Anne

The smart people got unsecured loans, and they rent. Worse comes, we don't owe anything.

Done deal.

To the buyers....why anyone would get a loan secured or otherwise when they have a house, and not see the potential problems is beyond common sense.

james, Newcastle,

I can understand people's pain, but I find it hard to believe the comments on here from 'professionals' who say that the cost of living is too high. What on earth are you buying?
We are fortunate enough to have reasonable jobs (as teachers) and can afford extra pension contributions, utility bills, out mortgage, savings, medical insurance and holidays with cash to spare.
However, we don't drink, use credit cards, have any loans (other than the mortgage) or live beyond our means.
Sadly, I think the key here is that for years many people have been encouraged to live beyong the means and to 'want' the latest cars, clothes and technology.
I fear that the massive pyramid scheme that is our modern consumer society is all set to come crashing down...

Martin C, South Yorkshire, UK

I have to agree with Ryan, Plymouth:

"Have a good long think about the fact that you live in one of the most developed nations in the world with an NHS and a Welfare State which is unheard of in most countries in the world."

And the best advice of all: "Live within your means"

How many people have thrown out perfectly good CRT TVs to buy the latest LCD panels.And for what reason? Well the picture's not as nice but it looks good in the front room.

Yes, we live in a consumer driven society where advertising pressures us into upgrading to the latest mobiles, the newest MP3 players, the exotic holidays, the bigger car. But we also have the free will and the intelligence to ask ourselves is it worth getting into debt for?

The fact is that we and only we are responsible for the decisions we make, not the government, not the banks. If you can't afford to maintain the lifstyle you want in this country, then either cut back the lifestyle or blame yourself not the government.

Dennis, London,

We now enter the age of the repossession. Lending rates are rising whilst MLR will fall. People are hanging on by borrowing on Credit Cards, thus this sector of borrowing has tripled over the last month. Others borrow on plastic to make up the deposit. The price of food and fuel bear no relation to the published government figures.
Who is fooling who ?
I find it hard to see the Government survivng until the next Election. Many Labour MPs in the should start looking at the job market now, Their CVs will make very poor reading.

V Cooper, Yeovil, United Kingdom

Richard,
1) Banks are still lending, just at less competitive rates. Those that have withdrawn deals are simply taking stock.
2) Average salaries may not be increasing in line with inflation, but people are still able to get promotions in the normal way - therefore they may be able to afford places (though this is of course not true for many many people)
3) Why should you buy tomorrow if prices are going to fall? Because, chances are, you are currently renting and so effectively throwing money down the drain. Buying, even if you are paying over the odds (both in terms of capital amount and mortgage interest) is probably still going to save you money in the long run.

Paul, Cambridge, UK

In response to those who claim the UK is too expensive to live and that people cant afford health insurance and holidays abroad. Have a good long think about the fact that you live in one of the most developed nations in the world with an NHS and a Welfare State which is unheard of in most countries in the world. Live within your means - if you rely so much on credit cards then surely its only a matter of time before you pay that back.

Ryan, Plymouth,

What the doom mongerers fail to recognise is one simple fact. Existing property owners who are financially secure and can continue to make their regular monthly payments to their mortgages and who have a low LTV can easily ride out this storm. I have seen both previous economic recessions and one thing that is quite certain is that when credit lines soften again and property prices start to rise, they rise quickly. So for all you people waiting for prices to fall. DO WAIT! But the choice of property available to buy at lower market value won't be pretty. Even if negative equity is a problem. Most responsible lenders won't throw mortgage borrowers out of their homes. If mortgage is being paid. Property is an asset to the bank or building society and occupied is worth far more than an empty one which the bank or BS has to sell. An englishmans house is his castle, That will never change in the UK.. Watch out for new equity share deals for new FTB.s on new builds, from developers

Graham Millward, Swindon,

Dewey, you are not realising the problem.

There is a huge demand out there for people to take their first step on the property ladder.

But they cannot do this without banks and building societies being able to finance this.

If house prices crash,people cannot move and free up housing stock.

Who could sell for a £100k when they owe £120k ?

There is still a shortage of affordable new housing being built in the places people need to live i.e. a commutable distance from where they work.

Paul, Manchester,

I see the old adage of 'supply and demand' is still used by those desperate to talk (themselves) out of the inevitable house price correction.
It is the availabilty and cost of credit which has fuelled this obscene bubble, and it is that contraction of credit which will see a big correction downward in prices.

R Moseley, Birmingham, UK

Dewey,
you are right! as soon as the market comes down there is a gazillion of people ready to buy.
Sure, but
a) using what money, since banks do not lend anymore, bigger deposits are needed, and interest rates are going up (unlike salaries that are flat, at best)?
b) why should I buy tomorrow if prices will be lower the following month, and in two months, and in three months?

Richard, Maidenhead,

Oh well. Not sure why some lenders are screwed and others aren't. I just got 4 mortgages last week from a leading buy-to-let lender, no problem...

*walks off whistling*

Howard Hughes, London,

Pay close attention to the disaster called the US housing market. You're next, UK.

Housing prices in the UK rose even higher from reality than prices in the US. It's going to get ugly in the UK before you know it. London is especially vulnerable at the moment. Be careful about the debt you take on for your housing needs.

James Bidwell, Chicago, Illinois

If this is the beginning of the recession will all the economic migrants go somewhere else?

dexey, birmingham, England

In reply to John Heenan,of Bath, UK

Don't fool yourself - I for one would be delighted if there was a recession and a massive house price crash which dropped house prices back by over 50- 60%.

Yes, the economy would be ruined for a few years and many people would loose their jobs.

However, this is exactly the wake up call we need in the UK. For to long we have borrowed without considering that we must pay back. the house price boom effectively sells our children in to debt slavery for the whole of their lives. Greed cannot continue.

Lara Stamford, Northampton, UK

What fool would encourage others to buy right now?

5% LOL

Property WILL be 10% less next year and another 10% less the year after.

Don't listen if you don't mind paying more.

Andrew, Liegh, Esesx

Could the British consumer be substituting secured equity release borrowing for unsecured borrowing. Is this a symtom of the ongoing contraction in the availability of mortgages?

I can't help but think that the British property market has reached the moment of truth. We will finally discover if the British property market has moved to a higher trend level or the recent price boom was simply a short term reaction to easy credit. Watch this space, judging from the number of property related articles The Times newspaper seems to very keen to discover the final outcome.

My guess is that prooperty prices will return to the traditional trend level of affordability!

Costas, Cyprus,

Deway, 5% is not a bargain........50% on the other hand would be just the ticket

Davie P, London,

"The Bank of England estimate for HEW (Housing Equity Withdrawal) for 2007 Q3 was £10.5 billion." - source : Bank of England website.

I wonder what percentage, or how many mortgages does the above figure relate to, and if this percentage is similar to the drop in newly approved mortgages. It could be that with the credit crunch tightening and lengers tighter approval criteria, people are simply going from HEW to unsecured loans to make ends meet!

It has become obvious and has been to myself since early 2006, that people cannot continue spending beyond there means forever. Having been in debt and now live without the use of a credit card, I know how hard the habit is to kick.

James Grant, Daventry,

There used to be so many mortgages on offer, a huge finite number. Now it's dwindling. This will definitely trigger a crash I'm sure. Deway's remarks below seem unrealistic.

Buddy, Hayes, UK

"....The BOE needs to pump 100 billion pounds into the system yesterday. If not house prices will crash and once it starts it will be difficult to stop. No body should be happy at a house price crash as it will feed into the economy and we will end up with mass unemployment...."

John Heenan, bath, uk

Don't be silly John, the worst case scenario will be 25% adult unemployment! This will probably be among non immigrant property speculator types anyway! Good competent professionals (say litigation lawyers and accountants and not quasi professionals like bankers and 'financial advisers') will do well. People in engineering and exports will do well. That leaves the property and share speculators, the politicians voted out and the other money lenders in the Temple....?

Austin Tassletine, South West, UK

I don't see how prices can fall any further. There are too many people waiting in the wings to get on the property ladder. As soon as the prices drop a bit, people will buy and the prices will start going up again.

Deway, Graves end, UK

They were right to stop leading, they have have a reputation as a quality company but my mortgage that is being sorted out at present has been an absolute nightmare, they are making errors left, right and centre.

Hopefully the service will improve after they catch up with the backlog.

Steve, london,

So a 5% drop means bargains in Graves End ! . A bargain to
me is more than that . Property price are still overvalued even
at a 10% fall.More like someone not wanting a 1990's crash ! .

Chris, Nottingham,

It amazes me that with this sea-change in swapping borrowing from loans to credit cards, the government aren't stepping in to prevent a secondary credit collapse!

Absolutely baffling and completely irresponsible. No doubt the gov't would go on about market forces etc, and that credit card APRs are high enough to compensate for additional default risk.

Just putting off the inevitable.

Phil Davy, Eltham,

Love it, love it, love it. Greedy institutions and people are finally getting their come-uppance.

Paul Downes, Milton Keynes, Bucks

Jon, there are mistakes in the article as the situation is moving so fast he didnt have time to proof read!

This is quite staggering. I don't think anybody predicted how fast this cancer is spreading. The whole mortgage system is grinding to a halt. This is what happened in 1929. It is no good lowering interest rates as banks will just pocket the difference as they try to repair their balance sheets.

The BOE needs to pump 100 billion pounds into the system yesterday. If not house prices will crash and once it starts it will be difficult to stop. No body should be happy at a house price crash as it will feed into the economy and we will end up with mass unemployment.

John Heenan, bath, uk

I agree with Stephen hutton's comments. The cost of living and maintaining any sort of reasonable lifestyle in this country has become too high. My wife and I are both professionals with children and yet just about everyone we know says the same thing, "they can't afford to save, they can't afford a private pension, or health insurance, and overseas holidays are just unthinkable ". Utility bills, direct and indirect taxation has become so high that it just seems to be a constant cutting back exercise to find the money to pay for it all.
We used to have enough spare cash each month to cover car repairs or a new washing machine or a dentists bill. Now there is just no chance of us funding such things in cash, so like millions of others it has to go on the credit card.
Something makes me think that one day the "credit" bubble is goning to burst and there will be a whole lot of us, millions I mean" that just can't pay anymore.
Maybe the BOE will bail us out as well, doubt it !!!!!!

Richard Payne, Saltash, UK

It's not all doom and gloom, this is a good time to pick up a property bargain. Prices have dropped nearly 5% in our area, making this a good time to buy. And if more people start picking up the bargains it's bound to encourage the market in general and prices will probably start rising again.

Deway, Graves End, UK

Now that homeowners are unable to use their homes like a cash dispenser they are turning to credit cards, hence the jump in consumer credit.
People who have bought with high loan to values in the past couple of years are also going to struggle to refinance as surveyors give more conservative valuations. This will leave some needing to borrow well over 100% of the properties "new" value in a market where many lenders are reluctant to advance more than 90% whist high LTV"s may also attract a higher rate of interest.

David, Billericay,

One High Street Bank converts Credit Card debt from unsecured to secured by imposing an immediate fee of £2000 and then subsequent solicitors fees at £500 per day. The bank raises the argument that it is in business to make money . Fair enough , but if any business runs out of liquidity then it fails and all creditors strip it of assets in a similar way.
The question is - when the same bank goes cap in hand to the BOE for funds - why should the tax payer stand for it ?

Jim Jones, Burton on Trent,

The BOE MPC considering to cut rates, but LIBOR still rising, who can hope to get a discounted rate now? The NPV is pretty low at the moment and yield curves are non existent in the current market. A good opportunity for arbitrage I guess, OAP.

Trewah.

Trewah, Hendon, UK

My thought exactly JD from leeds

john, warsaw, Poland

The real reason credit card spending is rising is because many, many people have spent the last few years spending instead of saving. Now that house prices have stopped going up 10% per year these people find they are living beyond their means. God help the profligate.

Chris, London,

Well this is it....the property market has finally crashed. As George Soros pointed out this is the start of a 60 year downturn!

Karaw, Hastings,

The only reason credit card spending is rising is because people cannot afford to live.

stephen hulton, eure, france

This article is stuffed full of typing errors. Don't newspapers employ proof readers any more?

Jon Darrington, Leeds, UK

The rise in unsecured borrowing is very worrying for both borrowers and the housing market. Just because it's unsecured doesn't mean that borrowers homes are safe if they default: it just takes longer for the lender to force a sale to get its money back. And there is anecdotal evidence that lenders, who have long prefered to push credit cards to homeowners, aware that they have a longstop form of security as a result, are increasingly prepared to use bankruptcy as a means of getting their loans repaid. But borrowers are not as aware as they should be of the risks of loosing their homes as a result of unsecured as compared to secured borrowing, partly because the regulatory bias towards warning of secured home risks has the perverse effect of making people less cautious about unsecured ones.

Anne, London,