Simple way to stop runaway house prices

[HairyArsedBloke]

Low interest rates now is the primary reason for low supply: people who got overextended and should have lost their houses instead sit on it hoping it will blow over. As the result less supply on the market because people with negative equity won't sell. Got it now?

No.

[Moscow Mule]

Low interest rates now is the primary reason for low supply: people who got overextended and should have lost their houses instead sit on it hoping it will blow over. As the result less supply on the market because people with negative equity won't sell. Got it now?

No, an uncertain economy and a worry about jobs is the PRIMARY reason.

Low interest rates is a SECONDARY reason.

[Mich the Tester]

Maybe people aren’t selling their houses because having spent lots of money doing them up they are now quite happy living in them?

[mr_woo]

No, an uncertain economy and a worry about jobs is the PRIMARY reason.

Low interest rates is a SECONDARY reason.

I was unaware interest rates were low? Most people who's homes are at risk will be on variable or fixed rates and not trackers. 5 - 7%.

[Moscow Mule]

I was unaware interest rates were low? Most people who's homes are at risk will be on variable or fixed rates and not trackers. 5 - 7%.

Do you remember when interest rates were 8-12%?

I was a wee bairn, but 5% is low.

[AtW]

Low interest rates is a SECONDARY reason.

High interest rates would have forced those who bought on peak of the boom and overextended themselves (6-7 multiples) to default on payments and then house would get repoed and sold. These forced sales would help fix the imbalance in the market.

Loss of jobs is often actually secondary reason - right now lots of jobs were lost, unemployed is well up, but these people ain't forced to sell houses because of artificially low interest rates.

Surely one does not need a degree in Finance & Credit (like myself) to understand these basics?

[DimPrawn]

Losing your job does not mean losing you home, as the government pay the interest portion of it (up to a maximum I believe - don't know what it is) and most people these days have just an interest only mortgage (and no means to pay off the capital!).

So losing job does not mean you lose your home.

You are more likely to lose your home if you have a job and the interest rates go up.

[AtW]

Most people who's homes are at risk will be on variable or fixed rates and not trackers. 5 - 7%.

"What is a standard variable rate mortgage?

Every mortgage lender has a standard variable rate, or SVR, of interest on which it bases all its mortgage deals.

The standard variable rate is, in turn, based on the Bank of England's base lending rate and this is decided at monthly meetings of the Bank's monetary policy committee, or MPC."

http://www.mortgagesorter.co.uk/type...able_rate.html

[TimberWolf]

High interest rates would have forced those who bought on peak of the boom and overextended themselves (6-7 multiples) to default on payments and then house would get repoed and sold. These forced sales would help fix the imbalance in the market.

Loss of jobs is often actually secondary reason - right now lots of jobs were lost, unemployed is well up, but these people ain't forced to sell houses because of artificially low interest rates.

Surely one does not need a degree in Finance & Credit (like myself) to understand these basics?

Plus, even if you are in positive equity and unemployed, you'd be better off staying put if possible - as long as house prices can be indefinitely propped up. Everything is paid for if you stay, but if you sell that equity counts as savings that will be rapidly taken from you.

[AtW]

You are more likely to lose your home if you have a job and the interest rates go up.

Usually it's the combination that does it.