Wait a minute, surely you are exactly the type of person who this situation should help? You say 'we' so I am assuming that 8 years of two people saving at reasonable interest rates should mean you have a good deposit by know. If you have 20K + saved up then buy, if you have less than this then the interest at 5% or so is never going to get you anywhere anyway so it's not the big issue for you.

OK, had you ploughed 8 years worth of savings into a house last year only to see you equity vanish in the blink of an eye then yes, I'd have some sympathy for you. However with interest rates low, property prices slashed and presumably a good deposit then what are you waiting for??? There are bargains galore to be had, just join up to a few of the e mail lists for people selling below market value / repo property and no matter where you choose to live, unless you are looking at West London, Cheshire WAG territory etc then 2 people with a good deposit are in a great position.

Why does everyone assume that savers are older people who have built up a nest egg? What about young people like myself who are saving up to buy a house, but have spent the past 7-8 years watching house prices increase so steeply that we couldn't buy, and our only option was to save as much as possible in the hope that one day prices would fall and we'd finally be able to afford a place of our own? The reason I don't have a mortgage to pay is because I can't afford a blooming house! All I can do is save as much as possible and pray that eventually I might be able to buy a house - but as interest rates get lower the dream of buying property becomes ever more distant. Don't complain about how much your mortgage costs you - be grateful that you could even get a mortgage in the first place!

Claire, you are being very short-sighted in your comments. We've been married for 40 years and have paid a mortgage like you and now luckily own our home at last. We also have saved really hard, going without expensive holidays and flashy cars to do so! Our generation did not have luxuries like mobile phones (we had been married for 6 years before we could even afford a house phone), dishwashers and tumble dryers, designer clothes (I made my own) ready meals (I made those too) eating out, and drinking out (we also brewed our own wine and beer).

Yes, because we have saved hard we are now retired and in a position to have a few more luxuries, though not excessive ones, But without interest on our savings we will be eating into the nest-egg all the time. My own father was in a residential home for just 18 months before he died aged 99, and in that time every penny of his savings above the minimum allowance was used up. We want to be able to choose appropriate care, should either of us need this in the future, but without any savings this will not be an option.

I am very sorry for those facing redundancy, especially people in their 50s who no-one wants to employ. However if everyone saved hard and did without the extras they seem to regard as essential, then they too would have a bank balance to help them weather the storm.

alfieboy and a_n_other, I agree with you both. We do need a mass withdrawal from banks, just the sight of people queueing to withdraw their money would be enough to stimulate government action. Look what happened with Northern Rock. If there are supposed to be 7 savers to every borrower there should be plenty of people to do it.

alfieboy

The real root of the reason for house prices going up was because of a shortage of housing in the first place. Nothing was done to replace the amount of council houses sold off over the last 20 odd years.

Then as you say, in comes the "greedy estate agents" and "greedy people buying up houses to make a quick buck"

I am not a lover of Estate Agents anyway but they only took advantage of the boom in the market which happens now and again. I invested in houses to make a "quick buck" over 8 or 9 years and did alright but that is just part of investing - Buy the right share or commodity at the right time and sell at the right time - and make a few quid, nothing wrong in that if you want your money to earn more than 2 or 3 % in the bank, and let the banks make a profit on your deposit. Some people can take the geard-up risk and some can't.

I agree with a_n_other. We need someone to organise us savers and set up a mass withdrawal from the Banks. Anyone out there who has any ideas? Gordon, be afraid.

ATM:

axisme,

Can you really see a "mini recovery" occurring with house prices in the UK?. The banks still need some encouragement to start lending again and 25% deposits to get decent rates are still likely to deter first time buyers.

Going back to 1992/93 which was the period of the end of the last house price correction and the initial recovery stage, we would see 1 or 2 months of rises in the House Price indices followed by a fall of 1 month or more which would wipe out the gain. As far as I remember the initial stage of recovery was counted as when there were a minimum of 4 months straight rises and in fact the market just bounces at or slightly above the bottom level for 18 months to 2 years.

I am in full agreement with the other points you raise regarding rates increasing again (as in 1980/81 recession), "the follow the herd" rush into the market especially with 100% mortgages and the shortage of housing which will be a problem for at least the next 15 years. After all when we see another new development starting......

By mini recovery, I mean that we will likely see 3 or so months of small increases. Purely because people don't feel their savings are doing enough. Some who were biding their time will take a what the hell attitude.

I still think house prices will fall 10% or so over the next year, but that doesn't mean they have to drop months on month.

My previous message was in reply toClairejm1981

axisme,

Can you really see a "mini recovery" occurring with house prices in the UK?. The banks still need some encouragement to start lending again and 25% deposits to get decent rates are still likely to deter first time buyers.

Going back to 1992/93 which was the period of the end of the last house price correction and the initial recovery stage, we would see 1 or 2 months of rises in the House Price indices followed by a fall of 1 month or more which would wipe out the gain. As far as I remember the initial stage of recovery was counted as when there were a minimum of 4 months straight rises and in fact the market just bounces at or slightly above the bottom level for 18 months to 2 years.

I am in full agreement with the other points you raise regarding rates increasing again (as in 1980/81 recession), "the follow the herd" rush into the market especially with 100% mortgages and the shortage of housing which will be a problem for at least the next 15 years. After all when we see another new development starting......

What a lot of bile from someone who is lucky enough to have the Government on their side. As savers what did we do to deserve this? We have savings from working very hard, some good property and business decisions over the years and losing parents, there is no need to be jealous of that. We were paying a mortgage when interest rates were 15% but you just had to pay up or you were reposessed, no sympathy then. We had few holidays, second hand everything and drove old cars as did a lot of other people. The main problem now has been caused by over inflated house prices, greedy estate agents, greedy people buying up houses to make a quick buck on them and people borrowing over what they could realistically afford for their 'dream house'. Interest rates were extremely low even before they started this drastic reduction, if you can't afford a mortgage when rates were at 5%, you can't afford your own house end of story. Perhaps if working class people had not tried to spend their way up to middle class without the funds to do so they wouldn't be in such a mess now. Also for those poor people facing redundancy, what about their mortgage protection which everyone is supposed to have? Good luck to everyone who faces problems through no fault of their own but to the people who wanted everything but couldn't afford it, TOUGH, bring in the bailiffs, you deserve everything you get.

I guess I will be worse off. I have been biting the bullet (living with parents) the past year and saving. I have no debts, so the rate cut doesn't benefit there. However, my savings are still growing as I'm managing to add more than 80% of my monthly income to my savings each month.

To be honest, the situation is a little perverse. The problem was with people taking too much debt and banks letting people get into too much debt. How can the solution possibly be to get people into more debt, while the rates are low, so they are stuffed again when the rates go higher?

There will be a mini recovery in housing prices over the next few months, as many people now feel their savings aren't benefiting them. However, this will be only first time buyers. There aren't a huge number of them around, and the recovery will be very short lived. Keep in mind that apartments have a VERY limited potential customer base. Generally they are for young career/students, and they have been heavily in debt for too long.

Our whole property market is a sham, at best. For over a decade we didn't build enough houses, which in turn drove house prices up to unrealistic levels, which in turn made short sighted people think they had to jump in, cos it's what everyone else is doing.

We can't change the fundamentals. The facts are simple.

1. Unemployment rising.

2. Unaffordable housing.

3. Weak currency.

4. Populous heavily in debt.

Please please please don't fall for this scam to get you to spend again, as it is indeed a scam. Get yourself out of debt, then build from there. Don't take on any new debts, as that's how we got into this mess.

BRIDGE COACH

Lets not be pedantic, and if you are going to be then it would be a good idea to do your research first. Go on Rightmove, do a search for 3 bed flats within 20 miles of Birmigham and you'll find loads of them from 49k - 70k. You can check any major city, even London, and within 20 miles you can find 3 bed flats for under 70k at the moment. As you mention it, his flat is in a place called Rugby, which as far as I am aware is near enough the Midlands. The point is that whatever savings you have, even if it is 20k, you can probably pick up a 1 bed flat above a shop which would rent out for £200 a month

Although I'm not elderley, I have previously had 6 different people letting a spare room from me, and never had any trouble. Of course you do need to be careful who you let in to your home, but that goes without saying. Obviously any damage etc would be recognisable straight away as you live there, so you can address the situation straight away. Normally a deposit should cover any damage somebody would cause in that time. It is far less risky than a normal BTL where they have months to trash it whilst you're not there.

Your comment about a crash of magnitude only affecting those who wish to sell is also quite inaccurate. What do you think will happen to banks if the market crashes? They have thousands of repos on their hands which are worth a fraction of the value of the mortgage they leant to the buyer. Regardless of whether you feel the bank deserves this or not, it hits the saver further - why? because the banks then make their money in other ways, i.e adding fees, dropping rates when they go down, but when they rise again, not passing these on to savers until they recover their losses.

In direct response to your last point, you could say the same to people who just leave their money in the bank, if they don't invest wisely then it is their fault. I am not anti-savers by any stretch, I understand how hard people have worked to get 'comfortable' for retirement. My parents recently divorced and had to split the money from their house sale, then use the remaining savings to pay for their new homes. They now have no savings and are fast approaching retirement, so I dread to think what things will be like for them in a few years time!

But also to those people like Sparky397 who make remarks about people with big mortgages, blaming them for their situation. Do you have any idea how much it costs to rent a place these days? My house would be over £800 per month, but with a reasonable deposit an interest only mortgage is currently around £350 on a tracker. Repayment at 6% would still be around £100 cheaper than renting. Also people who have bought in recent years did so with their best judgement, i.e. with the belief that if they didn't buy now, the market would get further out of their range and they'd be forever renting. Most thought that if they bought then, they'd at worst be paying roughly the same for the next 25 years, where as continue renting and you are subject to annual increases.

Well said! couldn't put it better myself.

I wonder . Have you dropped the rents on your buy to lets

Where do you think the money comes from for you to borrow?
I lost my home & job in 92 when interest rates were at 16%.
Think yourselves very lucky interest rates have been kept low this time.

Lets hope we don't get another housing boom or the same thing will happen all over again.