The house price crash-ometer that has lenders worried

I was more than a little surprised this week to receive a letter from the body that represents nearly every British mortgage lender.

The Council of Mortgage Lenders, I guess rattled by the delicate state of house prices following several years of bullish and sometimes irresponsible lending by some, wrote of its concerns about our house price calculator and its wish that we remove it from the site. 

We at This is Money pride ourselves in producing what we think is a balanced and informative site. Our news and features are backed up with tools and calculators to either help our readers make the right money choices or merely just for fun.

As I mentioned in our newsletter two weeks ago, we have a whole series of new house price calculators coming out. Here are two we released this week...

> Home valuation calculator
> Home equity calculator

Anyway, it's the view of the readers that's most important, so I thought you should make the call and have your say on our calculators. So here is the email from the CML and my response below. Have your say in the comments box below...

Dear Andrew

It’s very, very rare for us to complain about any of the tools and gizmos that appear on editorial sites, but the “house price crash calculator” currently appearing on thisismoney is a notable exception.

This tool seems specifically designed to cause maximum alarm, and in our view is an extremely ill-considered tool for your website that should be removed immediately.

Although we note that you list “house price optimists” among your personal dislikes, I can assure you our objection isn’t because we want to paint a falsely rosy view of market prospects, just a realistic one.  Encouraging people to consider that there is any prospect whatsoever of house prices reaching their 1992 levels is, frankly, irresponsible.  Your calculator takes no account of general inflation and is deeply, deeply misleading.  Even the most pessimistic house price forecasters are nowhere near this vicinity – and it does your readers no service at all to imply that this is any way a realistic scenario. I have alerted the Nationwide to the way in which their data is being used.

Please reconsider this unhelpful and misleading tool, which cannot possibly be regarded as reasonable.

Sue Anderson
Head of member and external relations
Council of Mortgage Lenders

And my response...

         Dear Sue,

Thanks for the email.
I was surprised by the content of it and some of the accusations it contained. Let me address some of the points you raise.

I can assure you that This is Money is not in the practice of desiging tools specifically to 'cause maximum alarm'.
This is Money targets themes of interest to its readers and users, and produces tools that put them in the picture.

The house price crash calculator is aimed at allowing readers to experiment with theoretical scenarios on property prices using information that Nationwide has put in the public domain. To suggest that readers will believe house prices will return to 1992 levels because it is an option on a calculator underestimates our readers.

And in terms of it being a realistic scenario, I'm sure you're aware of the various examples of prolonged slumps in property in developed countries in modern history - the sustained slumps in Japan (more than a decade) and Hong Kong (more than seven years) spring to mind.

The reason the calculator goes back to 1992 was that it was the nascent stage of the most recent UK house price boom to give them the maximum amount of information on this theme.

You should also know that the calculator is the latest in a long series of tools we are producing for the site - others include a house price boom calculator (a reverse of the existing calculator, that allows people to see how much their property value has risen). Others will be appearing on the site soon.

You mention the remark in the dislikes in my blog biog. As you can probably see, these likes and dislikes are a bit of light-hearted fun.
I can assure you that my No.1 prority is producing a balanced and respected website. The views I or any other member of the team holds in no way sways reporting or presentation of news and comment is always clearly ring-fenced.

That's maybe why This is Money has become a key destination online for property market news - readers seem to like the breadth and balance of our analysis. You may have missed the extremely incisive and well balanced commentary last week from our property correspondent, who, incidentally, predicts house prices will keep on rising (also - please note the reader comments praising Simon for such a 'balanced' article)...

Is there going to be a house price crash?

I'm surprised to see the CML so jittery about confidence in the market and very surprised by this attempt to bring the mortgage industry's influence to bear on an independent, editorial website.

Rather than censoring our output, our preferred approach is to publish as much information as possible and allow readers to make their own call - including their views on our approach to content production - via "Reader Comments" on the site and via the blogosphere. It's for those reasons the calculator will remain on the site.

Kind regards,

Andrew

Editor
www.thisismoney.co.uk

Comments

[Simon]

Congratulations on sticking up to the industry bullies who want to stifle any kind of viewpoint that is contradictory to their own vested interests. For too long now, we have been fed the industry bankrolled mantra of "house prices only go up". Thanks to their loose lending policies we have had an unsustainable boom in house prices and a badly damaged financial system that is struggling to keep upright. Now we face a credit crunch, a house price crash and either a recession or full blown depression.

ALL these could have been avoided if the banks and building societies that the CML represents, had acted responsibly in the first place. Booms are followed by busts as sure as night follows day.

People will complain and cry for the good old days, but the good old days were a dream bought with money from the future. A future we are now about to enter and a future where we will find that we can't afford things because we have already spent the money. If we had all been more prudent and spent the money that we had, we could have had sustainable growth in the economy and would not be facing the problems that are now presenting themselves.

The CML should focus more on corporate responsibility and less on the corporate greed that has characterised them over the last 15 years.

[Simon - London]

Unbelievable that the CML should even consider asking for you to take the calculator off your site.

I would be very surprised if they've ever asked a web site containing one of the many overly bullish house price articles to edit their content to give a more rounded view point.

It seems to me that they're cynically trying to distort the view of the housing market within the press, to protect the vulnerable credit based bubble caused by the dubious and lax lending practises of some of its members.

[DAVID]

I may be mistaken but i do not seem to remember this lot
shouting about some of the absurd lending practices which have lead us to the point of their paranoia.

[Nate]

Good for you Andrew! Stand up to the CML bullies. I find the coverage on this website to be well balanced, not all doom and gloom, but not putting on rose-tinted spectacles either. The crash calculator was very useful and interesting, as is the new equity calculator. More information is always good, don't let them censor you.

[H Thomas]

If the HPC calculator needs to be censored in order to 'protect' the market from (ahem) harmful information, things must be much worse than I imagined. So Ms Anderson's real message should perhaps be read as: PANIC PANIC PANIC!!! (either that or, "Hello Mr Foot, meet Mr Bullet").

[Aleks]

Well done Andrew - good response. The CML must really be "crapping themselves"( you can replace that with "worried" for censorship sakes!) to have sent a letter like that.

[R Young]

Sue Anderson's e-mail is going to backfire on the CML. This is a beautiful illustration of how property professionals bully and manipulate others into running their agenda and when they don't, they are treated to threats and censorship. Well done thisismoney for standing firm.

[J]

Leave the crash calculator in place!
Censorship is unhealthy in all contexts. Furthermore, those who encourage censorship invariably have vested interests in doing so...

[DbD]

Funny how anything other than the 'house prices only ever go up' mantra is deemed to be either doom and gloom or you are considered a nutter.

Keep the calculators there and give them as much prominence as you can .

Ed BALLS to the CML

DbD

[Kevster]

If only the CML had placed the same energy into monitoring mortgage practices...

[Ian]

If the CML feel the need to complain I suggest everyone assume the crash position.

[Geoff]

Seeing the fuss they make about a simple calculator, it would be interesting to know the CML's opinion of websites such as www.housepricecrash.co.uk

[Beaker]

Excellent reply.

There's no evidence that the CML have ever tried to complain any property ramping which has led to an extremely unstable market. If they had their members long-term interests at heart they would have been trying to dampen the dangerous exhuberence of the last few years and try guide their member on long term stability, not a quite buck based on no foundations. The CML are nothing but a vested interest embarrasement, and this letter to you proves it.

[Mike]

Why not adjust your calculator for inflation? That'll show 'em the figures are still just as scary...

[david barker]

Leave the crash indicator. Its ok for the Vested Interests to show how much money can be made from property but not sites like yours to show the downside.

[M Palmer]

Definitely do not give way to censorship - we live in a free society. The vaguely threatening statement about notifying Nationwide about the use made of their published data was quite amusing though. Does she think that they'll only allow people to use the public data to support positive house price growth conclusions? That would certainly generate a lot of positive market sentiment... not.

If house prices are in such a precarious state that publishing a crash calculator is worthy of the CML's attention, then you are doing us a great service. If they aren't in trouble, then the CML have no need to worry.

Having said that, the CML makes a couple of suggestions which could improve the calculator. It would be interesting to (optionally?) take general inflation into account on the calculator - the whole real / nominal house price thing really confuses a lot of people.

She also takes exception to using data all the way back to 1992. Maybe you could ask her what the CML thinks is a reasonable crash base date? Not that I'm suggesting you actually change it - but I'd be very interested to hear what the CML thinks is "reasonable" here.

[Maria Hampton]

Well done on the fantastic housepricecrash-o-meter. Let's hope it plummets faster than Sue Anderson's employment prospects.
No one seems to be cheering the recent rise in petrol prices, but the mortgage industry has for years managed to persuade people that rising house prices are a universal good, when they are in fact one of the few if only sectors to benefit.
Thank goodness market is finally looking positively sickly, and people my age can look forwardto living in homes of their own instead of the 'investments' of others.

[david m.]

Good to see the House Pricing Cartel are not getting their way!
Good on you thisismoney!

[MichaelT]

Andrew, thank you for having the guts to post this.

Frankly I'm absolutely outraged. It leaves me questioning whether the CML been actively trying to influence other media outlets to put a positive spin on dangerously overvalued housing market.

[Amanda]

Keep up the good work....To try and censor your input is unbelievable considering the state of the UK media!

[Pete]

I find that quite alarming that the CML would request the removal of that tool. It clearly goes to show they have a vested interest in talking up house prices, and I shall read all their press releases with suspicion in future.

It's important that the public are presented with the facts, and left to make up their own minds regarding issues such as house prices, so I respect your decision to stand firm on this issue, and not remove the calculator.

[NRG]

I had a good laugh at their letter, a good response Andrew.

[Alex]

Another example of treating the educated general public like children. That is the problem with this country, too many people do not want the public to see all information available and make an informed opinion.
Well done for sticking to your guns.

[Elaine]

I've just used your crash-ometer.
I'm in a house 'worth' 250K at today's money - but I want to buy one worth 395K. So I need to borrow 145K. However if prices were to 'shock horror' crash to 1997 values - my property would only be worth 81K...obvious tragedy. However since the place I want to buy would only be 125K - I only need to borrow 45K to get the house I want. So who is it that loses out in a property crash again... why the poor banks only getting interest from me on 45K not 145K - sorry I can't find a sarcastic enough font. CRASH? Bring it on...

[down wave]

Dear Sirs,

Well done, At least now I think that there are some ethical heros and champions still living in the UK, that will not compromise themselves or others for money.

B(u)y{e} To Lets, Have been Skating on Thin Ice and that an't Nice. Now it is a Losing Ticket in a One Horse Race.

The BTL's are partly responsible for the increased the value of my home from £130,000 to £320,000 in 8 years. I shall feel much better when its value is back to a sensible value, that represents the land value and the rebuild value of £600 per square meter.

If the BTL's have not operated using the protection of Limited Company vehicle, then now, they stand to lose everything including their residential home. The banks may well give them 30 days notice to pay of their business mortgages, if the equity in their portfolio is less than the value of their debt. Exactly as happend in the early 90's.

Yours Sincerely

Dr Anone

[Mark Smith]

I would guess you would get a big fat pat on the back if you included tools such as "buy to let greedometer" or a "property millionaire in a few short weeksometer" or perhaps "Irresponsible subrime lendometer or Mortgage equity release free cashometer". Well done for presenting a balanced view compared to the main stream press "vested interest rot" we are brainwashed with on a daily basis.

[Richard]

I endorse completely your response to CML's absurd and unreasonable communication.

Can I also make a plea that we all stop using the word 'optimist' for people who think house prices will stay high or continue to rise? There is nothing optimistic about such a position. Imagine someone who thought, for example 'car prices will rise at 15% per year from now on' - would that person be thought an optimist? Makes no difference if you already own a car, it's obviously bad news all round for car drivers. The same is true of houses, and our continued use of such language shows just how distorted our collective thinking has become on house prices. The real optimists are those predicting housing market falls (though of course, it would have been far better if we'd never got into this stupid mess in the first place, for which the CML must take it's share of the blame).

[george groom]

I'm an older guy with a house worth over £500k - ( at the moment) ha ha

I can remember 1992 and its affect on me - not a good experience - yes children it really happened !!

I welcome the crash - first off it will help my sons to buy more easily and second off I want to see all the smug property spivs take the hit they so richly deserve

UK is floating on a sea of debt in a leaky boat and the sharks are circling - beware !!

[David]

What a nasty little email from the Council of Moron Lenders. "Extremely ill considered"? That's rich. I suppose the 4, 5 times salary loans and more were carefully judged, just like the lenders' view that house prices never fall. Are these people merely fools or criminally dishonest? Either way, the boom encouraged and ridden by the CML membership has transferred wealth from the poor to the rich. Who is "frankly, irresponsible"?

The CML deserves everyone's contempt.

[Neil from Bristol]

"...frankly, irresponsible..."

Hmmm...perhaps the CML should take a look at the lending practices of some of there members?

Their "frankly irresponsible" manner in lending money has helped create this vast gap between 1992 and present day house prices.

[MB]

Shows how paranoid the industry are right now.

After all their members have bonuses and sales targets to protect you know. LOL

Burn baby burn!

[Fuchsia]

"Even the most pessimistic house price forecasters are nowhere near this vicinity".

Well, I'm thinking of making a calculator that forecasts that worldwide monetary systems shall collapse in two years, and soon an average house will be worth approximately 10 sheep, or 20 cartloads of firewood and a small but attractively coloured rock.

Is everyone going to start panicking now and begin hoarding sheep?

"Encouraging people to consider that there is any prospect whatsoever"

Anything is theoretically possible. Is the CML clamping down on science fiction novels too? I never realised that considering unlikely future possibilities was a crime.

The CML needs to get a grip; the majority of the populace should have the brains to consider whether a particular outcome is likely before choosing to believe in it.

[Daniel]

Well done thisismoney. You are absolutely right to raise awareness of the risk of negative equity facing todays property buyers.

On the subject of censorship, the moneysavingexpert forums are trying to suppress threads on the house price crash subject.

[andrew]

This is the beginning of the "desperate phase". We are seeing the same things in Ireland. Local property sites are shutting down access to price drops and more recently the business editor of a local newpater was fired for writing an article about how the MD of an esate agency is having trouble selling his house.

[T. Ware]

I am utterly shocked by Sue's message. This clearly indicates they are very worried indeed. And to think that they beleive that censorship is the key to them holding their jobs makes them sound both stupid and desperate.

[Andrew Oxlade, TiM Editor]

Thanks for the comments so far - please keep them coming. I thought it was also worth pointing out opinions elsewhere. Followers of housepricecrash.co.uk have been particularly vocal...

http://www.housepricecrash.co.uk/newsblog/2007/11/blog-vis-ask-thisismoney-to-remove-house-price-crash-ometer-8011.php

[Tai Yuen]

Good on you Andrew, I hope everyone in the UK reads this article. What people must understand is that only a minority of the UK's population, that is the rich, will benefit from the ever increasing house prices. The majority will suffer for years to come. The people of Britain must stand up and say 'No' to anymore house price rises. The CML, estate agents, financial instituions and the government all have a duty to bring houses down in the UK. We owe this to our children and our children's children.

[Vicky P]

Nice one, Mr O!
Sue Anderson has shot herself and the CML in the foot by calling TIS "irresponsible"… because the lax lending over the past five years has been totally sensible and has not in any way caused rampant house price inflation and an overpriced asset bubble.
What a joke.

Also the Spanish site equivalent to the UKs "House Price Crash" named "Burbuja.info" lends you their support against censorship Andrew.

[Richard]

Thanks very much for sharing this with us Andrew. It just goes to illustrate how much the vested interests in keeping property prices rising will go to spin the web of lies that is 'housing only ever goes up' and no matter how much debt it requires you are part of an underclass if you don't 'own' your own home.

I'll stick to renting thanks CML and wait for prices to come down and I'm estimating a conservative 40% drop over the next 5-6 years. We are in the crash phase now but we can't see it in headline stats from the likes of Nationwide yet because instead of reducing prices to sell, sellers are in the denial phase and would rather not sell than reduce. Roll on April when the BTL brigade rush to sell together due to new CGT rules. Big chunks will be flying off average house prices then.

[J-P]

Good for you to keep the calculator online. Other sites showing how asking prices have dropped have been targeted and forced to prevent information. Now your very useful site is in the sights for simply putting up a "what if".

Looking at the last 10 or so years it's got to be plain that things can't go on forever given salaries have not grown to the same extent (well at least not mine!). The calculator helps people see the sort of financial risks you'll never get exlained from anywhere else - certainly not a lender or their agent.

[Frankiesbeentohollywood]

I Thought the calculator was an imaginative and clever toy, but to be taken with a pinch of salt. However the complaint from the CML is completely OTT misguided and ill-judged. To me this speaks louder than the message This is money are trying to give.

[MyHouse]

Just pluugged my terraced house in East Anglia and plugged in the year I bought it low and behold it came up with a 21% crash back to 2004, when in fact my house actually has not moved at all in the last 3 years which is equally worrying, I would suggest the reports of rises over the country are wildly exagerated for many parts of the UK as the people of Colchester.

[George Draylon]

It's completely absurd that the CML should be so touchy about this calculator, given that for the last 10 years the majority of the national media have done nothing but scream at their readers every day about fantastical house price rises. What a bunch of silly billies, as Denis Healey might have put it.

[David Cardale]

Congratulations on your existing tools. It would also be very helpful to have a graph starting 1992 showing average selling price per sq meter compared to average construction cost per sq m EXCLUDING the cost of land and obtaining planning permission. This would show how much prices could fall if the Government were to increase the permitted urbanised land from the current 10% of England to, say, 12%.

[Alex]

The reaction of CML is understandable, since they are part of the group, which has an interest in house prices rising. This group: government, solicitors, estate agents, house owners.

The only constituent of the opposing group, are first time buyers.

Why was CML not speaking up for first time buyers, when headlines were screaming how much house prices were to be in several years time?

[mike cassidy]

Mad dogs and Englishmen go out in the midday sun......
Well me 'ol mateys the sun is going down on the 'ol property market and not even the CML can stop it.
NOTE.
If u want to see how stupid things are getting go to business section of The Times..where an article by Clare someone asks a panel of 'experts' all property agents/brokers for views on property market...
And guess what they say???????
Like asking turkeys to vote for Christmas...
cheers mike

[Simon West macott]

Something can't be right in your calculator. We happened to have our house on the market in 1992 for £400k but withdrew it because we changed our plans and stayed put. Your calculator has valued it at 192k in 1992 based on a slightly conservative value estimate today.

[David James]

I live in Japan in a large, 3-bed detached house in a middle-class area of lovely Kyoto. My house and the land it is on are worth approximately 160,000 pounds, which would hardly buy a caravan in any of Britain's "quaint" cities.

Japan is well-known for its lack of space and high land prices ..... despite very low mortgage rates here ( mine was 1 per cent for three years, followed by the current variable rate of 2.6 per cent ) people are not greedy. Japanese rarely live beyond their means, and do not borrow as much as possible to consume for today. Instead they ( and I !! ) save.

The recent property boom in Britain helps noone - first time buyers are shut out of the market, and those wishing to move up the ladder face a bigger price-gap to do so. The "comfort factor" encourages equity withdrawl, credit card borrowing and general over consumption.

I reckon we'll see a return to 2000 prices before 2011....then I might be able to afford to come home.

[geoff]

posted by: Simon West macott | November 13, 2007 at 12:51 PM

I live in Japan in a large, 3-bed detached house in a middle-class area of lovely Kyoto. My house and the land it is on are worth approximately 160,000 pounds, which would hardly buy a caravan in any of Britain's "quaint" cities.

Japan is well-known for its lack of space and high land prices ..... despite very low mortgage rates here ( mine was 1 per cent for three years, followed by the current variable rate of 2.6 per cent ) people are not greedy. Japanese rarely live beyond their means, and do not borrow as much as possible to consume for today. Instead they ( and I !! ) save.

The recent property boom in Britain helps noone - first time buyers are shut out of the market, and those wishing to move up the ladder face a bigger price-gap to do so. The "comfort factor" encourages equity withdrawl, credit card borrowing and general over consumption.

I reckon we'll see a return to 2000 prices before 2011....then I might be able to afford to come home.

Posted by: David James | November 13, 2007 at 01:28 PM

SEE YOU NEXT YEAR M8

[Roman Dawson]

CML are just making a fool of themselves, well done for a reply, very impressive!

[Adrian]

The tide is changing and the money has run out...accept it!

[Sam Wimport]

The only justified point I can see in the CML's communication is that the calculator is set by default to house prices in 1992. Although certainly not impossible, it is pretty unrealistic that any house price crash would reach those levels. As such it is probably a tad alarmist. You could consider resetting the default to something more likely such as 2000 or 2001, bearing in mind future inflation is likely to "save" us from the 1992 scenario.

[DdV]

The tone and content of CML's letter so obviously displays myopic corporate vested interest and lawyers that I can only feel sad for Ms Anderson being made so public. It reads like a couple of crashed cars welded together and passed on as legitimate.

The lawyers clearly drafted the second paragraph (aggressive, inappropriately high handed - "our view" = reasonable to request immediate withdrawal - well obviously.

It looks like the CML cut and pasted this into their own softer PR blandishments -"Please reconsider". Make no mistake, if they could sue you they would. They asked the lawyers, and the the answer was no. All they got was an inappropriately worded paragraph which they were too inept to integrate into a coherent letter.

[Dave Best]

Maybe you could print this lady's email address and we can all tell here what we think of her remarks !

[Steve]

I think that this just is an interesting gimmick, that most home owners will say "whatever" to, so leave it be as it was a waste of developers time, and therefore kept another IT consultant in a job.......weyhey

as to the CML, their correct use of the english language has been in dispute for years, has anyone ever tried to interpret their handbook???

however I do take the following to task

"We at This is Money pride ourselves in producing what we think is a BALANCED and informative site. "

Please provide a comprehensive list of articles delivered on this site since it's birth,since 1992 that gave positive response to the continuingupwardly moving market and please provide a list of articles delivered since 1992 about an imminent crash

I'm pretty sure the latter will be a far longer list

for years now we have read this site telling us how the crash is imminent, well, it's not a crash, it's a slowdown, and one that we needed

Well done for "finally" being partially proved right ThisisMoney, now start being positive!!

I expect this post won't go online, as it doesn't meet with your continued doom and gloom stance towards the property market, what was that ? - "balanced and informative"

did anyone really notice that rents in certain parts of the capital have gone up over 40% this year, and this trend is starting to filter out to the home counties, couple more months of "slowdown", couple more months of higher rents, and no-one will be able to live anywhere!!!!! rent or buy

all of you that want a house price crash, which ain't too likely see "3 interest rate cuts due next year" reported on this site, aren't going to see prices come down which is what you are trying to achieve, but you are going to see rents go up

61million people live here now and thats expected to be 65million within five years, and they all need to live somewhere!!

[Tim Norris]

Your calculator is a bit of fun with an underlying message that prices could go down as well as up, the FSA would be poud of you. You are right to treat the CML with contempt just as in many instances their members treat their customers. You would have to be rather insecure to believe that this calculator will tip the housing market into a terminal slump.

[Mark]

I agree with most of the sentiment posted to date, but as an economist my primary concern would be that this kind of rhetoric has a habit of becoming a self-fulfilling prophecy!

On the flip-side, I'm not too worried as I'm actually selling my house at the moment, coming out of property, investing the equity (securely!) and will re-enter the market once some of this uncertainty has settled (I'm lucky in that I have somewhere to 'doss' in the meantime!) - so potentially it's good news. Once my house is sold - talk the market down all you like - a 15% drop would see me mortgage free with no downsizing!

[loudspeaker]

Well done Andrew and MoneyMail, all power to your elbow

[Robert]

Well Andrew, I have to say I admire your constained and extremely polite response to Ms Anderson of CML. Your calculator is a useful and unbiased comparative tool.
No surprise though that a realistic look at house prices should cause such concern amongst a group of companies and its representative association wholly responsible for the present difficulties.
Its clear that Ms Anderson simply as an employee of CML has been prompted by her own institution on behalf its vested interest members to challenge an alternative and I would suggest a more pragmatic view of the property market.
It is a great pity that a similar degree of pragmatic thinking cannot be applied within the motgage lending community.
I am afraid that the reaction of the CML is clear evidence of its self interest bias and a concern that the current woes of the housing market will be properly appreciated and understood by the consumer.
Good work, and how about a Council of Mortgage Borrowers to redress the bias !

[JLG]

Dear Andrew,
I totally agree with Maria Hampton, above.

I have been avidly reading your site recently with great interest and with the vague hope of actually getting onto the property ladder.

I have invested in my future by educating myself at University, only to find that had I taken any job just to pay the mortgage back in 1996 when I started University, that I would have capitalised on such a course of action.

However, what was not apparent to me at that time were the dodgy lending practices of the CML membership, encouraging the already experienced negative equity trap that Britain has suffered in recent years, and their artificial hiking up of property prices with their irresponsible behaviour.

It is of no benefit to our society when countless families are put out on the street due to the negative equity situation straining their finances to breaking point.

Ms Sue Anderson is, in my view, a cynical proponent of 'boom and bust' with no regard to the trauma, social deprivation and emotional cost to families that in all likelyhood split up through such a strain on the relationships at stake.

Keep up the good work and definitely keep the House Price Calculator on the site. We only have residual freedoms in this country that have not already been legislated against, freedom of speech, the press and 'this is money' should be protected from interferrence by people like Ms Sue Anderson and her Member Institutions.

JLG Pontypridd

[Thomas STallwood]

Refer them to Northern Rock. I suppose it is one of their clients

[Tom]

The CML letter isn't really the problem - like any trade union, it's their job to protect their members. As implied by the writer from Kyoto, the UK has degenerated into a non-saving society which wants everything now.

Unfortunately, we are now in a no-win situation where, with equities out of favour/trust, the high house prices are expected to finance future retirements. Saving, or lower spending, doesn't seem to be an option. Gordon Brown, having ripped £50bn from the equity markets, has relied on the housing market to finance his spending plans.

If house prices fall, taxes will be increased and personal "wealth" will decline and start a spiral into depression. Somehow, I think that the spin to prevent this will surpass anything we've seen to-date.
What is really amazing is that so many people think that high house prices are a good thing. BTL needs a shock.

[Tim]

I bought my first house back in July 2000. Before going to see any of the banks & building societies, I used your mortgage affordability calculator to work out what my partner and I could realistically afford.

What a shock it was to the banks and building societies, even back then, that I didn't wish to borrow the full amount that they were prepared to lend me!

Not so long ago, the ill health of a close family member forced my wife and I to make some difficult decisions regarding our working arrangement in order to continue the responsible care of our children. And sure enough, I found a calculator on ThisIsMoney that helped us come to what is definitely the right decision in terms of keeping a roof over our heads, the bills paid and the children cared for. Things are tight, but there is a secure and stable way forward for us!

And very recently, having sold our old house and looking to buy a new property, I returned to my trusted old friend the Mortgage Affordability Calculator to figure out what level of mortgage we can really afford.

Interestingly, having experienced 7 years of the monthly bills and cost of home ownership, your calculator helped me to establish that we could survive on a maximum mortgage of 105K, over 30 years, at £650 a month...which is about 3.2 x our combined income and the repayments come in at about 33-34% of our take home pay. ...We have no credit card debt, no loan or car payments...a mortgage is our only debt and yet that would still only leave us £50 per month spare cash for saving, after shopping and bills are all paid.

Yet, just last week, during a mortgage review down at my local branch of Nationwide, I was interested to here that after tapping in our earnings etc, their computer said that they were willing to offer us 137K! How generous of them...but even in our 'clean' financial state - how could we ever sustain the repayments on and extra (aprox.) 30% above our absolute maximum affordable borrowing? … and Nationwide seem to be one of the more conservative lenders, when it comes to offering lending multiples.

So WHO really is the irresponsible party? You guys at TIM for providing us with the truth, help, statistics, calculators, balanced reporting and sound advice?
OR is it the CML and all associated lenders who have, to put it bluntly, dug their own hole, with irresponsible lending.

I simply cannot believe that at such volatile times where many could be investing their lifetime savings into a market which could possibly leave them in financial ruin, (And nobody can deny that possibility), they want to try to manipulate the media and fix the market in order to save face! It disgusts me.

The CML should have been looking after the interests of the hard working people of this country and promoted manageable growth. Instead, they have merely promoted greed and false wealth, and inevitably - many of the decent people that they should have protected will suffer from their wrong doing.

To all the team at ThisIsMoney - PLEASE continue to do what you have always done - which is reporting the TRUTH. Thank you for providing your readers with the useful advice and calculators.

To Sue Anderson - PLEASE let me draw your attention to the results of ThisIsMoney's most recent poll on the future of house prices. As I write this, 85% of voters predict a fall! The people and their money, (not your attempted manipulation of the media), will determine the future of the market in 2008. You and your colleagues will soon be accountable and remembered in history for your irresponsible actions.

[Aj]

Dear Editor:
I am a former publisher and chief editor of a newspaper in one of the most exciting parts of the world. The newspaper was slaughtered by the megalomaniac billionaire bullies and the corrupted servile mainstream media unwilling to stand up to them.
So, after they killed my paper, the one I thought was all about truth, I stopped reading newspapers. That was two years ago. I casually glance at google news headlines occasionally and thats' about it. My Economist lies unopened in envelops and I cannot get myself to pry open the drivel that awaits me inthere. I keep the lid on.
I do not know how and when I got subscribed to your web site. And I should admit that I opened the first emails sceptically. Now I am hooked.
I have always believed newspapers and whatever they are called on the web should be filled with common sense, page 3 nudes and political cartoons only.
Sir, You have the finest line up of columnists giving the most appropriate, sensible and rational advice in simplest possible terms on critical issues.
I hope they make it compulsory reading in all banks and that all banks make it compulsory for their clients.
All we need now is page 3.

[Tracey]

Good on you Andrew for not giving into bully boy tactics of those partly responsible (along with the FSA, Government & money lenders) for the despicable state in which we find our economy. Time to face hard facts before more people end up with negative equity & the potential of having their home reposessed.

[Nick Cioch]

It seems to me that the there is a collective effort to keep the house market from plunging after the irresponsible tulip mania style bull market which should have been addressed several years ago via interest rate rises.History always repeats itself and this time it's no different despite what the Government and lenders want us to believe.

[Ina]

Dear Sir,

I have read your news letter for some time and I regarded it so far professional and informative. However, now it seems that you have reached a delusional state to believe that you are the white caviller of the crusade against banks and estate agents.

You seem to overlook the fact that you live in one of the world biggest democracies in the world which is a free market and the prices are decided by demand and supply. No one forced the customers to take oversized loans and you have insulted the English population by assuming that they were so thick that they were totally unaware of the consequence of their own actions.

You have missed also to take into consideration the macroeconomic factors which are different from ’92. The globalization of the economy, the London’s position as the European financial centre and the emigration will help to protect the house prices from a sharp fall.

Your crash calculator idea shows also a terrible lack of understanding of modelling. From a statistical point of view the crash price calculator is fundamentally wrong and misleading. And you don’t even have a single disclaimer about the complexity of the factors which triggered the last crash therefore the banking institutions have qualified it as “irresponsible”. I don’t have time or any interest to enlighten you in statistical models so you should employ some people who have expertise in the field before you publish information and claim that it is “independent”.

Are you so desperate for attention and so dry of any new ideas that you have no other option than to cash in on peoples fears and distress? Sir, maybe you have reached the peak of your career in professional publishing and now is the time to move on and open a financial column in The Sun.

[Dan]

Congratulations on your calculators and your unbiased view of the market TIM. The truth is that if it were not for the totally irresponsible lending of the members of the Council of Mortgage Lenders, allowing over-indebted punters to purchase property at prices they could not really afford longer term, prices would never have risen to their current absurd level! The only reason that so many irresponsible lenders loaned such ridiculous multiples of salary to consequently overstretched borrowers was to make larger profits than ever!

Inevitably there must soon be a readjustment to reality! Typically The CofML and their members do not want to face that probability, mainly since they will now lose money due to bad debts, on loans which they should never have offered.

[P Williams]

It's probably true that we're drowning in a sea of debt thanks to irresponsible lending practices.
But you've demonstrated bias by calling your calculator a "crash-o-meter".
If you'd called it a "calculator", then you could rightly have scorned the CML's request to remove it. As it is, you're no less guilty of trying to steer the market as you claim the CML is.
The direction of house prices is big enough a story not to require bias. That you have decided it does, demonstrates sub-standard journalism. Being a newspaper reporter, I know sensationalism helps sell papers. But in this case you had the opportunity to maintain editorial standards AND readership interest. Instead, you blew it...

[Pagus Mosley]

It seems to me that some people believe the CML are Biased in their thinking. Nothing could be further from the Truth. They simply require "on-message" reports from media correspondents so that we can get back to business as usual. Massive multiples, unaffordable housing and soaring equity, these are not distant dreams, they are goals within our grasp, If we can but weather this squall.

[andrew tait]

What a silly girl. Perhaps it is a reflection of the current thinking of this Government and others, that everything should be suppressed if it does not conform to the Party line. We are not a communist state, at least not yet, despite the ideals of some Government Ministers.
Perhaps she would be better employed in making sure all new builds are fit for purpose to live in. For example, we bought our off-plan retirement duplex which was not ready to live in. After two and half years we have just had an NHBC inspection and the builder has been told to sort out the original unfinished scope and developing snags. 24 roof leaks is not funny, nor is contaminated drinking water etc. This is where mortgages go to. To support crap.

[Pierre]

I was very amused to come across your 'house price crash calculator' - what a change from all the hype about house price booms in recent years!

And well done for standing up to the CML. Censorship has no place in a free-speech society, and you should not be pressured into conforming with popular opinion.

I do, however, agree with the CML's letter on one point. Since the calculator takes no account of any measure of inflation, it is misleading. The results cannot really be interpreted in terms of what money can buy today, and overstate the decrease in value. I found it less useful because of this.

[ron]

I have been using your site for some time now and have found your site very fairminded and your property calculate is spot on for my area in central scotland, the CML need to get their act together and come into the real world of finance, keep up the good work, cheers!!

[Matthew Dickinson]

This is hardly the time of year for house price inflation, and everybody is suffering at the moment, including shops, banks and building societies. If shops are suffering before Christmas, then everything must be bad, so don't worry particularly about property, as things will improve eventually!

[Wise Move (WM)]

What a scam the CML is trying to pull!
In the UK nobody can afford to buy houses and now the prices are falling the CML wants people to pay their members outrageous interest premiums (20 percent plus over the bank of England base) for as long as possible before they go bankrupt. You are doing a great public service with the crash-o-meter! YES they will fall sometimes to 1992 levels (especially when you think you must deduct interest paid from "equity"). CML Council of Mortgage Loansharks. Incredible these "mortgages" were allowed in the first place. They would be ILLEGAL in much of Europe !
Well done This is money !
We are better off looking after our Hard Earned Cash !
Thank you for good reporting of the facts in the face of counterinformation from the CML !

[Finbar Taggit]

And when is the BBC going to be sued for its irresponsible and unregulated programmes about buying property for the last 5 years?

Location Location Location should be renamed Eviction Eviction Eviction.

[James Slade]

A ridiculous email from the CML which proves the underhand tactics now being used to protect the property bubble. I am sick and tired of hearing the media parrot out the tired old lie about limited supply justifying house prices - I wonder if these stories result from pressure from vested interest groups as well?

Haven't we learned anything since the dotcom bubble burst? The only difference here is that the Government has a vested interested in continuing to inflate the bubble. And not even they can hold off the inevitable forever.

[simon]

The lady from the CML has been naive and foolish in attempting to censor this website. I do however feel that contextual information should be built into the calculator. You could, for example, provide a real rate of inflation against which your readers could measure property price growth, possibly linked to earnings growth rates.

A person earning £10,000 in 1992 could easily buy a decent property for £35,000 with only a small deposit, minimal fees and no stamp duty. Today such a property would possibly be worth £175,000, but the owner, had he not sold and moved up the ladder, would probably be earning £50,000. The income multiple for mortgage purposes is broadly the same. However the interest rate in 1992 would have been c.8% i.e. 30% higher than today

[Matthew Barnett]

Andrew states in his response letter:

>You may have missed the extremely incisive and well balanced commentary last week from our property correspondent, who, incidentally, predicts house prices will keep on rising.

Well, indeed. And lots of other people may have missed that too and may have only stumbled on the crashometer tool, and that's the issue with the tool. The tool is not representative of your 'well balanced reporting', it's one sided in its design and the psychological effect it has on people who see it.

If your property correspondent is suggesting that prices will keep on rising, why produce a tool that panders to the negative hysteria that seems to be banded round by the elements of the press who seem to value a 'sensational story' above balance and reality?

The CML's letter may have been naive, but I think the underlying concern was reasonable - that you have produced a tool that could be taken out of context. For me, this doesn't really do you as an organisation any favours in terms of your reputation as serious and balanced reporters. Frankly its the sort of thing you'd expect to see in a tabloid rather than the FT. Which end of that spectrum do you want your reporting to be perceived as Andrew?

[Tim]

How amateurish and embarrassing for the Council of Mortgage Lenders. Their letter clearly indicates that they are in a panic about the inevitable falls in the market. It therefore serves to give substance and foundation to fears so rapidly emerging in the uk residential (and indeed commercial property markets). After all, the Council of Mortgage Lenders represent a sector that in the opinion of many has lent extremely irresponsibly. Do they fear the probable significant fall in the house price market will expose this disasterous behaviour by their members? It’s seldom the Council of Mortgage Lenders confirms that a crash is a real concern, but any reasonable person could be forgiven for interpreting their letter as exactly that.
I have personally managed a mortgage book for a large institute, and I for one can confirm that I am not impressed by the Council’s letter, I doubt the industry is impressed either, I find it quite remarkable, and it has significantly increased my fear of a property market crash.

[Pat]

Well that clinches it, there's definitely going to be a crash. They're terrified. It's not just their fault, people were stupid and greedy, they'll get their fingers burned, it's hardly the end of the world. Your stocks may go down as well as up, kiddies!

[Nigel]

The CML reaction to a simple calculator is OTT. What are they scared of? As for house prices, these cannot continue to rise for ever. I bought property in 1988 and remember the 'value' rising for a couple of years, then BANG! the property value dropped to 50% of the amount I had paid. I remember the Thatcher years of encouraging people to buy their own homes and banks falling over themselves to lend, lend, lend.
What I see now, is much the same. Beware house prices do go down, as financial institutions and Government are only too aware.

[Moshe]

I feel the house price crash calculator is a useful tool. Organisations like investment banks use scenario based (historical) data to calculate how much risk they are sitting on and try to analyse their portfolios based on what has happened previously to the value of their constituents. They tend to go back only over a couple of years, but the principal is the same - read all about it - http://en.wikipedia.org/wiki/Value_at_risk

[Tomarse]

My parents house was valued in the late 80's at £750,000 my father suddenly died in 92 and my mother was forced to sell in the height of the recession (for financial reasons). She sold the house for £320,0000. A developer bought the house for the 2 acre garden and demolished the house and built 2 new detached houses on it. These houses have both since sold for £1.7 million each.

We have been told by a surveyor a few years ago if we had managed to hang on to the house for 10 years it would have been worth in excess of 6 million. My mother today lives on a small income (7,000) from the money she invested after buying a much smaller new home.

O' hum!

[Vineet Mohan]

Hi Andrew. Good work!!! This is what makes the "free press" "truly free"

Having said that, Sue too has a point. You have scope to build further quality into this tool. 2 suggestions are (i) to introduce a %age option and (ii) be more geographically focused i.e certain postcodes have seen more increase than the others; hence along with the purchase price, there should be a mandatory postcode data entry required.

Regards,

Vineet

[john smith]

Even a blind man could see that house prices were over extended, the merry-go-round was bound to come to a halt, everyone knew that, the only question was exactly when.
I know lots of people who have been reducing their risk over the last two years, it was that clear.
The mortgage lenders are in for a torrid time but they of all people should have been the most prepared, it is after all their livelihood and should be the clear experts.
From their extreme reaction to you, it suggests there could be a long and falling decline in property prices.
The typical Labour ploy of aggressively blaming everyone else who holds no power, to deflect where the real blame lies, just does not wash anymore.
Keep up the good work, I admire it.