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I suggest in these economic times many people do not have any income /sickness protection and have a mortgage,why would the way i make a living be more of a risk to the bank if this scenario occured?Someone in a manual labour position whose back has gone and does not receive sick pay is more of a risk, i can sit at a computer unless my arris is on fire!
If there is a 35% crash we are all fecked,wont happen. |
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The chance of a 35% fall in property prices are slim to none
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Re "I suggest in these economic times many people do not have any income /sickness protection and have a mortgage,why would the way i make a living be more of a risk to the bank if this scenario occured?Someone in a manual labour position whose back has gone and does not receive sick pay is more of a risk, i can sit at a computer unless my arris is on fire!"
...that's fair enough Nortons, which is why I didn't say you'd be more of a risk than anyone else. I just pointed out the risk to the bank that you'd represent. Re property prices...Many properties lost more than 35% of their value during the fall from the 2007 peak in this country. In the late 80s/early 90s when I lived in Tokyo it was common for people there to parrot the "can't go wrong with property mantra" as the bubble era profits piled up and money fell off the trees. Now, over 20 years after the peak was reached, property prices there still haven't reached the prices that were being paid then. Of course that probably won't happen here but any lender ruling out the possibility of a 35% fall would be a fool. |
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Location location location. If the property is in an ok area there is no chance at all of it dropping 35%.
I have just sold one of my properties in Surrey. I got full asking price and was sold in less than 2 weeks. I actually live in Dorset and a property close to me just sold in less than a week,again for full asking price |
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History has shown us, as clear as a bell, that "no chance at all of a property dropping 35%" is just plain foolhardy. I'd accept "very unlikely to fall by 35%" though.
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NO chance in my "Spa " town, even though the brine baths have been closed!
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Hmm..."no chance" reminds me of when Greece won the Euros after I'd laid them at 150-1 because I thought they had "no chance". More fool me. Every fall in asset prices is preceded by people saying a fall of such and such magnitude "can't happen". And then, sometimes, it happens. I saw it first hand in Tokyo, people paying absurd amounts of money for rabbit hutch size apartments in desirable locations in the city because "there is no top", and then woosh, down came the house of cards. All I'm saying is that just as the 100-1 shot horse doesn't have "no chance", he has a chance, it's just a question of quantifying it and looking at risk/reward, the same applies to other forms of investment, including property.
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David i understand your reasoning but i find it impossible to understand the rigidity of the banks instead of considering each case on its merits.Its similar to the scenario of if your a financial advisor thats acceptable,state you earn a living through gambling on sport and people are disbelieving or consider you as social vermin.
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Nortons I agree with you on that and if I was in your situation I'm sure I'd have the right hump being refused a mortgage given your own personal situation. Blackcat's post just up the page is pretty shocking too. Maybe Ror or one of the other guys who works in a bank can give us more insight into how loan applications are dealt with.
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