1 million in negative equity

[graysblue]

this morning the bank of england has warned that 1 million homes could fall into negative equity and also predict that values could decrease by a further 15%.

my view is simple,
the more snatch backs which go to auction will result in property prices falling further than 15%,i reckon it will end up in meltdown.

this is how its gone wrong in my opinion.

the mrs knows a youngish couple who purchased their gaff 3 years ago for 155k the nice people at northern rock borrowed them 165k,the couple went on to have lavish holidays,buying a new car and fitting out the property with over 10k of furniture.

the result being there place is now worth 130k and they owe 15k on credit cards and the car loan,currently from their monthly wages they have virtually zero left after paying their various debts.

these people are downright stupid yet the banks must take their share of the blame.

probable outcome they will lose their home ect and be faced with many thousands of debt and possibly never be able to buy another property.

crazy.

 

[RobM]

Nobody made them spend on lavish holidays or run up credit card bills. Their problems are somewhat self-inflicted. Too many people have lived the buy-now-pay-later life and it's come back to haunt them. I have no mortgage, loans or credit card. Am I lucky or sensible?

 

[Mad Cyril]

I reckon the area is in for a battering.

I earn a decent amount yet when I visit certain parts of town I wonder how people can afford what they are driving/wearing.

I am sure there are some very well compensated people living in our fair town who can maintain this sort of lifestyle but I am not sure about the rest. Not everyone who gets on the train in morning earns a six figure salary but many of them want to live like they do.

 

[graysblue]

Nobody made them spend on lavish holidays or run up credit card bills. Their problems are somewhat self-inflicted. Too many people have lived the buy-now-pay-later life and it's come back to haunt them. I have no mortgage, loans or credit card. Am I lucky or sensible?

agreed 100%

these people are plain daft yet personal debt has hit over 1 trillion quid.

the banks allowed to borrow more and more without thinking can these idiots repay.

i applied for a credit card years ago,its never been activated yet the bank has increased the spending power on this card 4 fold.

 

[RobM]

I know - I last used a credit card about 4 years ago - guess what? They have upped my limit to £17,400! I am certainly not on a six figure salary although it's decent.
I paid my mortgage up early - thank you BP share scheme! - and have never regretted it. Mind you I was shaking when I signed the cheque...I could have bought a Porsche with that loot!

 

[graysblue]

thats why goverment and banks should have applied the brakes years ago.

allowing the public to go on a spending rampage will make every single one of us suffer.

my card has been increased to 14k the bank are constantly contacting me to tempt me into using the .poxy thing

 

[RobM]

Probably because the staff are on a bonus!

The only plus with a credit card is insurance against the retailer going bust BUT only if the purchase is over £100; if the whole sum is paid on the card (i.e. not half cash, half card) and not credit card cheques. I think that's right!

 

[McNasty]

I have bailed out people by re-mortgaging them to pay off cards and loans and told them to cut their cards up, but a year or two later I get the call to do it again. Some people thought that as long as they had equity in their properties it would always be possible to lump all the debts into one. This option went out of the window ages ago.
More and more people will lose their property in the not too distant future.
Me ? I just gave mine to the ex when she divorced me ---- no property, no negative equity.

 

[Mad Cyril]

I have bailed out people by re-mortgaging them to pay off cards and loans and told them to cut their cards up, but a year or two later I get the call to do it again. Some people thought that as long as they had equity in their properties it would always be possible to lump all the debts into one. This option went out of the window ages ago.

You should have pointed them towards Carol Vorderman.

 

[RobM]

"No property - no negative equity" - problem solved!

Seriously though, what does negative equity matter unless you're selling? We all have to live somewhere and renting doesn't add to one's portfolio. Houses are expected to rise in value yet everything else we buy isn't. Odd, eh?

 

[Nobby Snide]

this morning the bank of england has warned that 1 million homes could fall into negative equity and also predict that values could decrease by a further 15%.

my view is simple,
the more snatch backs which go to auction will result in property prices falling further than 15%,i reckon it will end up in meltdown.

this is how its gone wrong in my opinion.

the mrs knows a youngish couple who purchased their gaff 3 years ago for 155k the nice people at northern rock borrowed them 165k,the couple went on to have lavish holidays,buying a new car and fitting out the property with over 10k of furniture.

the result being there place is now worth 130k and they owe 15k on credit cards and the car loan,currently from their monthly wages they have virtually zero left after paying their various debts.

these people are downright stupid yet the banks must take their share of the blame.

probable outcome they will lose their home ect and be faced with many thousands of debt and possibly never be able to buy another property.

crazy.

For once GB, I agree with you.

Its something that many in Britain have done since the 80's. As you say, the couple were young, they probably dont remember the 'bad old times' of pre 'credit card, spend now- pay never interest freelifestyles' thathave been pushed in our faces, all theyve known is the selfish I want it now, I want what youve got attitude that is rife in Britain.

we do need to et back to some old fashioned values of, 'If I cant afford it, I won't buy it'...

I worked in retail all my working life upto moving to Spain and I remember in the 80's 90's people asking me if we accepted CASH and if they got a discount....maybe cash wl become king again..cut your cards up..GO ON, DO IT NOW!!!

 

[RobM]

SS, has Spain the same troubles?

 

[McNasty]

Technically negative equity is loss of profit on paper. As you rightly say it only kicks in when selling as, provided you can keep paying the mortgage, very long term the mortgage will reduce until paid off. This obviously does not apply to interest-mortgages when at the end of the term you still owe the original sum.

The problem is being made worse now by credit card companies putting a charge on your property to try and get back monies they lent you in the free and easy credit times when things go bad. Beware.

 

[Nobby Snide]

SS, has Spain the same troubles?

yes and no

It is affected by the credit crunch, but a lot of its 'wealth' was ironically based on building holiday homes for the rich western and north europeans. Over the past four years, we have seen the Germans get hit at home with a double tax whammy on having holiday homes, and most have sold in droves, really cheaply, the Scandies have been put off this area because of the influx of Brits, Irish and Eastern Europeans and now the Brits are literally walking away from thier houses here because they can no longer afford the repayments.

that in turn is causing a slowdown on future building work, as super saturation point on the property market has been reached, there are no jobs to be had, either legal or black money, and the local governments are turning the screws on 'foreigners' living here by changing the rules literally daily.

as for the rest of Spain, it is following the trend of all other financially based societies.

However, people here are much more pragmatic about life, and are much more adept at changing thier lifestyles, because only upto recently, most were poor anyway.

 

[graysblue]

it always made me chuckle when someone stated "my gaff is worth XYZ" IN TRUTH the value means very little ie if it were worth big dollar and you were tinking in terms of moving abroad or downsizing yes you would be able to bank a decent chunk.

the crazy amount of stamp duty requires urgent adjustment in line with property inflation.

once property prices have settled it must return to people having the 5% deposit.

in addition the banking industry MUST check and double check peoples borrowing.

BAN those crazy adverts on telly as well ie "have you debt problems" blah blah blah.

 

[Nobby Snide]

In a further reply to RobM, credit cards here, are virtually non existant.

Debit cards are the same here as in UK, ie, if its not in your account, you cant have it, but with credit cards, you have to set aside the value that you want as a credit card, ie you actually pay up front for the amount that you want on your card. And then you get charged interest on what you spend!

As you can imagine, there arnt many takers on the offer. The banks are happy though, as theres no risk to them.

 

[Andyhsufc]

SS, has Spain the same troubles?

well banco santander seem ok buying up all the british failures!

 

[Nobby Snide]

well banco santander seem ok buying up all the british failures!

of course...they are able to, because of the points I raised...and the Uk partners of Bank Santandair are...?

 

[RobM]

Abbey? Alliance and Leicester maybe.

 

[Nobby Snide]

The Abbey...all fits in nicely dont you think?