Riots?

[Septih]

Apparently there might be trouble in Newcastle tonight, near my old house where I plan on doing some gardening after work. That'll be fun!

[Commando]

1) I don't know how much a problem being a high risk customer is to the actual customer
2) Well if the price crashes relative to salaries, it wouldn't be too hard to get the extra cash, this is a problem with any house upgrade, not just negative equity sufferers.
3) See 1

Being a high risk customer isn't necessarily an issue, if the economy is stable. Right now it's not, and being a high risk customer is a big problem if you want to buy a house. It's only recently that banks stopped demanding 20% deposits for mortgages, whereas 10 years ago you could get a mortgage with no deposit at all (admittedly this might be something to do with the reason the economy's in such a dire state!). Try to get a mortgage on a house when you not only don't have a deposit but are in massive debt due to negative equity and they're not going to give you an easy time.

As for it being easy to get the extra cash if house prices crash along with salaries, I'm not sure I see what you mean. Unless you're talking a few hundred pounds difference I'm not sure why it would be easier if salaries went down while your outgoings (i.e. the mortgage) remain the same. I don't know many people who have several thousand pounds stashed away "just in case", and like I said, you'd struggle to get a loan from any bank.

[Beckie]

Sorry I pulled the number of jobs out of thin air based on a recent story about some other depot opening and the number of jobs it created. I dont really know the size of it very well.

And I love the house price economics discussion I seem to of created!

Being a high risk customer and actually getting a mortgage probably means you have to pay 5% instead of 3% or something. Which could make quite a difference to the amount you have to pay a month.

On mortgage of 225,000 at 5% rate would have to pay £1,315 per month.
On mortgage of 225,000 at 3% rate would have to pay £1,067 per month.

Thats £3,000 difference a year!

[Demonheart]

http://www.amazon.co.uk/gp/movers-and-s ... 70-4942219

lol

[Septih]

As for it being easy to get the extra cash if house prices crash along with salaries, I'm not sure I see what you mean. Unless you're talking a few hundred pounds difference I'm not sure why it would be easier if salaries went down while your outgoings (i.e. the mortgage) remain the same. I don't know many people who have several thousand pounds stashed away "just in case", and like I said, you'd struggle to get a loan from any bank.

I said if prices crash relative to salaries. Unless I've made a mistake that should mean that prices fall (a lot) faster than salaries. If they fell at the same rate then they would be the same relative to each other.

[Commando]

Ah, okay, misread what you wrote. Yeah, I guess if house prices dropped by 90% and your salary stayed roughly the same it would be easier to save up the extra money, but that seems somewhat unlikely. Salaries are always going to be related to a certain degree to how much it costs to feed, clothe and house a person (hence why salaries in London are higher than elsewhere in the country), so a drastic drop in house prices would certainly result in a gradual drop in average salary. Which isn't a problem for someone buying a house after the price drop, but is rather serious for someone who bought before it.

[Roper]

It's only recently that banks stopped demanding 20% deposits for mortgages, whereas 10 years ago you could get a mortgage with no deposit at all (admittedly this might be something to do with the reason the economy's in such a dire state!).

I think thats definitely one of the reasons we're in a mess, and also one of the reasons house prices went up so much over the years. It wasnt that people were earning loads more, they just let people borrow larger and larger amounts which simply meant they had more to spend and pushed the prices up, meaning everyone needed their 100% mortgages to have a chance to afford one.

[ash]

seems some people didn't get what they bargained for