Proposed mortgage cap 'suicidal' say 'property experts'

Really2

overlander wrote: »

Maybe wrongly i just assumed that the 3x was the max and any other debts would reduce the amount you could borrow.

I don't think they could do that.
If you set a ceilling I can only see you not geting a mortgage if it truely was unafordable.

It's a very tricky one but I would say if you had 3X you could easily get away with a reasonable amout of debt.

dopester

Really2 wrote: »

I don't think they could do that.
If you set a ceilling I can only see you not geting a mortgage if it truely was unafordable.

It's a very tricky one but I would say if you had 3X you could easily get away with a reasonable amout of debt.

Wasn't the case for family who've told me of their experience in the past, including early 80s.

In for interviews at the bank/building society, to pour over what they could afford. Turned down for a mortgage quite a few times as well.

Really2

dopester wrote: »

Wasn't the case for family who've told me of their experience in the past, including early 80s.

In for interviews at the bank/building society, to pour over what they could afford. Turned down for a mortgage quite a few times as well.

80's inflation and IR would make 3X salary most probably 3X less affordable than todays prices.

I am just saying some banks are bound to take "risks" as they are going to become cash rich?

Even if this was the case in this hypothetical situation it would just put the emphasis on saving (nightmare for all school leavers as ownership dream would be getting further and further away)

I think in a place like America this would work but in this country we have too many working people to take property prices over a average wage.
Lets face it we are overpopulated so unfortunately "demand" places such a large pressure to keep prices over a "wage average" level.

Like I said in china I think the average wage worker would have to save 100% of their salary for 20 years just to get a 30% deposit in some city's.

3X salary would not bring down prices their so I fail how if we implemented a saving culture here it would not turn out the same!

sdooley

Au contrair, the Government makes a good turn on the cost of council housing. Especially now so much of it is being handled at 'arms length' by charities.

overlander

In for interviews at the bank/building society, to pour over what they could afford. Turned down for a mortgage quite a few times as well.[/quote]

The more i think about it, that does kind of add up. 3x salary and allowed some other debt, interview and finances scrutinized. I really do not see a problem with that, that way there will be a flexible part to the process. The only down side is i can see people like previously mentioned taking on loans to pay for their deposit but that introduces the affordability aspect.

edgex

Mortgages are just one part of the whole debt problem.

personally, i would do it this way:
any & all secured debts no more than 90%ltv
unsecured debt no more than annual salary

minimum payments on credit cards etc to be increased to 10%
any fees to be regulated, & not added to the loan

Really2

edgex wrote: »

Mortgages are just one part of the whole debt problem.

personally, i would do it this way:
any & all secured debts no more than 90%ltv
unsecured debt no more than annual salary

minimum payments on credit cards etc to be increased to 10%
any fees to be regulated, & not added to the loan

Personally I would be stricter.

5% deposit minimum (at least 10% for best rates no teasers for low deposit)
no mortgage if you carry any other debt than an essential loan or day to day (EG car loan and say CC max £2000)

Then allow up to 4 X joint Max (depending on disposable EG no debt max mortgage if afordable, afordable based on 6%IR).

Reason.

To get out of the thinking of getting in to debt for anything else that is essential eg. car house etc.

Hopefully that would breed less debt acceptance so people could then manage their own risk rather than nannying.

dopester

Islam brought in restrictions against lending at interest due to how the debt burdens in society had weakened them overall (large section of society fraught servicing big debt burdens, poverty,). Doesn't Judaism also forbid lending with interest between Jews.

A New Taboo on Debt

A more positive sign for America's future and those who invest in it would be the emergence of a new taboo on debt. When people have suffered from overindulging in some practice, rules often change in the wake of a trauma to place it off limits. The bitter experience of debt default and debt bondage by taxpayers could lead to at least a partial repudiation of high-tax policies that encourage debt. That would be far more constructive for the future.

Max_Headroom_3

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.

But that is the whole point!!!

If mortgages were capped, a modest house in the south east would no longer be £300K!

Max_Headroom_3

kennyboy66 wrote: »

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.

No one is suggesting fixing prices.

This is about fixing lending to sensible levels.

Surely a good thing?