Housing group gives four-year negative equity warning

http://www.bbc.co.uk/news/business-11132705

Suits me sir!

FFS!

Why should people expect to be able to own a house? The freedom to own a house is a human right but actually owning a house isn't.

If you don't have enough money for lollipop, u cant haz lollipop.

I suppose that's been the problem in the last decade or so - it didn't matter that you'd struggle to pay or didn't understand the risks, you could get a mortgage anyway

Exactly right.

I warned several people that there would be a recession and they'd end up in negative equity.

Did they listen?

And me. My fixed rate down't run out until late 2014, so I don't need to worry about my loan to value ratio until then. The actual house price is neither here or there as I have no intention of selling for several decades.

I think that some economists are wrong in thinking that this is a traditional recession and housing crash. In that way it would be a 4 year period of negative equity. Though I think that this time it is different. Alistair Darling did say that this was the worst crisis in 70 years. A lot of people criticised him for that. I thought that he was understating the severity by only going back 70 years, and not including the 1870 depression, putting it on a par with that. In that respect a 4 year negative equity might actually look overly optimistic. Property prices have risen for a year not because of increased demand but because of other factors. A lot of greeks buying into London to escape the tax clamp down back in Greece has had a local impact. Though most of the country is out of the price range of the first time buyer, and without first time buyers coming into the market buying at levels which reflect their income then it is in a bubble state relying on property owners bidding up the prices like a Ponzi scheme. the coalition have been talking about becoming competitive on the export markets. That means that wages have to come down as a proportion of costs. One way that can happen is through wage cuts and that is incompatible with the current house price regime. The issue for the government is that to get housing to a more stable level they need to make it less attractive as an investment.

House prices fall again in August, says Nationwide

http://www.bbc.co.uk/news/business-11161166

'I'll give you £100k and a kingsize Twix, but that's my final offer'

I'm in the middle of making a revised offer to the seller. It's simple, drop your price or we walk away.

I wish someone would get a grip of the house price index. Last month I heard two reports on radio 5 - one said the average price had droppped to £169k and the other, a week later, said the average was £220K.

unless you have to sell there is no such thing as negative equity.

+1

If your house is X and the house you are looking at buying is Y, and X > Y then what are you complaining about? You have enough from selling house X to cover house Y.
If X < Y then you'd still have to fork out extra even if X kept it's original worth...

Perhaps this stuff only matters to people who buy multiple properties and use them to make money?

[quote="forquare1
Perhaps this stuff only matters to people who buy multiple properties and use them to make money?[/quote]

It matters if
Your mortage is due for renewal (say you had a fixed mortgage) as you will not ahve enough equity to get the best deals
If you are down sizing (say retired) and hopped that your main home would give you a good wedge of cash to invest

Many building societies variable rates are quite reasonable now. Though if you have anything other than a repayment mortgage this is a long term problem.

http://blog.moneysavingexpert.com/2010/ ... re-rights/

And, just for reference mind, this is his wife (Lara Lewington):

New Bank Rules 'Mean End Of Cheap Money'

New rules aimed at making the global financial system more stable mean the end of cheap loans and mortgages, Britain's banking industry has warned.


Banks around the world will have to increase the amount of capital they set aside against potential losses after experts reached an agreement in Basel, Switzerland.

The deal, agreed by central bankers and regulators from 27 countries including the UK, will effectively push banks' key minimum capital cushions from 2% of their assets to 7%.

They will have to raise the amount they hold in common equity - the best capital for absorbing losses - from 2% to 4.5% to ensure the financial system can survive future shocks.

They will also have to hold a capital conservation buffer of a further 2.5%, bringing the total liquidity cushion to 7% of assets and liabilities.

Banks that fail to meet the new requirements could be banned from paying dividends to shareholders until they have bolstered their balance sheets, according to reports.

In a joint release, regulators said the new "Basel III" rules would provide a "fundamental strengthening of global capital standards" after the meltdown that crippled the world economy in 2008-09.

The new requirements should not prove too large a challenge for UK banks, which already have reserves larger than the 7% required.

RBS' is 14.4%, HSBC 10.8%, Barclays 13% and Lloyds 9.6%.

But there were concerns that additional costs would be passed on to customers, meaning higher interest rates on loans and mortgages.

Angela Knight, chief executive of the British Bankers' Association, warned that the cost of borrowing will rise as a result of Basel III, spelling the end of the "cheap money era".

She said: "The liquidity requirements are significant, as these feed through to the price and the availability of lending.

"A bank is like any other business - if its fixed operating costs go up, then so does the price of its product.

"All the changes are good from a stability perspective but add billions to the fixed operating cost of a bank. The consequence is that inevitably the cost of credit - the price the borrower pays for money - will rise."

Sky's City editor Mark Kleinman said: "The agreement by financial regulators to overhaul the rules governing the supervision of the world's biggest banks is a genuine milestone.

"The major UK banks have all built up capital cushions in excess of the new regulatory minimum - and in some cases, comfortably so.

"So there should be no need for them to raise new capital as the new rules are phased in over a period of five years.

"However, the new rules also come with restrictions on bonus and dividend payments if a new capital 'buffer zone' is eaten into.

"That is something which all banks, including those in Britain, will have to take into account when setting payouts to shareholders and staff."

http://news.sky.com/skynews/Home/Busine ... 6144?f=rss

Thoughts? Will we even notice the rip-off?

I have not noticed it yet. I have a loan that I might refinance to a lower rate but will the bank effectively want to lose all that money to keep a customer?