Proposed mortgage cap 'suicidal' say 'property experts'

overlander

I should add although i am in favour of more regulation i do not think there is any chance of this becoming law. No party would want to be responsible for crashing the housing market.

workingNOMAD_2

They should cap it at 3 times and then houses might be affordable again and all these dreamers who wont lower their prices for houses might wake up a bit!

edgex

now is the time to introduce any of these sort of changes, when the market is in such a mess it isnt really working properly.

if property prices do reach affordable levels, who does it negatively effect?
very few people
its less than 40% of properties that have a mortgage on them, & a lot of those will have been running for some time, say 10years+
so those affected would be people that bought at the top of the bubble & the speculators that drove the prices up.
they took a gamble, it hasnt worked
oh boo woo

baileysbattlebus

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?

We live in the south east and in general wages can be quite a bit higher than elsewhere - unless you're in the public sector.

The average full time salary in the Local Authority area we live in (Wokingham) is just under £42k and the median salary is £32k.

Quite a few people work in London.

But on door step (about 2 miles down the road we have the Microsoft Headquarters, ING headquarters. Prudential headquarters, Thames Water headquarters, a bit further Waitrose headquarters and about 15 - 20 miles away we have Pepsico UK and Ireland Headquarters and Vodafone Headquarters, Panasonic R&D centre, etc etc

and that just in our little bit, off the top of my head.

JP45

I'm not convinced of the need for an absolutely rigid limit of 3x income, but I would like us to move to a situation where in future:

1. Most mortgages are limited to around 3x income or 2.25x joint income, as in the past, unless the lender sees very clear evidence that they can afford to borrow more.

2. Most mortgages are limited to 90% LTV. 100% mortgages become the exception and absolutely no mortgages >100%.

2. Self-certified mortgages, aka liar's loans, are abolished. I can see no justification for these. How on earth can a bank or building society lend someone a six figure sum without proof of the borrower's income. Sheer madness.

Really2

edgex wrote: »

now is the time to introduce any of these sort of changes, when the market is in such a mess it isnt really working properly.

if property prices do reach affordable levels, who does it negatively effect?
very few people
its less than 40% of properties that have a mortgage on them, & a lot of those will have been running for some time, say 10years+
so those affected would be people that bought at the top of the bubble & the speculators that drove the prices up.
they took a gamble, it hasnt worked
oh boo woo

Was 1999 the height of the bubble and everyone that owns a house and lives in it a speculator?

I would say most FTBs in the last 10 years were not speculators?

So you sacrifice them to make a new crop?

I can't see what is wrong with afordability

Surely a policy that is adaptive to change (EG interest rates going up affects afordability)

Is better than some one size fits all solution that ticks the right boxes ethicaly does not work in reality.

Could anybody give an example of what is wrong with afordability?

Really2

JP45 wrote: »

I'm not convinced of the need for an absolutely rigid limit of 3x income, but I would like us to move to a situation where in future:

1. Most mortgages are limited to around 3x income or 2.25x joint income, as in the past, unless the lender sees very clear evidence that they can afford to borrow more.
.

Are you not sacrificing family's for single people?

I could only afford the same house as a single counterpart in that case so what would happen to familys?

surely a single person does not need the same property as a family?

piggeh

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.

Wages will be downgraded for construction related professions. Didn't they also go up in correlation with house prices in the first place though? If builders expect the same wage as before they're living in the same dream bubble as those that expect house prices to always go up.

The major component cost for housebuilders was the cost of land. If house prices drop then the cost of land will drop in line with it, it's entirely realistic that profits will still be achievable if houses dropped to a 3x multiplier as had been the case historically.

lostinrates

Really2 wrote: »

Are you not sacrificing family's for single people?

I could only afford the same house as a single counterpart in that case so what would happen to familys?

surely a single person does not need the same property as a family?

We do have quite a large number of single parent families though

Gorgeous_George

There needs to be a limit to the amount of debt an individual can accrue. whether this should be 3x, 4x or 5x I don't know. Things change in life and affordability calculations change with them therefore affordability should be a factor but there still needs to be an upper limit for personal debt.

The limit needs to be total debt and not just mortgage debt.

Maybe the limit should be 0.5x at age 18 rising to 3x at age 21 and 5x at age 25.

GG