The Magician (![[info]](http://l-stat.livejournal.com/img/userinfo.gif){kind=small} the_magician) wrote in x_mass, |
I agree with the bankruptcy thing ... in the US, at least in some states I believe, your primary residence is protected under bankruptcy, so that you continue to have a place to live. That may be one option for this country (leading to howls from those that lost their house before the law changed)
My brother isn't in negative equity, but between the mortgage, tax bills and other debts, he's going into bankruptcy anyway (the current market has pretty much killed his business) he's got a buyer for his flat, but he's selling at a fairly big discount to get the money in now, to pay off what he can and put down the deposit and first months rent on a flat before going bankrupt (it's what the CAB advised) ... There were figures less than a year ago that showed that if house prices dropped something like 20% only about 5% of mortgages would go into negative equity ... however GfK had a recent survey of 60,000 home buyers and estimates that up to 1 in 3 mortgages could be (or will this year) go into negative equity (some people disagree with the methodology and the scale of the problem)
"For a lot of people that means hundreds of thousands of pounds" ... if they bought with a 100% mortgage, and the house prices drops 50%, then that still means they had to buy at over 400k at 100% mortgage ... I don't think there really are "lots of people" in that category ... there are a small group of people who've bought properties up near (or above) £1million that may well have a negative equity of "hundreds of thousands of pounds".
A lot of people buying the £300k + houses have done so based on selling their previous property and having a substantial deposit, as the mortgage component was still going to be a multiple of their income ... let's say they were on £40k and got a 5x mortgage, that's 200k, so that £300k house would have needed a 33% deposit ... so a house price drop of 30% would still leave them in positive equity. And a drop of 50% would leave them with a negative equity of £50k ... so the important figure isn't how soon house prices return to the peak of the market, but (for that person) how soon it returns to a 30% drop from peak ... anyone who bought in the last two years (and 50% of people who remortgaged in the last two years) may be in negative equity now.
Telegraph article on GfK survey
The country still has a banking sector, even if a lot of the shareholding is ("on our behalf" - ha!) by the government, and the financial depression is worldwide, so handling it well could actually become *more* important to this country ...
start encouraging our best and brightest to actually produce real research and development rather than just work in the city?
Having met many City types, I wouldn't trust them to produce medicines, robots or anything else :-)
But yes, it's a lovely thought ... any ideas about how we can encourage more R&D in this country?
My brother isn't in negative equity, but between the mortgage, tax bills and other debts, he's going into bankruptcy anyway (the current market has pretty much killed his business) he's got a buyer for his flat, but he's selling at a fairly big discount to get the money in now, to pay off what he can and put down the deposit and first months rent on a flat before going bankrupt (it's what the CAB advised) ... There were figures less than a year ago that showed that if house prices dropped something like 20% only about 5% of mortgages would go into negative equity ... however GfK had a recent survey of 60,000 home buyers and estimates that up to 1 in 3 mortgages could be (or will this year) go into negative equity (some people disagree with the methodology and the scale of the problem)
"For a lot of people that means hundreds of thousands of pounds" ... if they bought with a 100% mortgage, and the house prices drops 50%, then that still means they had to buy at over 400k at 100% mortgage ... I don't think there really are "lots of people" in that category ... there are a small group of people who've bought properties up near (or above) £1million that may well have a negative equity of "hundreds of thousands of pounds".
A lot of people buying the £300k + houses have done so based on selling their previous property and having a substantial deposit, as the mortgage component was still going to be a multiple of their income ... let's say they were on £40k and got a 5x mortgage, that's 200k, so that £300k house would have needed a 33% deposit ... so a house price drop of 30% would still leave them in positive equity. And a drop of 50% would leave them with a negative equity of £50k ... so the important figure isn't how soon house prices return to the peak of the market, but (for that person) how soon it returns to a 30% drop from peak ... anyone who bought in the last two years (and 50% of people who remortgaged in the last two years) may be in negative equity now.
Telegraph article on GfK survey
The country still has a banking sector, even if a lot of the shareholding is ("on our behalf" - ha!) by the government, and the financial depression is worldwide, so handling it well could actually become *more* important to this country ...
start encouraging our best and brightest to actually produce real research and development rather than just work in the city?
Having met many City types, I wouldn't trust them to produce medicines, robots or anything else :-)
But yes, it's a lovely thought ... any ideas about how we can encourage more R&D in this country?
