Proposed mortgage cap 'suicidal' say 'property experts'

Max_Headroom_3

Kenny4315 wrote: »

Salaries would plummet ..... mr plumber and mr electrician won't be getting £30 per hour if the new build house they are working on goes from say £200k to £100k. There wages will be downgraded or they won't get any work. The result is less tax revenue, salary reductions across the board, imports become more expensive compared to income, etc. It is not a good thing living in a cheap economy.

So better people are getting paid more, but all supported ultimately by end purchasers over borrowing?

How is that possibly a good thing, it ends with the same false unsupportable economy we had two years ago.

Max_Headroom_3

Kenny4315 wrote: »

On the same salary.

If the house is £100k and you have £10K then the banks lending £90k.

If the house is £150k and you have £50K then the banks lending £100k

Which is less risky for the bank if the market fall 10% ??

The house price should be irrelevent in this instance (on the basis it covers the debt either way). Lending should be done on the basis of affordability, not asset value/risk.

Again, it's this thinking that got us in this mess (oh we can lend them that huge amount, doesn't matter if thy can't really afford it, the asset value covers it).

overlander

Max_Headroom wrote: »

But that is the whole point!!!

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

That whole concept is too hard for some people to grasp obviously. No wonder we are in the state we are in.

Max_Headroom_3

dgl1001 wrote: »

this will not happen over the long term - its a joke. REASON - if people can't access open market housing, they will have to find council accommodation, which is already over stretched. Restricting the accessibility of housing is not a new principle and has already been debated in government. The government can't afford to house even more people, which this stupid policy would help do.

No, house prices would have to fall to affordable levels. You can't simply say "houses are worth this, now no one can afford them, end of".

Houses are worth what the population can afford to pay. Limit the latter and you limit the former.

Really2

overlander wrote: »

That whole concept is too hard for some people to grasp obviously. No wonder we are in the state we are in.

But why is the south east so overblown compared to the rest of the UK.

Surely they had access to the same mortages etc but still went on to cost more as a multiple than anywhere else in the UK?

mystic_trev

The Daily Telegraph is apoplectic about the idea, which on its own is reason enough to suppose there may be some merit in it.

Any regulatory cap on mortgage lending - perhaps to a maximum of three times income - would be ‘suicidal’, the newspaper declares on its front page this morning, quoting ‘property experts’ in its defence.

‘Don’t let mandarins ration mortgages’, urges a leader article in the same organ, just ahead of a half page special feature entitled: ‘Do the regulators really know best?’

The Telegraph’s fury refers, of course, to one of a number of possible proposals in tomorrow’s eagerly-awaited FSA consultative paper on new banking regulations.

As it turns out pretty quickly, however - though not until you’ve bought the paper and turned to page 2 - these property experts include a former president of the National Association of Estate Agents (originator of the headline ‘suicidal’ line), a gaggle of mortgage brokers, and a spokesman for the Council of Mortgage Lenders.

With the greatest respect, none of these – with the possible exception of the CML – can be seriously considered to be ‘property experts’.
Rather they are salesmen and media-friendly self-publicists, happy to provide a handy sound-bite at short notice.

Their objection to the FSA proposal to cap mortgages – if that indeed is what transpires tomorrow – is based on the threat that poses to their simplistic but lucrative business model, and nothing more.

http://www.citywire.co.uk/personal/-/comment/morning-line/content.aspx?ID=333093&Page=1

baileysbattlebus

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.

We bought our first house in May 1982, the mortgage was with the Halifax (building society).

The house was in Scotland cost was £23.5k, we had £300 deposit and borrowed maximum allowed. It was one application + 3 payslips and letter from employer confirming employment and length of service, no interview or anything else. We had an endowment mortgage - as that was what the Halifax were really pushing at the time - interest rates were 12% or 11%.

But there was full MIRAS at what ever tax rate you were on, which reduced the interest payments, endowments being interest only were more tax efficient than a repayment mortgage at the time. And ofcourse there was still married persons tax allowance then too. So the take home pay would have been more than the equivalent today.

Most people I know who bought then - which was a lot of people where we lived (it was a new estate) - didn't have any problems getting a mortgage. The one thing we had to have was indemnity insurance as it was a high LTV mortgage. Oh, another condition was the building & contents insurance had to be with them too. That was in the days before that was illegal.

overlander

Really2 wrote: »

But why is the south east so overblown compared to the rest of the UK.

Surely they had access to the same mortages etc but still went on to cost more as a multiple than anywhere else in the UK?

I assume a few factors, that the wages in the south east are indeed higher than the rest of the UK. This alone will not account for the difference so liar loans unrealistic multiplies. Exactly the perfect example of people needing potected from themselves.

Really2

mystic_trev wrote: »

http://www.citywire.co.uk/personal/-/comment/morning-line/content.aspx?ID=333093&Page=1

Sorry but if houses sell at lower levels in greater volums surely that is better than what is currently happening.

Did the jurno forget that EA's survive on sales and the actual price is fairly irrelevent as it is volums that make the business tick not the odd big sale?

Reason it is suicidal is who is if it did drive prices down that much who would pick up the tab (NE and bankrupt banks?)

Really2

overlander wrote: »

I assume a few factors, that the wages in the south east are indeed higher than the rest of the UK. This alone will not account for the difference so liar loans unrealistic multiplies. Exactly the perfect example of people needing potected from themselves.

What happens when you get overpopulation and high wages.
The poor (well not poor but uncompetaive) get forced out. I am not saying this is right ethicaly but surely a massive factor of the south east?