Proposed mortgage cap 'suicidal' say 'property experts'

kennyboy66_2

Perhaps the government could also stipulate the price of cigarettes, alcohol, bread, milk, petrol, gas & electricity.

If you really want this level of state control in free markets why don't you move to North Korea, Venezuela or Cuba ?

Be careful what you wish for in your pursuit of a cheap house.

Really2

Well given a lot on here have £50K-£100K deposit saved I would say it proves a 3X salary will never happen.

Disposable income is obviously the main key to afordability and with such large cash holdings by people i think this shows a lot of people have high disposable incomes.

Even if this did happen HPI would then be driven by saving as only those with the largest deposits get the best houses.

We would be looking at massive deposits.(Take a look at china they have to save around 30%-50% deposit to be able to get a property and houses are still 8X salary at least))
Although a savings culture would be good HPI will still happen.

5% deposit and 3X Salary does not stop HPI.

The only thing that willis low demand and it is quiet blatant there is still a massive demand for houses (or this forum would not exist)

whathavewedone

3 x salary across the board is way too restrictive.

My oh earns 70k, we had a 100k deposit when we bought our house. So the lender was cushioned against risk to quite a large extent. Why should we have only been entitled to a mortgage of £210k which even with 100k added on doesn't buy a great family house in the south east? We don't want to have lots of disposable income to spend on clothes and holidays. We want a nice house, big enough for our needs close to good schools.

Furthermore, I'm a qualified lawyer and was earning 50k before I had kids. If we can afford our mortgage at a fixed rate of 5.6%, still have money left over to save into an ISA without me working why should we have been told we could only borrow 3 x salary? Our mortgage is 4.5 x salary currently.

I don't want to live in a Marxist state where I'm told how to spend my money thanks very much.

The people who bought in the last 5 years may be disposable to you in your quest for a cheap house but there are a few of us and if the government brought in a policy like this which saw our house more than halving in value, leaving us on the SVR with interest rates of over 8% would I bother to get a job to get us by or would we find a place to rent and then go bankrupt? Because we could.

Lots of people would go bankrupt, lots of people would need to be housed at the taxpayers expense, the banks wouldn't get their money back in most cases and they wouldn't be getting much money from new borrowers if restricted to lending no more than 3 x salary to everyone.

This is not the way forward. The economy didn't collapse because banks were lending people more than 3 x salary. They collapsed because they lent to any old Tom, !!!!!! and Harry regardless of credit history or income. All the banks have to do is judge each case on its own merits. If people have a hefty deposit the bank takes on less risk, therefore they can lend more. Banks make more profit, individuals take on the risk.

overlander

Its about the only sensible thing Brown has said in years. This could be the best thing which could happen to this country, some initial pain but we will be better off in the long run. There is no downside to it, just think of all the extra money available for the economy as people are not slaves to their mortgage. Its pretty sad but your average punter really does need saved from themselves, this will do it. At long last there is now an incentive to actually get a better job/save to buy a bigger house instead of looking for a crooked adviser.

Kenny4315

What should happen in the mortgage world is that banks should sensibly assess the risks of individual mortgages, and offer rates and products to suit the risk. Based upon affordability, LTV, and income streams, where self-certified, employed or whatever.

If your a FTB starting out on a career, with little deposit say 10%, then maybe 3 or 3 1/2 salary would be fair, while those further up with say 35% deposit would present no risk at say 4 to 5 times income.

The whole point of the paperwork being checked prior to mortgage approval should be ability to pay, not just multiplying income by 3 regardless of other critical factors. II have had true self-certified mortgages I have never missed a payment, I had my last house paid in 5 years.

overlander

whathavewedone wrote: »

3 x salary across the board is way too restrictive.

My oh earns 70k, we had a 100k deposit when we bought our house. So the lender was cushioned against risk to quite a large extent. Why should we have only been entitled to a mortgage of £210k which even with 100k added on doesn't buy a great family house in the south east? We don't want to have lots of disposable income to spend on clothes and holidays. We want a nice house, big enough for our needs close to good schools.

Furthermore, I'm a qualified lawyer and was earning 50k before I had kids. If we can afford our mortgage at a fixed rate of 5.6%, still have money left over to save into an ISA without me working why should we have been told we could only borrow 3 x salary? Our mortgage is 4.5 x salary currently.

I don't want to live in a Marxist state where I'm told how to spend my money thanks very much.

The people who bought in the last 5 years may be disposable to you in your quest for a cheap house but there are a few of us and if the government brought in a policy like this which saw our house more than halving in value, leaving us on the SVR with interest rates of over 8% would I bother to get a job to get us by or would we find a place to rent and then go bankrupt? Because we could.

Lots of people would go bankrupt, lots of people would need to be housed at the taxpayers expense, the banks wouldn't get their money back in most cases and they wouldn't be getting much money from new borrowers if restricted to lending no more than 3 x salary to everyone.

This is not the way forward. The economy didn't collapse because banks were lending people more than 3 x salary. They collapsed because they lent to any old Tom, !!!!!! and Harry regardless of credit history or income. All the banks have to do is judge each case on its own merits. If people have a hefty deposit the bank takes on less risk, therefore they can lend more. Banks make more profit, individuals take on the risk.

Just think if this law came in you would still get your big house, clothes and holidays. Some initial pain but lots more disposable cash.

Really2

overlander wrote: »

Its about the only sensible thing Brown has said in years. .

Brown never even mentioned it?

Really2

overlander wrote: »

Just think if this law came in you would still get your big house, clothes and holidays. Some initial pain but lots more disposable cash.

Which would possibly fuel HPI as people saved more money and deposits got lager and larger to secure a house purchase..;)

We would deposit war HPI... Great if you are not a FTB (again:rolleyes: )

overlander

Really2 wrote: »

Brown never even mentioned it?

Damn so he is still a waste of space, oh well never mind.

overlander

Really2 wrote: »

Which would possibly fuel HPI as people saved more money.;)

We would deposit war HPI... Great if you are not a FTB (again:rolleyes: )

Yes possible but most people with that sort of mentality have credit cards/Mew/Debt coming out of every orifice.