DOOM: House prices

[AtW]

“House prices may fall by up to 30 per cent in a worst case scenario, a leading mortgage lender has warned, as higher interest rates and strict financial stress tests squeeze the market.

Financial experts giving evidence to MPs warned that the UK was likely to experience a contraction in house prices with a “very uncertain outlook” over the next 12 months.”

https://www.thetimes.co.uk/article/h...warn-9tjkkdvng

[SueEllen]

“House prices may fall by up to 30 per cent in a worst case scenario, a leading mortgage lender has warned, as higher interest rates and strict financial stress tests squeeze the market.

Good!

[d000hg]

“House prices may fall by up to 30 per cent in a worst case scenario

"Worst case" is a pointless prediction. Surely worst-case is the country gets carpet bombed with nukes or a massive asteroid hits us.

[jamesbrown]

Probably "worst reasonable case", like gov't planning.

Interest rates now at 3%

[_V_]

No one bats an eyelid when house prices double every 5 or so years, but even if someone even mentions a tiny probability of a 20% fall in prices, everyone in the UK is like "WTF!!!! Govt needs to step in and do something!!!!"

[PCTNN]

So you think people who fall for a living arrangement pushed by the government deserved to be punished.

You know state pensions are pushed by the government?

The government? Does the government tell you that you need to buy a house that is at the very top end of your affordability limit?

If a bank tells you that you can get a 500k mortgage and off you go buying a 550k house just because NOW you can afford it, then it's on you, your stupidity and lack of risk awareness.

[Whorty]

"Worst case" is a pointless prediction. Surely worst-case is the country gets carpet bombed with nukes or a massive asteroid hits us.

That's 2nd worst case ... worst case is Truss/Kwartang coming back.

[ladymuck]

I am out of touch with the process of getting a mortgage, but I would have thought that when taking a mortgage at a stupidly low interest rate, people would have considered the scenario that rates could triple. Or did some people actually believe that there was a new world of forever low interest rates?

I was thinking this too. There are affordability checks where the lender is supposed to test if you could still afford the repayments at a higher interest rate.

However, what I think is probably the bigger challenge is that those affordability checks worked out ok at the time but that time was before Russia decided to invade Ukraine and the inflationary effect on the cost of living started to spiral out of control.

In that unforeseen scenario, an increase in mortgage rates is another straw on the camel's back.

[vetran]

hey we are short a few million dwellings until they sort that the prices won't stay down for long.

[d000hg]

I am out of touch with the process of getting a mortgage, but I would have thought that when taking a mortgage at a stupidly low interest rate, people would have considered the scenario that rates could triple. Or did some people actually believe that there was a new world of forever low interest rates?

You don't reasonably expect them to triple in a short space of time, at the same as energy triples and everything else shoots up too.