Taking on a mortgage going forward...

[Lord Beria3]

Hi,

Just wondering what the collective wisdom on the board is about going for a mortgage in the current situation going forward,what with Peak Oil and the economics of the housing market.

Good decision or a massive mistake?

[rue_d_etropal]

I suppose if you borrow a load of money, then the system goes splat, who is going to come round to demand their money? At least you might have somewhere to live, but probably nothing to eat, unless you buy a place with land to grow things.

[tpals]

I sent in my final mortgage payment yesterday. I would be very uncomfortable taking on that kind of obligation in this economy.

[kenneal - lagger]

As Rue said, depends on whether or not you think that any one will come to pick up the debt after the crash and if it's a property where you can grow your own food. I wouldn't bother for a flat or a town house with a tiny garden but a small, squarish, brick house, semi or mid terraced, with a chimney and a bit of land at a reasonable price, yes. Grab it quick.

[featherstick]

I suppose if you borrow a load of money, then the system goes splat, who is going to come round to demand their money? At least you might have somewhere to live, but probably nothing to eat, unless you buy a place with land to grow things.

I don't know why anyone thinks debt is going to evaporate in some sort of upheaval. It won't, short of the zombie apocalypse. Debt represents an asset and assets have value, and even if your credit institution - bank, building society, whatever - goes bust, the debt will be sold on to someone else, who will come looking for you to recover it.

[UndercoverElephant]

Hi,

Just wondering what the collective wisdom on the board is about going for a mortgage in the current situation going forward,what with Peak Oil and the economics of the housing market.

Good decision or a massive mistake?

Unless you've got a large deposit and a high, provable income then you probably won't even get a mortgage. House prices can only go down now, IMO...

[Lord Beria3]

The idea of a debt jubilee seems unlikely to me.

[kenneal - lagger]

I sent in my final mortgage payment yesterday. I would be very uncomfortable taking on that kind of obligation in this economy.

Did you celebrate with a wee dram?

[Prokopton]

Bad idea IMO, for reasons given already by featherstick.

People should not talk about a 'crash' and the system 'going splat'. Civilizations take a while to go down and I agree with John Michael Greer that we're in for a Long Descent. People like Nicole Foss are insistent on getting debt-free if you can.

[kenneal - lagger]

I suppose if you borrow a load of money, then the system goes splat, who is going to come round to demand their money? At least you might have somewhere to live, but probably nothing to eat, unless you buy a place with land to grow things.

I don't know why anyone thinks debt is going to evaporate in some sort of upheaval. It won't, short of the zombie apocalypse. Debt represents an asset and assets have value, and even if your credit institution - bank, building society, whatever - goes bust, the debt will be sold on to someone else, who will come looking for you to recover it.

If we get the sort of slow collapse that means there will be people trying to realise their purchased asset, in the form of a mortgage defaulter's house, the government would have to enact legislation to keep defaulters in their properties. There would be so many defaulters and so many empty houses that it would be unmanageable to chuck everybody out.

If you had the right sort of property in the right place, possession would be nine parts of the law. By the time full collapse arrives the possessor would be the owner.

What would the owner of your debt get from an empty house? No one would be able to buy it from them and if you have to pay a rent, what's the difference between that and a mortgage? The rent would be negotiable as everyone would be in the same boat.

[UndercoverElephant]

I suppose if you borrow a load of money, then the system goes splat, who is going to come round to demand their money? At least you might have somewhere to live, but probably nothing to eat, unless you buy a place with land to grow things.

I don't know why anyone thinks debt is going to evaporate in some sort of upheaval. It won't, short of the zombie apocalypse. Debt represents an asset and assets have value, and even if your credit institution - bank, building society, whatever - goes bust, the debt will be sold on to someone else, who will come looking for you to recover it.

If we get the sort of slow collapse that means there will be people trying to realise their purchased asset, in the form of a mortgage defaulter's house, the government would have to enact legislation to keep defaulters in their properties. There would be so many defaulters and so many empty houses that it would be unmanageable to chuck everybody out.

I'm sorry, but that is totally unacceptable. It is unacceptable from the point of view of all of the people who have been saving up for a deposit for the last 15 years and couldn't get on the bottom rung of the housing ladder and unacceptable for young people coming through who want to be able to buy property. Throwing defaulters out of their properties is the only way that house prices are forced down. Not throwing them out is to further punish the innocent by letting off the guilty. If the government does not throw them out then they will be evicted by baying packs of houseless savers.

[kenneal - lagger]

It might be unacceptable to some but I suspect there will be more defaulters than savers. Where are the defaulters and their families going to go? Hotels? Also defaulters are more likely to have families than savers, who are just getting onto the property ladder, are. The government couldn't be seen to allow children to be thrown onto the streets.

Anyway, with a collapse that bad, savers' cash would vanish into thin air as well as the jobs which provided the money. If you look at the USA, very many of the defaulters houses are still empty and going derelict. so why allow people to be thrown out when they could pay a rent, albeit a small one.

[UndercoverElephant]

It might be unacceptable to some but I suspect there will be more defaulters than savers. Where are the defaulters and their families going to go? Hotels?

Why the hell should the defaulters and their families get to keep their houses when the innocent houseless saver families have to continue throwing money down the drain in the form of rental payments?

Also defaulters are more likely to have families than savers, who are just getting onto the property ladder, are. The government couldn't be seen to allow children to be thrown onto the streets.

Anyway, with a collapse that bad, savers' cash would vanish into thin air as well as the jobs which provided the money.

Right. So the savers have been triply-shafted whilst the "homeowners" get away with blue murder. What you are suggesting would push a generation of already-angry people over the edge. Remember that these revolutions, including what is happening is Spain, are the youngsters revolting against the older generations. If the situation you are suggesting actually happened in the UK, then a similar revolution would follow.

If you look at the USA, very many of the defaulters houses are still empty and going derelict. so why allow people to be thrown out when they could pay a rent, albeit a small one.

Totally different situation. In the US there is housing surplus. In the UK there is a housing deficit. That is why house prices in the US are already in freefall whilst in the UK they have been propped up by money-printing and uber-low interest rates.

Also, in the US you can walk away from a house without having to declare yourself bankrupt - the bank takes the hit instead.

[Lord Beria3]

Kenneal - I happen to agree with you that at some point, defaulters will be able to stay in their homes, once they reach a critical proportion of the population.

However, nobody can predict when this tipping point might occur and certainly not the eventual hard crash. It is quite likely that you will be the unlucky one to be thrown out... so your advice, is irresponsible in the extreme.

This ignores the moral issues raised by UE (which I share).

[UndercoverElephant]

Kenneal - I happen to agree with you that at some point, defaulters will be able to stay in their homes, once they reach a critical proportion of the population.

However, nobody can predict when this tipping point might occur and certainly not the eventual hard crash. It is quite likely that you will be the unlucky one to be thrown out... so your advice, is irresponsible in the extreme.

This ignores the moral issues raised by UE (which I share).

Defaults are the only thing which can force house prices lower and house prices must go lower. The government doesn't give a sh*t about the fate of families who default. All it cares about is the capability of the banks to take the financial hit.

Even the normal other two "D's" - death and divorce - aren't leading to forced sales at the moment because a lot of people are choosing to hold on to those properties and rent them out. But if a mortgage-holder defaults then the house will be repossesed and then it will be sold, and it will be priced to sell. These properties offer the best hope for millions of people in this country who have been priced out of the property market for the last ten years or more.

Letting defaulters off the hook is no better than bailing out the banksters.