Proposed mortgage cap 'suicidal' say 'property experts'

b0rker

piggeh wrote: »

I would imagine if this happened we'd be going back to similar levels anyway? Maybe not 3x, but 3.5x, possibly 4x max. No qualms but someone needs to ensure Banks DO lend responsibly - left to their own devices, I don't believe they will.

As it is not uncommon for a bank to charge a £1000 arrangement fee then I would expect them to be able to spend some of that money on actually doing their bloody jobs and properly investigating someones income. God only know what that £1000 is supposed to be being spent on as it is. Probably Sir Freddy's pension! Or maybe to pay a secretary on £1000 a month to fill out a 10 minute form.

As we all know the banks have not been doing proper affordability checks for the last 10 years. Who's job was it to make sure that they were? Who's job was it to regulate the banks so that they did not get so horribly greedy and eunsure that we did not end up in the situation now?

The FSA.

Really2

chewmylegoff wrote: »

it didn't seem to bankrupt the country in the last property crash.

Perhaps because last time the banks were not on their knees from American subprime.

ad9898_3

Dan: wrote: »

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?

The whole problem though Dan is people haven't had the 'ability to pay' thats why the crisis has unfolded.

To me the whole housing market has always been a pyramid scheme, that is why since 1970 we have had 4 housing booms and 4 busts, the only way to have stopped a pyramid in the past is for it to collapse, which it has everytime, causing untold misery for everyone involved.

If we have a cap, house prices will rise with wage inflation, which will stop the pyramid ever forming.

chewmylegoff

Really2 wrote: »

Perhaps because last time the banks were not on their knees from American subprime.

what difference does that make to whether people have to pay their mortgages back or not?

Really2

ad9898 wrote: »

If we have a cap, house prices will rise with wage inflation, which will stop the pyramid ever forming.

Sorry I disagree an expnading population and reasons stated such as China would prove that to be wrong.

Really2

chewmylegoff wrote: »

what difference does that make to whether people have to pay their mortgages back or not?

You asked why it did not bankrupt the country in the last crash. I answered why.
It's the truth.

lostinrates

Really2 wrote: »

I agree savings is great just savings lead HPI is just as much a nightmare for any FTB. (as buyers get older the nexg generation get pushed further away)

I think some on here are kidding themsleves that 3X todays IR rates is not going to cause lots of cash sloshing around looking for somthing to fill.

I Agree if IR was 15% 3X would be good (perhaps excessive)

But we all know the world can change over night (well a few months)
and to not have a flexible system could cause unwanted problems further down the line.

Like yourself 3X would possibly stop you doing what you wanted to do.
If you did buy some where at 3X you would have £xxxx sloshing around doing nothing (well on curent IR).

I think some forget the more you earn does not increase your expenditure it increases your disposable income.

Why not let you take a calculated risk if you are happy and the bank are covered?

I'm sorry Really, I just don't understand what you are saying in this post. Could you try again, or can someone else explain it to me?:o

Kenny4315

chewmylegoff wrote: »

it didn't seem to bankrupt the country in the last property crash. yes, this time the HPI was stupider, but the principle is the same. property values realigning themselves with the average trend is not going to send us back to the stone age. it might trap a lot of people in negative equity - but guess what, they'll just have to pay the debts that they already agreed to pay, and would have had to pay regardless of HPI.

They didn't have to bail-out all the banks, and insure massive loses onto the tax payer, billions upon billions, if a crash occured. A 3 X cap wouldn't relalign prices by about 35% a true correction, it would take them down well beyond it. 3 1/2 times used to be normal but solid candidates even before the HPI would be able to get more than this without to much trouble.

chewmylegoff

Really2 wrote: »

You asked why it did not bankrupt the country in the last crash. I answered why.
It's the truth.

well, the country may be in financial trouble because the banks are screwed, based to some extent on their exposure to US sub-prime, but that doesn't answer why house prices falling to 3x salary in this country will send us over the edge?

the implication is that the banks will lose horrible amounts of money as a result. but people will still have to pay the money back to the banks, regardless of the market value of the house. are we saying that losses that UK banks suffer on repos in the next couple of years are going to send us back to the stone age?

Really2

lostinrates wrote: »

I'm sorry Really, I just don't understand what you are saying in this post. Could you try again, or can someone else explain it to me?:o

Any HPI is bad for FTB's

A multiple of 3X is pointles for people in your situation.
As a higher multiple would still be affordable due to you partners high wage meaning you have a large disposable income.

In a nutshell.;)