60% LTV

[rogerfederer]

They will only crash if unemployment and falling wages persist so that banks need to (continue to) restrict lending for safety. The housing market is basically on ice for the foreseeable future. Any correction happens at the margins and won't be known until the market is no longer on ice. I hope they go down, because they are over-inflated, and they will probably follow other asset classes down to some degree, but they aren't currently being traded like other asset classes, so they're a special case. I think Nomura are predicting a 13% decline by this time next year, which is pretty minimal given the growth in recent years (and the relative performance of other assets).

Given how long this is going to go on for, I think it's obvious that the amount of people out of work - keeping in mind that the hospitality and insecure work makes up a sizeable proportion of the economy - is going to have a major impact on house prices, number of people moving, renters downgrading or moving back in with family.

Fear sentiment among consumers means they won't be splurging cash any time soon, although I'm told that people with insecure work histories were still picking up BMWs from the local BMW garage up until last Wednesday; idiots.

Regarding mortgages: I would fix for two years. With the QE required I don't see mortgage rates going up for a long, long time.