Interesting article.
I wonder when we will start to see it here. Maybe it is happening but we just don't hear too much about it, in case it leads to more defaults.
http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?em
IMO people who are in negative equity are being taken for fools. Most people who bought a house 2 - 3 years ago, are noe living in a property that is now only worth 1/2 what they paid for it. Do they really believe that it will come back in a reasonable time frame, to a price that they can afford to sell it and trade up? It will take time for the penny to drop with them, but drop it will, and then what?
These people need sit down and do the maths. When enough of them realise what is going on, and that they are paying back loans that prudential loan companies, (and a blind man with a stick), could have seen that they would never be able to repay over the long term, they will start defaulting in large numbers and then something will have to be done for them. Another NAMA to bale the banks out again, I don't know. Maybe as voters these people will begin to organise.
Sure, these people entered these contracts of their own free will. They could have said No. But you also have to take into account the fact they were young, that they were being sold credit, by very smart commission driven salesmen, aided and abetted by all the other vested interests involved (Government, banks, properts supplements, recent property experience, hard sell, an ineffective financial regulator and Central Bank). You snooze, you loose! was the mantra.
Can't afford to get on the property ladder, why not buy in Blugaria, rent the property out (guaranteed rental and all that sort of guff), sell it in a few years and buy a house in Ireland. 40 year mortgage, No problem. We'll even take Rent a Room as earnings.
This time 10 years ago, we had just survived the Y2K bug. The world as we knew it didn't come to an end. Roll on 10 years and it very nearly did. I wonder if, in another 10 years, we will look back at 2010, NANA etc and see that that was really the beginning of the end.
Time will tell.
Murt
I wonder when we will start to see it here. Maybe it is happening but we just don't hear too much about it, in case it leads to more defaults.
http://www.nytimes.com/2010/01/10/magazine/10FOB-wwln-t.html?em
IMO people who are in negative equity are being taken for fools. Most people who bought a house 2 - 3 years ago, are noe living in a property that is now only worth 1/2 what they paid for it. Do they really believe that it will come back in a reasonable time frame, to a price that they can afford to sell it and trade up? It will take time for the penny to drop with them, but drop it will, and then what?
These people need sit down and do the maths. When enough of them realise what is going on, and that they are paying back loans that prudential loan companies, (and a blind man with a stick), could have seen that they would never be able to repay over the long term, they will start defaulting in large numbers and then something will have to be done for them. Another NAMA to bale the banks out again, I don't know. Maybe as voters these people will begin to organise.
Sure, these people entered these contracts of their own free will. They could have said No. But you also have to take into account the fact they were young, that they were being sold credit, by very smart commission driven salesmen, aided and abetted by all the other vested interests involved (Government, banks, properts supplements, recent property experience, hard sell, an ineffective financial regulator and Central Bank). You snooze, you loose! was the mantra.
Can't afford to get on the property ladder, why not buy in Blugaria, rent the property out (guaranteed rental and all that sort of guff), sell it in a few years and buy a house in Ireland. 40 year mortgage, No problem. We'll even take Rent a Room as earnings.
This time 10 years ago, we had just survived the Y2K bug. The world as we knew it didn't come to an end. Roll on 10 years and it very nearly did. I wonder if, in another 10 years, we will look back at 2010, NANA etc and see that that was really the beginning of the end.
Time will tell.
Murt