Keep 100% mortgages?

Graham_Devon

Really2 wrote: »

You have to start somewhere but I do not think 100% was the right starting point:)

Nor do I personally.

But I can see the problems other people face, especially those renting at high prices, because of the higher local house prices, who also need a high deposit.

Down here, people are being literally forced to leave the area they grew up in.

I was one of those people.

I could afford the payments easily (I am now, just in a different area and could afford much more if I wanted to, I'm already overpaying). But I have been forced to move simply because others are buying up the homes for investments and second homes.

With prices 11-12x salary here, the mortgage above would not have helped me, but it would certainly help some where the excesses are not quite as high.

The house prices in the area I left have now dropped 24% according to the BBC, where the more affordable place I live has dropped just 1.2% and actually saw growth last quarter apparently.

To me at least, this shows how destructive rampant prices can be, due to investments, profit and second homes. Not only by forcing people who live there out of the area, but also the destructive fall the prices have when empty homes are being sold for prices no one can afford when the bubble pops.

I'm off on a tangent. But that mortgage, I believe, would help people like myself live in a house, as a home. Instead of being forced to rent, not able to save deposits that easy. That's all it was about I guess.

Personally for me though, i still chose the 90% mortgage when I could have had 125% buying in 2006.

JonnyBravo

Graham_Devon wrote: »

I was looking for input, not to just be told it's duff really, but can't really be bothered anymore, it's gone too far.

We all seem to just be bickering, yesterday I was wronged by the same people for saying people should save deposits if they want more than the 3.5x income the FSA may have imposed, and told I was stupid. Today told it's stupid this way.

I'm not quite sure what people want, which is why i came up with this and looked for suggestions.

I really would like to discuss, from a middle of the road starting point, which is why I asked for your input on the examples you were giving me, but it seems it's easier to just back down (this ins't a pop!!!) and I'm still learning about this board!

But I really am left wondering how I can be wrong every which way I turn with the same people using extremes to prove I'm wrong.

Just the other day, I was told my sugestion was wrong as house prices only had another 5% to fall and they were bottoming out. Today I'm wrong (by the same people) based on examples of house prices falling much further, or indeed, just falling in a couple of decades!

Everyone can be wrong if people consistently change the goal posts to use any factor to prove you are wrong, but that doesnt really help anything.

I guess what we have achieved, is found that no product will suit everyone and no mortgage product has 0% risk.

I don't remember saying saving for a deposit was wrong. In fact, I know I didn't contribute.

So what do I think is best?
What I wouldn't agree with is a hard and fast multiple..... other debts need to be considered as does overall income.
It's easier to say I want each case to be considered on it's merits but of course it is this lack of rules combined with the fact that no real stringent assessments have been made for the last 10 years that got us into this mess.

I'm not sure there is an answer. Whatever the rule, whatever the assessment, eventually people start to bend said rule or procedure to "get ahead" of the opposition.
I'm a believer that boom and bust are unavoidable as it's all fed by human nature and our desire to "compete"

chucky

Really2 wrote: »

I think that is fairly sound because I think

1) The borrow should be able to decided a certain amount of their own risk (A bank will not know your future worth but you may)
2) A bank should always cover there risk. So a 4.5X salary may be a risky multiple lending only 50% of the asset value disolves the risk to the bank.

it's better than was in place - i can still see holes in the system though.

the 4.5 multiple person would have the same risk as losing their job and being reposessed than the 3 X salary multiple. so the multiples have nothing to do with repayments - just affordability, as with a good LTV you could take payment holidays.

to be fair it's better than it was

Really2

chucky wrote: »

it's better than was in place - i can still see holes in the system though.

the 4.5 multiple person would have the same risk as losing their job and being reposessed than the 3 X salary multiple. so the multiples have nothing to do with repayments - just affordability, as with a good LTV you could take payment holidays.

to be fair it's better than it was

Dont get me wrong this is only if we had to set multiples.

I think I wrote on the last one all would have to take affordability in to account.

Personaly I think it should all be affordability. People will always abuse a strict platform some how.

Really2

Graham_Devon wrote: »

Nor do I personally.

But I can see the problems other people face, especially those renting at high prices, because of the higher local house prices, who also need a high deposit.

Down here, people are being literally forced to leave the area they grew up in.

I was one of those people.

Graham i lived in a slightly different area.

Where I lived it was about £700pm to rent a £300K house.

But I was a home owner so I moved out the area as it would have been too risky to move up the ladder.

I know it's a shame to move out of a certain area which you grew up in.
But don't you feel a bit better away from the place and just being a "tourist" occasionally.;)

People get forced out of areas as richer people overspill. No mortgage cap would stop that unfortunately.:(

chucky

Really2 wrote: »

Dont get me wrong this is only if we had to set multiples.

I think I wrote on the last one all would have to take affordability in to account.

Personaly I think it should all be affordability. People will always abuse a strict platform some how.

yes you're right - affordablity is determined by the individual.
everyone is different and my aim is to pay down as much debt as quickly as possible - for others it's doing it long term.

the banks will have a hard time determining minimum affordability as it will vary from person to person but also region by region.

this is why these discussions have so many extremes. graham in Devon and will have a different viewpoint to you in the North East and from me in London to what affordability would be.

but hey, this forum is entertainment anyway!

where's wookie boy anyway

Graham_Devon

Really2 wrote: »

Graham i lived in a slightly different area.

Where I lived it was about £700pm to rent a £300K house.

But I was a home owner so I moved out the area as it would have been too risky to move up the ladder.

I know it's a shame to move out of a certain area which you grew up in.
But don't you feel a bit better away from the place and just being a "tourist" occasionally.;)

People get forced out of areas as richer people overspill. No mortgage cap would stop that unfortunately.:(

Oh i know, the mortgage thing and the excesses of the last few years are two seperate subjects.

The up side is my parents accidentally made a fortune on it, over 600% profit for their home in 8 years. So the priced out thing was only recent. House prices will always be higher here, thats a fact of the area. But they went absolutely crazy.

Were talking £380k for a 3 bedroom, semi detached ex council house. Not even a garage. That's why I was forced out. Up over 600% in 8 years.

So for me, being able to afford a property really is a big thing, most of the people I know my age are renting with not even a chance of being able to afford these deposits needed. Just a 10% deposit equates to £38,000 for an ex council house. That's my issue!

My place was 150k for a 2 bed terrace so small I could lie down in the lounge and touch one end of the room with my foot and the other end with my hands, very easily, and I'm 6ft!

For mine, i believe that the 100% mortgage earlier would suit.

mewbie_2

Graham_Devon wrote: »

My place was 150k for a 2 bed terrace so small I could lie down in the lounge and touch one end of the room with my foot and the other end with my hands, very easily, and I'm 6ft!

You could have just said a n x 6' lounge I suppose.

Sorry... picky. All of post sensible... 600% increase.. absolutely amazing. Magic money from a magic Chancellor.

Thrugelmir

The main issue at the moment is that no one knows where the property market is going to settle at. Regional variations in terms of price falls are wide making "average" house price figures rather meaningless. Property prices are only falling slowly due to the availability of cheap credit for those can obtain a mortgage and the number of property owners trying to rent rather than sell.

Maybe the Government should bring in a maximum 80% LTV rule for the primary mortgage on a residential property. Banks and other institutions lending in this market would be regulated in same way. This would at least cap the risk to the lending institution. Also as there is a restricted amount of mortgage funding available it would help sharing it out on a fairer basis.

If a borrower wished to find an additional finance this would at their risk and cost. As the money borrowed would be a far higher rate.

This course of action could accelerate the fall in property prices in the short term but at least bring stability to the market again. Until stability returns there will be no confidence in buying.

Once stability returns then the threshold could be raised to either 85% or 90% LTV on property up to a price level of say £150,000. This would at least help FTB's. Any borrowing over the 80% would be subject to a mortgage indemnity premium.

All mortgages to be on a repayment basis, (interest only to be used temporarily in cases of financial hardship).

As for people complaining about saving for a deposit. My grandparents bought their first house in 1933. It took them them 4 years to save the £25 deposit ( house cost £250). To do this my grandfather walked 4 miles a day each way to work just to save the bus fare. Maybe we all need to rethink our lives ( I include myself) and realise how easy life has become.

mewbie_2

Thrugelmir wrote: »

As for people complaining about saving for a deposit. My grandparents bought their first house in 1933. It took them them 4 years to save the £25 deposit ( house cost £250). To do this my grandfather walked 4 miles a day each way to work just to save the bus fare. Maybe we all need to rethink our lives ( I include myself) and realise how easy life has become.

Well I'm certainly going to tell my grandkids how I suffered to buy a house - gave up eating for three years "Did you Gramps?", no sex due to fear of calorie loss "Really Gramps?", and had to work evenings at a gay strip joint "Oh Poor Grampy".