drbubb

If only... we could make it so, by just choosing. Unfortunately, governments see to do everything they can to DELAY the problems in a way that just makes to risk of a Global Depression higher. Delaying is not the same as Averting a crisis... unfortunately Just look at the last decade, to see how the problems were worsened by almost every decision == == == Hmm. JUICY NEW PRODUCT - Or a TRAP for unwary FTBers ? : The deal is a two-year fixed rate at 5.79%, for borrowers with a deposit of only 10%. However, what really sets this mortgage apart is the fees – or rather, the lack of them. Buying your first house is a big step, but many first-time buyers make these classic mistakes There are no product fees, no conveyancing fees, no mortgage application fees. Indeed, the lender will even refund the valuation fee. According to Halifax, the average first-time buyer typically faces fees of just shy of £2,000 when buying a property. That’s £2,000 in the buyer’s pocket, instead of going to the lender with this mortgage, something that I know would have appealed to me when I bought back in February 2009. This is a stupid deal for the lender. Chances are. many of these loans, if made as described, will wind up as problem loans. You cannot appeal the "law of gravity", just be offering a 90% LTV loan. If prices fall 10%, then almost all your 90% borrowers will be trapped in negative equity - What then? BTW, 5.79% is not cheap, and for HOW LONG is the rate fixed ?? Two years? When Rates rise after 2 years, what then?

EXCERPTS Such sharp declines would outstrip the official forecast for a 2.7pc decline in 2011, and roughly match forecasts by National Institute of Economic and Social Research (NIESR) that "real" house prices, after accounting for inflation, would still be at 2003 levels in 2015. (The fall in Jan. could be a shocker. Thanks to the cold weather, few buyers will have done viewing leading up to purchase.) Homeowners problems could be compounded by an interest rate rise. Mr Archer said: "Current mounting speculation that the Bank of England could be forced into an early raising of interest rates by rising inflation adds to the downward pressure on house prices." About two-thirds of households are on variable rate mortgages, exposing them to higher costs if rates rise and potentially increasing the number of forced sellers. (A real risk. Let's see what happens if/when sovereign debt worries spread to the UK in 2011.) However, Martin Ellis, Halifax's housing economist, said falling prices may deter sellers from putting their homes on the market, helping to "reverse the imbalance between buyers and sellers". (The reverse may be true. At some point, falls lead to panic, with more people wanting to sell, and "save themselves.)

I do not. I forecast nominal prices. Inflation is not very meaningful in the house price inflation (in my way of thinking.) Changes in income are more important

I think you need to compare their forecasts, with their own indices. My forecast of 12 months ago was negative (I think: -3 to -5%), so I missed by as much as they did. But once the top was in place (Q2-2010), we go the sort of drop I expected.

Yes. You may have noticed the detail from my data grid: Year-on-year figures... Mon.: Rt'move : London : 2009 D : : 221,463 : 398,426 : 2010 D : : 222,410 : 408,248 : Year on Year: yoy: +0.42% : +2.47% : London was up 2% more than UK-wide for Rightmove. But both were down almost -3% in December. It will be interesting to see whether this rapid rate of collapse continues into 2011.

That's a good point : about the EROSION. But I also think that lenders must be thinking a bit about their customers' ability to make mortgage payments in a higher interest rate environment. They are not going to get bailouts as easily as last time, so if they want to stay alive, they had better mind the store.

Of course the ACTUAL NSA number was : -1.08%* Here's an interesting excerpt from the report: The low interest rate environment has reduced the burden of servicing mortgage debt. Typical mortgage payments for a new borrower have fallen from a peak of 48% of average disposable earnings in mid 2007 to 29% in the last quarter of 2010. This key measure of affordability is at a better level than the long-term average over the past 25 years (37%) and is an important factor supporting housing demand. Despite this, House prices are FALLING at crash cruise speed. DO YOU THINK, that maybe both banks and borrowers are a little concerned that ultra-low rates may not persist, and the borrowers might face paying mortgages when rates are a bit higher? It is refreshing to see a glimmer of reality creeping into borrowing decisions. == == == *data: Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx 2010 N : : 229,379 : 420,248 : 155,575 - 0.4% / 163,398 = n/a = 164,708 163,268 : £163,333 :- 0.91% :140.4% : D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,763 = n/a = 162,435 161,498 : £162,131 :- 0.74% :137.2% : ===================================== mom: -3.04%: - 2.86% : Est.DI: 137.2 % / : -0.39%: = n/a = :-1.38%: -1.08% : - 0.74%

Back on Dec.29th, I Said about the forecast for a no change in 2010: I think 2010 will come in at about -1.6 to -2.0%. So their call of "flat" missed the direction Two days later, I got this reaction: We now have the year-on-year figures for both Nationwide and Halifax.... Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx 2009 D : : 221,463 : 398,426 : 156,900*+0.1% / 162,103 169,042 168,763 167,260 : £164,681 :+0.30% :134.5% 2010 J. : : 222,261 : 407,731 : 156,116 - 0.5% / 163,481 169,777 169,484 165,514 : £164,497 :- 0.11% :135.1% : HFsa HIGH F : : 229,398 : 427,987 : 156,584 +0.3% / 161,320 166,857 166,703 165,997 : £163,659 :- 0.51% :140.2% M : : 229,614 : 417,461 : 157,054 +0.3% / 164,519 168,521 168,433 167,808 : £166,164 :+1.53% :138.2% A : : 235,512 : 421,822 : 157,368 +0.2% / 167,802 168,202 168,212 170,772 : £169,287 :+1.88% :139.1% : H&N HIGH M : : 237,134 : 420,203 : 157,682 +0.2% / 169,162 167,570 167,287 169,204 : £169,183 :- 0.06% :140.2% J. : : 237,767 : 429,597 : 158,700*+0.1% / 170,111 166,203 166,351 166,395 : £168,253 :- 0.55% :140.5% Jl : : 236,332 : 422,248 : 158,500 - 0.1% / 169,347 167,425 167,536 168,331 : £168,839 :+0.35% :140.0% A. : : 232,241 : 405,058 : 158,200 - 0.3% / 166,507 = n/a = 168,124 168,889 : £167,698 :- 0.68% :138.5% S. : : 229,767 : 399,019 : 157,600*-0.4% / 166,757 = n/a = 161,974 163,639 : £165,198 :- 1.49% :139.1% O : : 236,849 : 418,778 : 156,200* 0.9% / 164,381 = n/a = 164,949 165,275 : £164,828 :- 0.02% :143.7% : Hi Delus. N : : 229,379 : 420,248 : 155,575 - 0.4% / 163,398 = n/a = 164,708 163,268 : £163,333 :- 0.91% :140.4% : D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,763 = n/a = 162,435 161,498 : £162,131 :- 0.74% :137.2% : Year on Year: yoy: +0.42% : +2.47% : Est.DI: 137.2 % / : +0.41%: = n/a = :-3.75%: -3.44% : - 1.55% To summarise, my H&N Index (average of Halifax & Nationwide) was: £162,131, down from £164,681, that's -1.55% yr-on-yr ! And the last 5 months are: - 0.68%, - 1.49%, - 0.02%, - 0.91%, - 0.74% : for an average of -0.77% monthly. That's in the middle of "Crash Cruise Speed" (ie: -0.5 to -1.0%)

Very nice indeed. The Long march at Crash Cruise speed continues... Back on Dec.29th, I Said about the forecast for a no change in 2010: I think 2010 will come in at about -1.6 to -2.0%. So their call of "flat" missed the direction Two days later, I got this reaction: We now have the year-on-year figures for both Nationwide and Halifax.... Mon.: Rt'move : London : Hometrack chg./ Na'wide H.old.SA Hali.SA Hali.nsa: H&Nindex : mom :DelusIdx 2009 D : : 221,463 : 398,426 : 156,900*+0.1% / 162,103 169,042 168,763 167,260 : £164,681 :+0.30% :134.5% 2010 D : : 222,410 : 408,248 : 155,100 - 0.3% / 162,763 = n/a = 162,435 161,498 : £162,131 :- 0.74% :137.2% : Year on Year: yoy: +0.42% : +2.47% : Est.DI: 137.2 % / : +0.41%: = n/a = :-3.75%: -3.44% : - 1.55% To summarise, my H&N Index (average of Halifax & Nationwide) was: £162,131, down from £164,681, that's -1.55% yr-on-yr ! And the last 5 months are: - 0.68%, - 1.49%, - 0.02%, - 0.91%, - 0.74% : for an average of -0.77% monthly. That's in the middle of "Crash Cruise Speed" (ie: -0.5 to -1.0%)

THE FOUR Bullish Drivers for HK property in 2011

I don't live in the UK now, nor do I plan to return there. But it occurs to me that... Some older folk with a bit of money, should be thinking of hiring (unemployed?) younger folk to start building a refuge for them in farming areas of the UK. This would: + Give meaningful work to the young + Establish a relationship, which might be of value to both + Begin the build a "lifeboat" which could provide a safer future for the families of the investor, and the young worker Does anyone else see potential in this idea ?

Sorry to hear this, CJ Where elsewhere might you go?

Real Interest rates are negative, and markedly so. And that is encouraging people to speculate in things like commodities and properties. The BofE would be prudent to raise rates back to more sensible levels, so that real rates are POSITIVE, and that will help to reign in speculation and reckless lending. If they do not do that, the losses for banks will be HUGE if inflation keeps rising and gets out of control. Then the required rate rise to slow inflation would be massive. It is better to be cautious now.

I hope you can buy it cheaply enough to make a nice profit doing it up I do not envy your situation, and would not want to see you fall into a loss, simply to stay busy

I agree that it seems unlikely now. But if something near my Worse Case arrives, it will be worse than that.

Not if prices are going to drop by 30% over the next 3-5 years which is truly possible IMHO

WHOOPS ! David Cameron called an 80% Loan "respectable" ... Did he mean: "reckless" ?? The Prime Minister warned that the housing market was “stuck” and would not improve until banks and building societies got back to “respectable” lending. He vowed to get the market moving again. In his strongest comments yet on buyers being denied access to the housing market, Mr Cameron said the reaction to crash which exposed people on unsustainable mortgages had now gone too far. He said: “In a way the pendulum has now swung too far the other way. If you are a single person, you are earning a decent salary, you go to the bank or building society, you are actually quite a good risk, they won’t give you 80 per cent of the value, they won’t give you four times your salary. “So we are working with them to try and say, look of course we don’t want to see the unsustainable boom of the past, but we’ve got to get proper lending, respectable lending going again.” /more alarming nonsense: http://uk.finance.yahoo.com/news/Banks-gon...2hhdmVnb24-?x=0 Does he really want to have to bail out the reckless banks another time ?

Thanks for that, M. Pile this on top of: + The imposition of Housing benefit Rental caps + The deflationary impact of: austerity job cuts, lower salaries, rising VAT sales tax + Increased sovereign debt concerns And we have some powerful downside forces about to hit the UK property market

Thanks for that, M. Pile this on top of: + The imposition of Housing benefit Rental caps + The deflationary impact of: austerity job cuts, lower salaries, rising VAT sales tax + Increased sovereign debt concerns And we have some powerful downside forces about to hit the UK property market

Governments are not very good at doling out pain, except through taxation and inflation, but you have come up with a good list. Can we add in "banksters put into stocks alongside Mr. Brown, with rotten tomatoes sold at subsidized prices" - then I would be happy. This is good too: I think Mr.Brown's political skills could be very useful in Africa. Perhaps Nigeria.

That is where the government has to get involved. The banks will have assets. Their equity shareholders get wiped out, and the silly old pensions discounted. The govt steps in if needed

Sure he can. he pays a deposit (pds.5k - 20k) and assumes a mortgage on a foreclosed property for the rest. It is happening right now in the US The FTB is the answer to the prays of the guy working out the troubled property portfolio. My grandfather worked for a bank in th great depression and did deals like that

Thanks for drawing up this scenario... Happy or not, it may come. Here's what I suggest, let the old banks crash and burn. (But give depositors 95-98% of their money back) Set up new banks, with better management and more prudent lending policies. Most people will be happy with a maximum of 50-60% LTV if house prices are cheap enough to start with. "who is going to give them the 80k mortgage they now need to buy the 100k property." Post crash, there will be plenty of cheap properties, and even a few surviving landlords, who can then rebuild. The landlords should be maybe 50%LTV maximum, and FTBers maybe 60%LTV maximum. The problem will not be: how can FTBers afford the properties, it will be who can the banks find to take the unwanted properties off their hands. The FTBers will set the prices, not the BTL kings or the vendors.

i am sorry - i cannot answer that. Sean David Morton is predicting big defaults in Europe (Greece, Ireland, and Spain) and also in US states like California and Ohio in the first 6 months of 2011. I think the troubles will spread to the UK, and take the form of restricted credit, and probably rising rates

I am recording FORECASTS FOR 2011: + Roger Bootle "megabear": -10 to 15% in a year "is not impossible" + Capital Economics team- : -10.0% + DrBubb/ Global Edge Inv. : - 9.0% (London - 6.5%) + Tim Waring / Gritty Econ. - : - 7.5% + Howard Archer/IHS Global : - 7.0? ("will lose 10% from 2010 peak") + IG Index Sep2011 (156.4) : - 6.5% - yoy to Sept.2011 + Liam Bailey, Knight Frank : - 6.0% + Yolanda Barnes, Savills-- : - 3.0% (London - 1.0%) + Hometrack, in Dec. 2010- : - 2.0% + RICS / Royal Inst. Surv.-- : - 2.0% My "official" forecast is: -9% for 2011, But I think there is a fair chance that price may fall faster than that. Reasons for the expected fall, of near 10%: + Sluggish demand due to austerity measures beginning to bite. + Rising rates, thanks to cost-push inflation in energy and food prices, + Downwards pressure on rents, as Housing Benefit caps come into effect + Deterioration of the presently-bullish sentiment During the course of 2011 or 2012, I expect we will see the year-on-year change of to hit -10% and higher. 2012 falls could speed up, if 2011 is -9% and rates are forced higher by rising inflation. Greater London could surprise on the downside, if public sector job cuts bite, and the UK tax regime turns less favorable for the mega-wealthy. /more: http://tinyurl.com/GEI-hpi2011