1,5 million people in the UK “own” houses with a mortgage that is a lot higher then the value of their houses. Many people in the UK got a mortgage for their property, without having enough money – but still they received a mortgage by the banks too easily.
Now, 2 things can happen, that also happened in the past in other countries:
1. The interests rates rise (e.g. double ?) and people need to remortgage.
2. People then can not afford it anymore and need to sell the house
3. Houses are only worth half of what they were bought for and banks have a problem.
4. Some banks might go bust…other people loose their money too.
Related posts:
- Is it possible to remortgage on the the value the house will be worth after work is carried out?
- What should my friend do with a house they have? To do with selling / remortgaging.?
- capital gains tax question?
- Can I re-mortgage?
- been married for 15 yrs 6 yrs ago i bought my house on my name do i have to sell if we devorce?
Non home-owners would be chuffed if house prices slumped. I think there is something terribly wrong that someone can’t buy their own home if they are earning a good wage. A correction is in desperate need at the moment.
i very much doubt that there will be a collapse. the profits of the big banks are too high for such a collapse to happen. think in theoretical terms, the royal bank of scotland and its subsidiaries have annual profit of approxiamtely 9 billion pounds. multiply that by 5 and you have 45 billion in 5 years. that is a lot of money to lose. although it is invested in various ventures. plus the government would bail them out or else the whole economy could collapse. then again spending 25 billion pounds on a nuclear defence system does not help
as we are highly unlikely to use it… as a benefits ofv a nuclear war are none.
People have been predicting gloom and doom for the British economy ever since Labour came to power.I think it’s because they got used to the boom and bust economy under the Troys.Perhaps they miss the record re-possessions,15% interest rates and recessions that became the norm in those terrible days.Remember when (after 16 years of government) our prime minister said “if it’s not hurting it’s not working?Not exactly words of encouragement I think you’ll agree.
I’m not afraid of it. As a tenant, I’m looking forward to it.
I still remember the 80’s, when everyone told me to put my money into property, couldn’t fail, etc. Luckily I kept out of it, and was one of the lucky ones when it all went pear-shaped.
And, no-one saw it coming then either.
As a home owner, i made the sacrifice of saving,not going out and working my @rse off to buy it, I know I’m okay now so don’t really care about the value of houses. Still got 20years to pay though but i can afford it and the banks won’t collapse they would buy each other out and close branches,sack thousands of staff to keep profits up, so am not worried in the least as i don’t work in this sector