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Repossessions rise by 21%
Former Member
Posts: 1,876,323 The Mix Honorary Guru
http://news.bbc.co.uk/1/hi/business/7234254.stm
It's quite shocking really
http://www.ft.com/cms/s/0/867f760c-d375-11dc-b861-0000779fd2ac.html
And it is due to increase by another 10% this year.
Whilst it's bad that people are losing their homes, I think this is as good an illustration as any that houses aren't foolproof investments - and the people being stung the hardest are probably those with one house and 6 'investment properties' all bought on credit under the false assumption that rental returns would not only cover the credit costs but also bring in some extra cash.
Really unfortunate. I bet those two from the BBC now feel a little sheepish after telling people for years that you can't really lose playing the property game.
It's quite shocking really
http://www.ft.com/cms/s/0/867f760c-d375-11dc-b861-0000779fd2ac.html
And it is due to increase by another 10% this year.
Whilst it's bad that people are losing their homes, I think this is as good an illustration as any that houses aren't foolproof investments - and the people being stung the hardest are probably those with one house and 6 'investment properties' all bought on credit under the false assumption that rental returns would not only cover the credit costs but also bring in some extra cash.
Really unfortunate. I bet those two from the BBC now feel a little sheepish after telling people for years that you can't really lose playing the property game.
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Well if it's mainly "investment properties" that are being repossessed, then it's not people losing their homes, and I couldn't force myself to feel the tiniest bit of sympathy for them. If it's people losing their homes (and I expect it will be a combination of both) then that's terrible, but the way the market's going.
Scumbags :mad:
There may of course be banks trying to make profits (thats what they are there for) but it is also the cost of borrowing on the general markets. The cuts in interest rates both here, in Europe and the slashing of rates in the US havent drastically changed the inter-bank lending rates.
One thing is operating to make a profit. Another is profeteering and ripping people off.
Of course, and I wasnt really defending the banks, just suggesting that mortgage rates are a bit more complex than just what the Bank of England sets.
If you read it's also First Time Buyers who have overestimated their salaries (self assessment) and got 100% mortgages.
ETA: the NR bailout isn't helping matters, as the deficit builds up investors demand more return for their risk, link....the pound has fallen 8% against the euro since november and the bond market isn't stupid.
Regardless of all that though - I think it was an accident waiting to happen. A lot of misinformation put out by estate agents, the government, the banks and even the BBC (have you noticed how they've bummed property as investments for the past 10 years), either because they've been ridiculously short sighted, or wanted people to keep ploughing money they dont have into property in order to give the appearance of growth so they can give themselves big paychecks. Well, maybe that's a bit cynical... but if I remember A level economics (and I do) influencing demand for products and services doesn't create real long term growth, it just creates inflation at higher level of consumption (i.e. house prices are higher than the value of the houses). Obviously there are enough holes with any assumptions that I make to make a blanket statement like that to sink a battleship - but the theory holds true and we're seeing the effects of inflated house prices hit the market.
I genuinely feel sorry for those who've lost out. I don't agree with 'property tycoons' buying houses on speculation that they'll increase and leaving them empty, pricing locals out their hometowns - but at the same time I think there has been so much propaganda that anyone with money would have put it in property. Even my brother, who is pretty clued up on investments advised me to get one last year as it would increase in value (ask my mum to put deposit down and in her name and live in it with friends at uni - you know how some do?) but I shied away because of the extra responsibility and no guaruntee I would see a good return on my investment. But so many people have just been continuously told by institutions that they 'can't' lose money. Those same people are being repossessed now - yes they may have been irresponsibly spending but many of them will have been convinced to a degree they didn't consider the possibility they'd be repossessed.
Don't worry J - there's always going to be a cycle. If worst comes to worst people will accept lower standards of housing. But if you think back to the Roman era when the average schmuck like us lived in a mud hut or something (only the aristocracy / traders [one and the same?] lived in nice town houses) and since then nearly without fail people have found themselves in better situations. There never was a golden age where everyone had themselves a big house with lots of land and two ponies - of course we've been conditioned to aspire to that but everyone has always needed to work hard (or more likely, know / be related to the right people).
In Japan people happily settle for studio apartments. But go live in Scotland an hour out from the big cities and you can get a 5 bed for less than £70k (in some places).
Most rich people who can afford to buy homes for their kids at uni make money.
If there's a big student population properties are always sought after, there's a guaranteed rental market and in spite of blips - the general trend is for house prices to increase.
If 10/15/20 years ago... you put £100k in a savings account, £100k on the Stock Market and £100k in property you'd have made a lot bigger profit on the latter two. In the long run property is a decent investment imo, if I had a load of money to spare I'd buy a house or flat with it.
Just look at the ratio between income and mortgage repayments in recent years, it's increased significantly - surely this is a sign of reckless spending? And I do blame those who are in a position of influence over buyers.
edit: 'rich people' tend to get IFA to set up a distributed risk portfolio of shares, savings, stocks, options, you name it. You can even make money on the market crashing. With money comes the expertise and experience required to retain money. It's always the ones who have less and are just trying to make a living for themselves that get screwed over. Money attracts money, afterall. So if they do invest in property, if the market slumps and their repayments go up they can just ride it out, because they're loaded. Whilst all those who were trying to make some money for very possibly the first time, other than working hand-to-mouth 9-5 soon find themselves in financial ruin.
Sorry, I really could rant all day about the injustice of the system.
Senor Miguel,
Your comments on global financial matters suggest to me that you have enough knowledge to profit substantially from the forthcoming bloodbath. Good luck to you.
Programmes like this epitomise what is wrong with the way people buy houses in this country. A home is meant to be a place to live, not something to buy simply for a bit of easy money. If you're a pensioner and you want to downsize, that's fine. Take the money, you've worked all your life, you deserve it. But as for these "property developers" who buy houses, do them up and sell them at a ridicilous mark-up, I hope they're all boiled alive.
It's this kind of culture which is leading to repossessions going up. People bought into the lie that housing would always be a safe place to invest money. Bollocks. The value of a house can go as down as well as up. The moment people learn that, we've got some chance. Until then, we're fucked.
know what you're going into springs to mind
i agree with you here, a house is a plave to live in, when peopel see it as that, of course it's a solid investment, when people buy hoping to sell paying off themortgage plus profit, then things go pear shaped
It's not a mark up, it's the properts MARKET VALUE
It's not the fact they are marking it up higher than its value, they bought it very cheap because of all work
Something that anyone who could get the mortgage could of done :rolleyes:
Personally, I definately plan on investing in property when I'm older, would never have done it in the last few years the way the market is though
Most people are moaning they can't afford to buy a house anyway, so I assume you are renting? From a landlord? :rolleyes:
BTL'ers are the worst problem, it's the people with 3 summer houses, all sitting vacant except for a few weeks of the year.
Well I don't really have a problem with them. They're buying it, improving it and then selling it on. They're not buying it and then renting it out, preventing someone else from buying it. What really annoys me about those programmes is the sheer hypocracy of it. They get some couple from the South East of England complaining that they can't afford to buy a house, and their solution is to turn them into the very thing that causes the situation in which they can't buy a house in the first place, just in France or Spain. I remember watching one of them where a bloke from Sardinia was selling a house, and as soon as he found out they were English, he put the price up from £120k to £160k.
I have never met anyone who actually couldn't find a house to buy who had the money/mortgage capability, have you?
I have never been to an area which didn't have an array of houses for sale either
BTL'ers may be partially responsible for pushing prices up but that's not what people here seem to be saying lol
For some reason in the last 5 years during the whole boom, people seem to have acquired a logic that they have a right to buy a house, maybe because they are missing out on all the fun of the prices rising? I don't know, but it's not a right, unfortunate as that may be, that's life.
Me and my wife saved up for 3 years to afford a deposit on our house, and it's now worth a fair bit more than what we owe on it, because we saved up.
The right to buy a house is far older than that. It's one of Maggies initiatives if I remember correctly. But you fully accept the right for other people to buy every single one of something that people need to live to actively prevent them from buying it? It's the same as buying anything else with limited supply. By buying it, you are actively preventing someone who genuinely needs it from buying it, just to make a bit of cash. In a completely free market though, it would be completely acceptable to do this with anything from concert tickets to life-saving drugs. So yes, in a market where there are a limited number of houses, I think the rights of those who want a house to actually live in are more important than the rights of those who want a house to make a profit from. I don't support any new legislation or anything, but I support my right to call them the scum they are, and I also support the government helping people buying a house for themselves, and penalising people buying a house to rent, in order for real buyers to outbid investors.
Run that by me again?
Nice, twisted logic you have there. Everyone doesn't automatically get the right to buy a house.
Lots of people can't buy "in the area they want" but could if they moved to parts of Scotland or Wales.
I bought my 3 bed house 3 years ago for 75,500!
4 miles down the road (where I would rather live and where my son is going to school) the same house would of been 120K+
So what did I do, I bought in the cheaper area?
Morgages back then were around 4-4.5x salary so that's a salary of less than 17K - or almost two minimum wage style salaries ?
You keep saying other people are "actively preventing" people buying ? How are they doing that? A BTLer has no more rights than someone buying a home
They could both see the same house, both put the offer in etc
For the record, BTLers have to have a 15% deposit for starters, and get a higher interest rate as it's commerical
Would love to meet people who have saved a deposit but couldn't get a mortgage for that amount ???
BTL "investors" have driven inflation of house prices meaning that most first time buyers cannot now afford to buy. Those first time buyers now have to rent, providing income to the BTL landlords, who then have more money to spend on more BTL investments, driving prices ever higher.
Demand for houses doesn't outstrip supply, despite what people try and claim, as there are more houses than people. The problem is that most people can no longer afford to buy them because BTL "investors" can always outbid them. Houses are no longer for living in.
Whilst I agree that owning a house isn't the be-all and end-all, rental legislation in this country doesn't give anyone any security. If you are outside the fixed period of your tenancy your landlord can give you one month's notice to leave the property and you don't have any defence to prevent him from booting you out on the street. The only tenants who have any security anymore are council and housing association tenants. The waiting list for North Tyneside Council's housing is about five years.
And it's all well and good lecturing people about how they should move, but a) why the fuck should they move from where they grew up and b) it's not that easy to move if you're in employment. There's no point me moving to the Rhondda to get a cheaper house because I know that wages in my area of expertise (welfare law) are about 35% lower in the Rhondda than they are here. And 35% of £20,000 is a lot of money.
Who gives 25% Deposit ?? The minimum is 5% with most lenders, 3% with lenders like the halifax. I think 5% deposit is fine for most people, which is £3,500
If you can't save up the deposit or get it from somewhere, you can't buy the house can you? Whether there are BTlers or not
No, most 'recent' BTLers, as in the ones who haven't got experience or big portfolios are actually facing losses and covering the rest of the payments themselves.. or being reposessed..
Just to clarify, are you actually blaming the entire recent housing boom on BTLers? If so, that is very narrow minded and naive.
Source?
It's not the fact there aren't enough houses, as I said, it's the fact there aren't enough houses in the RIGHT AREAS that people demand they have a right to live in.
Right, but if you wanted to buy a house that badly, the choice is there?
"Why the fuck should you move from where you grew up?"
Well .. why shouldn't you? If you wanted a house that badly lol
I had too? Rather than sit and winge to people about not being able to afford to buy, I moved out of the area
Infact, I could of bought in my home area, at a higher price, for a worse house, so I moved to the valleys
Where do you live Kermit? I bet within an hours drive there is some amazingly poor area you could snap up a property in
There are two reasons why repossessions are increasing and neither of them are to do with reckless customers borrowing more than they can afford.
Firstly, banks are more concerned about risk and are becoming harsher on arrears and defaults. The banks can usually go for possession if you are in as little as two months arrears. They never used to reach for the lawyers at this stage and gave more leeway but now they go straight for possession. They cannot move the risk elsewhere so they get rid of the risk. Two months arrears isn't really very much, for most people it would be around £1100.
Secondly, with the LIBOR running at a ten-year high the standard variable rates of most mortgage lenders is around 8%. For sub-prime lenders normally their standard variable rate can be 4%-5% above LIBOR- meaning an interest rate of 12%. That's credit card territory. People coming off fixed-rate deals at 4% aren't prepared for the jump. They're used to paying less and used to being able to remortgage and now they can't. People can't afford the higher payments, fall into arrears, and the banks want the risk off the books so they go for possession.
The people I feel sorry for are all the idiots who were told that right-to-buy from the council was a good idea. They've tossed away a secure tenancy paying peanuts and now they're going to be homeless.
And those people then get lectured at for not providing a sufficient deposit.
The standard deposit in a property transaction is 10%. Lenders have to give special permission for less.
At the most basic level that's true, but misses something fairly important.
Most people could probably save up 10% of £20,000 (as house prices were five years ago) but most people on low incomes won't be able to save 10% of £80,000. Particularly if they are stuck in rental accomodation, getting moved about every six months and having to pay the extortionate estate agent charges.
My sister-in-law has had to fork out nearly a grand in estate agent fees in the last two years from moving about. She's now being turfed out of her current home by her landlord because he can't afford the mortgage and wants to sell up. So she'll need to fork out another £600 now to get somewhere else on the rental market.
That's half a deposit that she's had to toss away because, hey, she needs somewhere for her family to live.
Before you start bandying around words like "naive" remember what I do for a profession.
Yes, I pretty much do blame the housing boom on BTL. Most other sensible market commentators agree with me.
I bet there isn't. I live ten miles out of the city because of what my budget was; not that I care, we're semi-rural here and I like it.
Ten miles further out again and you're in an area renowned for having the most expensive real estate in the north of England. Look up Hexham and Morpeth house prices, look up house prices in Whitley Bay (which isn't salubrious) while you're at it. It's a bit of an eye-opener.
Moving a few miles down the road isn't the problem. If your family is in London, and your job is in London, then what good is having a house in the Rhondda on sale for £75,000? You can hardly commute from Merthyr fucking Tydfil every day, can you.
And you can't afford to buy where you live because all your money goes on servicing the mortgage of your landlord. Until your landlord gets repossessed, that is, and you can turfed out on your arse with 14 days notice.
That was a response to your twisted logic. You claim that you've never met someone who has enough money who can't buy a house. Well of course you haven't. The point is that there are now fewer people with enough money, because the house prices are increasing. Due to increasing prices, which you fully admit are partly due to BTLs, people who would otherwise be able to afford a house cannot. Where's the misunderstanding with that statement? House prices are increasing in part because more people than need houses are attempting to buy them. Therefore fewer people are in a position to afford a house in the first place.
Source please
No, you are mistaken.
I generally have come into contact with two groups of people -
Those who can afford to buy
Those who can't, and also have 0 deposit, 10K of debt etc etc
I have not met anyone who has even saved 3 or 5 or 10K towards their deposit as part of a long term plan