Gordon Brown to bar 100pc mortgages

Ian_Griffiths_Halifax

maddapple wrote: »

What is wrong with FTB's wanting to buy a 3 bed semi with a garage, my wife and I bought our first place 2 years ago and that was a 3 bed semi, we had a budget of 230K so would you expec us to be happy in a 2 up 2 down?

I did say:

I'm not saying that all FTBs need this limitation

And did you have all the loans and credit cards I mentioned or did you just have the mortgage. Are you struggling now or are you comfortable?

These aren't anybodies "rules" they are suggestions.

MarkyMarkD

I agree with Ian. The expectations of many people are unrealistic.

It's not just the fact they expect a brand new, nice, house with a garage or whatever. It's the fact they expect to fully kit it out with brand new stuff, and to stick a new car in their new garage. All at the same time.

It's that sort of mentality which led to Northern Rock's 125% deals and the like.

When I were a lad (;)) my first house I bought with my wife had pretty much no fitted kitchen, rubbish wiring, and no carpets on the floor.

We got given some secondhand furniture. We bought a secondhand cooker. We didn't have a garage, and it was a mid-terrace.

I was working in a professional job and my wife was working full-time.

And it was all we could realistically afford.

Can you see many FTBs in the 1990s and early 2000s accepting that way of living?

But it was what we had to do, to buy a house and to avoid getting into stupid debt.

Tribulation

The thing is, 30 odd years ago when house prices were a sensible amount of money and didn't raise by £1000's every other month, it was sensible to save for a deposit.

But in the last 20 odd years, if you found a house for £50000 and spent 2 years + saving up £2500, the house would then cost close to £100000 meaning you are still short £2500 for a 5% deposit.

Not only that, but the price you will be paying for private rental while you do try and save, is likely to be more than a 100% mortgage on the 50000 would have cost you anyway.

Tribulation

Gorgeous_George wrote: »

The simple answer is to limit loans to a specified income multiple based on income. Subject to affordability and with an income of:

£10K, 0 x income
£20K, 1 x income
£30K, 2 x income
£40K, 3 x income
£50K, 4 x income
£60K or more, 5 x income

That would be a really good idea if buy to let, property developers and estate agents hadn't been so greedy that house prices were pushed above what any sane person can afford.

8 years ago my 4 bed house in Norfolk cost £53000, now worth £140000.

8 years ago a couple each earning 20K could easily have brought a 3 bed house round here with a £40k mortgage.

Now they have no chance.

prowla

That idiot Brown was happy to rake in the tax take from the housing bubble.
Now things have gone astray and he's suddenly the knight in shining armour who is going to fix the problems.
It makes me sick.

michaels

Sorry - makes no sense to me, it seems to imply:

1) Everyone has equal 'other outgoings' - no student loans or child support to pay

2) Inflation will permanently be in the recent historic range - if we return to 70s/80s inflation then surely lower multiples would be needed?

3) People can not chose what share of their income they spend on housing - I might chose a bigger house and an old car and no booze or ciggies

Happy to be convinced otherwise...

Gorgeous_George wrote: »

The simple answer is to limit loans to a specified income multiple based on income. Subject to affordability and with an income of:

£10K, 0 x income
£20K, 1 x income
£30K, 2 x income
£40K, 3 x income
£50K, 4 x income
£60K or more, 5 x income

Introduce a mandatory European Money Driving Licence for borrowers (similar to the ECDL for computers) and Robert's your dad's brother.

GG

opinions4u

There is a view that whatever income calculation is used for lending should remain unchanged forever (or only ever slightly tweaked).

After all, a mortgage is for a third of your life, not just for the current stage of the economic cycle.

I'm quite comfortable with some of the more complex affordability calculation concepts, although lenders should (and have probably already moved to) nudge the top amounts down.

As for the maximum %ge loan? Clearly it should be reviewed based on the outlook for the housing market.

100% loans on their own are not an evil.

100% loans to people who can't afford them are.

As is a 40% loan to somebody who can't afford it.

Fliss_M

its all about affordability. We took out a 95% but that was with the 5% from a newbuild builder. We were looking at 100% at a stage but a job fell through. But the point if, is you can pay it, theres no problem.

Something else that strikes me. Before you would have a council house, save what you could and then once you had a big enough deposit, buy a house.

But now with all these private rental houses and the council having no homes for anybody so they have to go private, there isnt the extra cash. It was that renting was cheaper then a mortgage, now its the same price. Wheres the insentive to stay renting till you have the cash, if your putting the same into somebody elses pocket as you would your own house?

And to boot, these private rentals will throw you out quicker then a mortgage company if you struggle to find the rent. (not saying thats wrong, just that another example of how they are so similar people think why bother renting, its the same as owning)

Conrad

I'm going to do a thread on the following over on the economy and house prices section;

'How lenders will get around Browns 100% ban'

koexelek

Conrad wrote: »

I'm going to do a thread on the following over on the economy and house prices section;

'How lenders will get around Browns 100% ban'

I bet, at the moment, the lenders would be happy if Brown wanted to restrict mortgages to 75%