Homebuyers could be forced to put down a deposit of at least 15 per cent

bluejake

Homebuyers could be forced to put down a deposit of at least 15 per cent - the equivalent of £24,000 in today's market - following measures announced today.
In a major review of the banking crisis, Lord Turner of Ecchinswell, chairman of the Financial Services Authority, said that banks could be prevented from offering supersized mortgages.
The proposal, which will be explored in further detail in a paper to be published in September, marks an end to the reckless lending to homebuyers, typified by Northern Rock's offer, at the height of the boom, of 125 per cent mortgages.


Better late than never I suppose although a lot of taxpayers money would have been saved had sense prevailed a few years ago when it it was clear house price inflation was out of control - fueled by irresponsible lending.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5931461.ece

dopester

From The Sunday Times
March 22, 2009
Five weird ways banks snub you
In today’s mad lending world even the good customers are bad


Mortgage lending last month fell 15% to only £10 billion — its lowest level for eight years — despite government pledges to get the market moving again.

Brokers report that banks and building societies are increasingly rejecting applications even for those with big deposits or good credit ratings.

Ian Gray of the broker largemortgageloans.co.uk said: “Each day lenders seem to dream up a new reason not to lend to ‘good’ borrowers with perfect credit ratings and deposits in excess of 40%.”

3 page Sunday Times article

chucky

bluejake wrote: »

Homebuyers could be forced to put down a deposit of at least 15 per cent - the equivalent of £24,000 in today's market - following measures announced today.
In a major review of the banking crisis, Lord Turner of Ecchinswell, chairman of the Financial Services Authority, said that banks could be prevented from offering supersized mortgages.
The proposal, which will be explored in further detail in a paper to be published in September, marks an end to the reckless lending to homebuyers, typified by Northern Rock's offer, at the height of the boom, of 125 per cent mortgages.


Better late than never I suppose although a lot of taxpayers money would have been saved had sense prevailed a few years ago when it it was clear house price inflation was out of control - fueled by irresponsible lending.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5931461.ece

that's really going to hurt people that can't get a deposit together.

they're going to have to be keep on renting and hope for house prices to drop .

ad44downey

bluejake wrote: »

Homebuyers could be forced to put down a deposit of at least 15 per cent - the equivalent of £24,000 in today's market - following measures announced today.
In a major review of the banking crisis, Lord Turner of Ecchinswell, chairman of the Financial Services Authority, said that banks could be prevented from offering supersized mortgages.
The proposal, which will be explored in further detail in a paper to be published in September, marks an end to the reckless lending to homebuyers, typified by Northern Rock's offer, at the height of the boom, of 125 per cent mortgages.


Better late than never I suppose although a lot of taxpayers money would have been saved had sense prevailed a few years ago when it it was clear house price inflation was out of control - fueled by irresponsible lending.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5931461.ece

It should be at least a 25% deposit. That'd have the added benefit of forcing house prices down further which means they wouldn't have to borrow as much int he first place which has got to be a good thing.

lostinrates

ad44downey wrote: »

It should be at least a 25% deposit. That'd have the added benefit of forcing house prices down further which means they wouldn't have to borrow as much int he first place which has got to be a good thing.

TBF for many forced down house prices aren't as good as they are for lots of 'us'.

15% seems a reasonable deposit on a home in a more expensive area, on a decent level of affordabilty, to me anyway.

ray123

It should only take 2-3 years to save the deposit.
Is a very good idea imo, for the reason that it will teach FTBs the art of budgeting...

If someone cannot save a deposit of 30k over 3 years (833.33 per month), how can they afford to puchase a property and keep up with mortgage repayments?

Broken_hearted

A sensible idea to show buyers the expense involved in buying a house. If you can't raise the deposit you would struggle to maintain the mortgage and other costs.

Time2Go_25

ray123 wrote: »

It should only take 2-3 years to save the deposit.
Is a very good idea imo, for the reason that it will teach FTBs the art of budgeting...

If someone cannot save a deposit of 30k over 3 years (833.33 per month), how can they afford to puchase a property and keep up with mortgage repayments?

Probably because they are already paying more in renting a property than they would in a mortgage.

penguine

chucky wrote: »

that's really going to help people that can't get a deposit together.

they're going to have to be keep on renting and wait for house prices to drop .

Have corrected your post for you.

lostinrates

pdel61 wrote: »

Probably because they are already paying more in renting a property than they would in a mortgage.

Even if paying same (or less) in rent than they would on a mortage, saving double your ''mortgage'' payment would be hard: Some could do it quickly, others, shouldn't be penalised for acquiring a pot more slowly. For exmple, for DH and I the only people we were punishing when living frugally, were ourselves, but if we had children etc I would have expected savng to be a longer process. I wouldn't, however, expect it to be too easy..I think you do have to show some commitment to meeting paymentsif expecting a bank to lend to you. Perhaps a sort of bank savings scheme leading to mortgage, so you have already shown your commitment to meeting payment dates etc.

mitchaa

ray123 wrote: »

It should only take 2-3 years to save the deposit.
Is a very good idea imo, for the reason that it will teach FTBs the art of budgeting...

If someone cannot save a deposit of 30k over 3 years (833.33 per month), how can they afford to puchase a property and keep up with mortgage repayments?

Unless you are high earners, the above would be next to impossible. The requirement for 15/25% deposits would be ridiculous if you ask me.

Average family with 2 kids, 1 male earning average £26k income and paying normal 6% pension contributions and a P/T mum earning £11k with no pension, the income of £37k is as below

£1515+£790 = £2305

Typical 3 bed SD property = £750
CT and water rates = £150
Car expenditure incl petrol/tax/MOT/Servicing = £200
Necessary bills = £250
Food = £400
Child costs, clothing, leisure, school clubs = £200

That's leaving around £350 spare cash leftover however i've not taken into account birthdays, xmas's, holidays, adult leisure, any debts etc etc

These are typical incomes and expenditures of average families, so where on earth do you suggest that they find a spare £833pm from when taking into consideration all the above

For an average family to save £30k, i think you would be looking at closer to 10yrs, not 3yrs. What would be the point in saving for 10yrs, 10yrs worth of wasted rental and missed equity if you ask me.

This is getting ridiculous expecting everyday normal people to save 15-25%

Perhaps if you are living with parents, or in the military, £833pm savings may be possible on modest incomes but if living in the real world, and having to pay expenditure like above, not a chance.