Proposed mortgage cap 'suicidal' say 'property experts'

ad9898_3

Why ?, is the question I would ask would it be suicidal. If mortgages were capped at 3x salary, the whole of the economy and society would benefit in the long run. Just think, with all the pent up demand it would create (as long as we wern't being lied to about a shortage of housing:rolleyes:), house builders and construction would be back on its feet. People would be more relaxed, not having to work 25 hours a day to service mortgage debts, more real money to be spent in the economy, the list is endless......... the downside ??.........................

Well people who bought with high LTV's in the last few years would be in big trouble, however what percentage of the population is this ?? and if it's relatively small should these people be 'sacrificed' for the sake of the greater economy.

I've said it before, why oh why do people want everything as cheaply as possible apart from the most expensive thing they will ever buy... a house !!, it's totally irrational, almost perverse.

"Any move to further restrict mortgage lending would add insult to injury," said Trevor Kent, a former president of the National Association of Estate Agents.
"It would be suicidal and cause property prices to come down yet further. Lenders are already reluctant to lend, and this would give them an excuse to put up another hurdle, stopping buyers getting access to finance."
Last month, Lord Turner called for a return to safety-first banking, saying: "We want to see the reinvention of the traditional savings and mortgage bank in Britain, making loans on prudent and careful terms."
It is understood that Downing Street is very keen to see Lord Turner recommend a cap on mortgages, stopping anyone borrowing more than three times their annual salary, unless in exceptional circumstances.

http://www.telegraph.co.uk/finance/personalfinance/5002083/Proposed-cap-on-mortgage-lending-by-FSA-is-suicidal-say-property-experts.html

maninthestreet

This has been discussed on at least one other thread. How would a 3x salary mortgage cap create a 'pent up demand'? People would see their houses devalued over night, with huge negative equity, and the the housing market would be in crisis.

Dan:_4

The government want banks to start lending again, so I doubt they would enforce such a restriction.

The key is 'ability to pay'. If you earn enough to afford the mortgage repayments, have a clean credit history and little other debt - whats the big deal?

robin_banks

Last paraghraph of your link;

Melanie Bien, at mortgage broker Savills, said: "If you insist on putting a limit of three times salary, you will end up with as a subdued market as you have now. Prices will have to come down even further for first time buyers to afford a property."

Does she mean prices will need to come down to an affordable (and therefore realistic) level ?.



THis

ad9898_3

maninthestreet wrote: »

This has been discussed on at least one other thread. How would a 3x salary mortgage cap create a 'pent up demand'? People would see their houses devalued over night, with huge negative equity, and the the housing market would be in crisis.

'Some' people would be in negative equity, pent up demand would be caused by FTB'rs coming back to the market, houses would need to be built, if you believe the yarn that there is a shortage, creating construction jobs, creating chains for people to move, I would be surprised if every mortgage holder would be in NE if mortgages were capped at 3x.

Is the housing market not already in crisis, caused by over valuation of property and lax lending ?

Pssst

It seems reasonable to me to have a cap. What is the point of allowing people to borrow much more than they can afford?

If house prices have to come into line with this then too bad. House prices were overcooked anyway in a fairy tale market created by those with a vested interest who took full advantge,took the profits and have probably now done a runner when it has all gone wrong.

Look how long we had warning signs for and yet the vested interests continued to stoke the market to eek out the last vestige of profit whilst discretely edging themselves out of the business into less riskier areas.

House should be homes first,investment vehicles second.

Its better for all concerned that this is what happens.

How can you have someone on 20k gross a year being able to borrow 150k? Its not a manageable situation and so if the 20k person needs a home,they need to buy something smaller,cheaper or rent.

New home builders have been flat packing the country with quick system built apartments and selling them for silly money for years. A self assembly cardboard box for £200,000..what a joke. Same with new homes. Often quick,system built homes with a "quality" facade sold at massively inflated cost.

The bubble has well and truly burst so lets get back to more sober and sensible housing arrangements.

ad44downey

The mortgage cap is the only sensible suggestion put forward in this entire crisis. It's just a pity it wasn't put in place 10 years ago and we could have avoided the depression we're now in

Pssst

ad9898 wrote: »

'Some' people would be in negative equity, pent up demand would be caused by FTB'rs coming back to the market, houses would need to be built, if you believe the yarn that there is a shortage, creating construction jobs, creating chains for people to move, I would be surprised if every mortgage holder would be in NE if mortgages were capped at 3x.

Is the housing market not already in crisis, caused by over valuation of property and lax lending ?

Quite right.

There is no shortage of housing or at least there shouldnt be.

Two jags prescott has been sanctioning the widespread demolition of thousands upon thousands of perfectly serviceable homes up and down the country and selling off the land to his friends,the big property developers. He has been doing this for years under his iniquitous and criminal pathfinder scheme. He has even stolen homes from people and forcibly evicted them from their own homes under the scheme and yet he has got off Scott free.

edgex

So they really think that going back to a mortgage multiplier of ~3, which was the standard for years & years, would end the property market?

They just dont like it because it would cut their earnings, as they still do it on a commission basis.


Nothing wrong with a cap of 3x & a 90% max LTV

then its just a matter of getting the unsecured lending under control
no more than your annual salary should do everyone

Dan:_4

What about Joint Mortgages?

Kenny4315

Why would construction improve ??

Why would house builders build houses, developers develop, etc if there is no profit to be made ? Which will be the case if a 3 X salary cap was enforced. There in the sh*te now so why would a correction beyond the proper market correction make them in become profitable ?? As a result who would make up the long term housing shortfall ?? Don't say the government, they'd be in enough Sh8te as billions/trillions of bad debts hit them via the nationalised banks.