.

I don't know anything about that, I just know that it is almost always cheaper to pay with cash than credit.

RaZe

Not necessarily so. BTL mortgages are not based on income multiples, but on the expected rent being able to cover about 140% of the loan interest. Then you can rent the house to yourself and be quids in.

But you do need to have a 15-20% deposit.

Sadly, although you might think you have a perfect credit record, to a lender you have an empty credit record, which says nothing about your credit worthiness.

DG

Did he sell his house? Seems that FoFP didnt (which was my assumption, not his claim).

Nope, you'll have a crap one.

What about interest free credit? And define 'credit'..what about buying on

0% inteerest credit card and then paying back 6 montsh later, or moving the debt to another card? Is taht what you mean, or do you mean HP or a loan?

Try buying a car or double glazing with cash.

Also, Self Certification and Non Status mortgages are still available. The lower the deposit, the higher the interest rate (usually).

This is not a recommendation to utilise one, especially in the current overpriced property climate.

My point was that mortgages are credit and the sort of credit that's currently available for mortgages is highly unlikely to still be available after a credit crash. The lenders will be desperate to recover what they've already got out on housing, not looking to lend more into a falling market.

It's too long since the last credit crash (1930's) and so nobody remmbers the downside of credit.

Yup. Same goes for buying houses.

FoFP

There's irony there. I hate being in debt so much (I once owed someone thirty quid for a week) that I've never had any commercial credit other than the usual float on my credit cards (paid in full every month). This apparently makes me a poor credit risk.

FoFP

Avoiding tax? I find that many people are willing to exchange goods for cash, at a discount because Robbing Hood doesn't get his cut.

FoFP

Hence why so many people will stay away from stocks - perhaps for the rest of their lives.

Perhaps more of an unknown credit risk.

Or more likely, not someone they are going to make a lot of money on - i.e. no extended credit at 32.9% APR. :)

Nothing to do with that, you'll find that most major car dealers and doubling glazing cos will give you a better deal for credit since they get a cut of the commission.

"Richard Faulkner" wrote

Why, exactly?

If your right then its an interesting idea, I will look into that.

That could be a problem.

RaZe

"Kenny of the Fells" wrote

Some of them, but attacking pensions and savings and relying on mortgage equity withdrawal to drive "growth" have been Brown's personal and unique contributions. There was a credit bubble under Thatcher which went pop in

1988-9 but it wasn't the mainspring of all economic growth over the prior 8 years.

"Tumbleweed" wrote

Indeed, and those who are living in rented accommodation are obviously invested in the idea that they are right, so they are not about to suggest a

10% correction.

I can't quite see 90% falls myself, not least because the exemplar offered is usually Japan whose property market was plainly a lot more overvalued than ours. I can see 20 to 30% quite easily though.

In message , John Redman writes

In general, properties are for sale at prices which are higher than value.

This means that it takes longer for them to sell than if the asking price were the value.

In a static market, agents will encourage sellers to reduce their prices over a period of time, or the sellers will do this without encouragement, until they sell, (or withdraw from the market.

In a falling market, it will take longer for the above reductions to reach the value, (if they ever do).

In a rising market, the market can reach the inflated asking price, before the need for a price reduction, or without the need for a price reduction.

During the change from a rising market to a falling market, stocks increase because it takes longer for houses to sell. During the change from a falling market, stocks reduce because it doesnt take as long for houses to sell.

The above assumes a fairly steady volume of properties being placed on the market and, whilst not an exact science, it seems to be a reasonable guide.