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

Graham_Devon

Tygermoth wrote: »

Ahh but if we can only afford the rent - no savings for a deposit how can we afford children? childcare? I could not stay home it could not be financially done.

So why have a child if i do not get to be a mother? or have a child that has a mother only part time?

Madly enough if we bought a house the outgoings would be lower (3 bed semi for half the PCM we pay) . It would be wildly irresponsible to have a child without as much security as possible (yes i know that bank reposses, and marriages fall apart and security can fall away)

Sigh, I see no answer.

Wow i am on a bit of a downer today... Sorry

I do, get some stress, some housing benefit, and start a baby farm.

Seriously, look at all the people around you popping out babies with not a care in the world, while you work damn hard and get no where.

If anything will keep BTL landlords going, and others in overpriced rents, it's housing benefit, or LHA should I say now, as that will keep prices artificially high.

ILW

Tygermoth wrote: »

Madly enough if we bought a house the outgoings would be lower (3 bed semi for half the PCM we pay)

That seems a bit strange, unless you are basing mortgage payments on todays very low rates.

Kenny4315

My views from another thread.


I just don't get it Devon, you think the 100% deposits are okay, yet are in favour of a 3 X salary cap. In my view the deposit is far more important than the salary multiplier. This allows the bank to reduce its exposure to the risk of a falling market, and control the downward cycle much more effectively, as the cushion would allow the bank to give the customer some scope, payment holidays or whatever, if it knew it was still in a position where it could at least recoup the mortgage amount.

I'd like to see deposits at around the 15% to 20% mark (maybe 10% in law but with a hefty premium for this type of service). This is easy to enforce as its a stragiht percentage of purchase price, salary control isn't. Salary moves overtime and with experience, also with the economic cycle, say overtime, short working weeks, etc, and can stop almost immediately through redundancy.

A deposit against a properly valued property is set at that point pretty effectively. Obviously it will move over time upward and downward, but you have a sensible start point.

A set deposit allows for a reasobale degree of control throughout the cycle. In a boom period when you remortgage the deposit threshold allows some release, but controls the amount, while it importantly gives you time in the correction, as it is going to take at least a year to fall 15% to 20%, that allows the sale or re-organising of finances.

In terms of salary cap, I wouldn't have one, I'd let the banks do business on the affordability to the client, I not fussed in reality if that works out to be 5 or 6 times salary, as the exposure to to bank and the system is eliminated by the large deposit, which would have otherwise been blown on sh8te in all proability. Obviously it has some impact on consumer spending but a debt fuelled consumer spend isn't that good anyway, as the evidence shows.

What I'd also like to see is better incentives between rates for holding a larger amount of equity, at present there is but it just isn't enough. This would encourage people to hold equity rather than releasing and spending on sh8te. A factor that Mr Clown used to defeat the 'boom and bust cycle'.

In my view if folk can't afford to put down this sort of level of deposit there not ready to buy a house, and all the costs that are entailed with one. They'll simply have to rent, in this time they'll save more deposit (enhancing a saving culture so lacking in the UK), they'll get more experienced and so command a better salary.

The problem we are in now is that the deposit was not enforced and has resulted in significant negative equity and those within the 85% to 100% bracket, in a falling market. So it really is how low can the government allow the market to go before it scr4ws up the whole economy seriously big time.

penguine

ukcarper wrote: »

The trouble is people want house prices to go back to pre hpi prices but are not prepared to act like people did then. The world has change over the last 30 years and to many people think they are entitled to what they want with out working or making sacrifices for it and most people want it now.

Rubbish.

Pre hpi prices are those of 10 years ago. My OH bought our flat then, just at the end of the last crash. He had been saving ever since he started work 5 years earlier, and he had just enough to put down a 10% deposit on a 2-bed property that needed a lot of improvements, in an unfashionable but safe area. He borrowed no more than 3x income and our monthly payments were always affordable.

Reversing the insane, absolutely suicidal bubble of the past decade does not mean we're going revert to life as it was in the 1970s. It just means the way we as a society behave with regards to mortgages and debt is going to have to become more sensible.

How you think people are "prepared" to act has nothing to do with it. The previous model was unsustainable and there is now no going back.

ukcarper

penguine wrote: »

Rubbish.

Pre hpi prices are those of 10 years ago. My OH bought our flat then, just at the end of the last crash. He had been saving ever since he started work 5 years earlier, and he had just enough to put down a 10% deposit on a 2-bed property that needed a lot of improvements, in an unfashionable but safe area. He borrowed no more than 3x income and our monthly payments were always affordable.

Reversing the insane, absolutely suicidal bubble of the past decade does not mean we're going revert to life as it was in the 1970s. It just means the way we as a society behave with regards to mortgages and debt is going to have to become more sensible.

How you think people are "prepared" to act has nothing to do with it. The previous model was unsustainable and there is now no going back.

How do you get from my post that I support the house price bubble

MissMoneypenny

Kenny4315 wrote: »

I just don't get it Devon, you think the 100% deposits are okay, yet are in favour of a 3 X salary cap. In my view the deposit is far more important than the salary multiplier. This allows the bank to reduce its exposure to the risk of a falling market, and control the downward cycle much more effectively, as the cushion would allow the bank to give the customer some scope, payment holidays or whatever, if it knew it was still in a position where it could at least recoup the mortgage amount.

100% mortgage in a rising market will be ok and I think they will return. At the moment, banks will require a hefty deposit as the house prices have a long way to fall yet. It is better that the buyer risks their own money than risk the banks, in a falling market.

IMO a 3x salary for joint is enough with 4x for singles. With rents falling, renters will have more money in their pockets (if they keep their jobs) to be able to save.

penguine

ukcarper wrote: »

How do you get from my post that I support the house price bubble

From this statement:

The trouble is people want house prices to go back to pre hpi prices but are not prepared to act like people did then.

Kenny4315

If house prices drop by 60% or 70% the country is well and truly scr3wed. The money isn't stored in the coffers for a rainy day it's all been spent on cr7p, by both the individual and the government even Mr CLown knows that a total meltdown, ie beyond a sensible correction of around the 35% from peak, is a disaster of epic proportions.

Those wishing for a crash of such proportions would be buying in an economy on a par with one of the Eastern Bloc countries. Billions of personal wealth and government wealth wiped out wouldn't be good.

The result would be mass unemployment, and massive company, and personal bankruptcy. Those left working would be doing so for nothing as taxation will shoot through the roof.

ukcarper

Kenny4315 wrote: »

My views from another thread.


I just don't get it Devon, you think the 100% deposits are okay, yet are in favour of a 3 X salary cap. In my view the deposit is far more important than the salary multiplier. This allows the bank to reduce its exposure to the risk of a falling market, and control the downward cycle much more effectively, as the cushion would allow the bank to give the customer some scope, payment holidays or whatever, if it knew it was still in a position where it could at least recoup the mortgage amount.

I'd like to see deposits at around the 15% to 20% mark (maybe 10% in law but with a hefty premium for this type of service). This is easy to enforce as its a stragiht percentage of purchase price, salary control isn't. Salary moves overtime and with experience, also with the economic cycle, say overtime, short working weeks, etc, and can stop almost immediately through redundancy.

A deposit against a properly valued property is set at that point pretty effectively. Obviously it will move over time upward and downward, but you have a sensible start point.

A set deposit allows for a reasobale degree of control throughout the cycle. In a boom period when you remortgage the deposit threshold allows some release, but controls the amount, while it importantly gives you time in the correction, as it is going to take at least a year to fall 15% to 20%, that allows the sale or re-organising of finances.

In terms of salary cap, I wouldn't have one, I'd let the banks do business on the affordability to the client, I not fussed in reality if that works out to be 5 or 6 times salary, as the exposure to to bank and the system is eliminated by the large deposit, which would have otherwise been blown on sh8te in all proability. Obviously it has some impact on consumer spending but a debt fuelled consumer spend isn't that good anyway, as the evidence shows.

What I'd also like to see is better incentives between rates for holding a larger amount of equity, at present there is but it just isn't enough. This would encourage people to hold equity rather than releasing and spending on sh8te. A factor that Mr Clown used to defeat the 'boom and bust cycle'.

In my view if folk can't afford to put down this sort of level of deposit there not ready to buy a house, and all the costs that are entailed with one. They'll simply have to rent, in this time they'll save more deposit (enhancing a saving culture so lacking in the UK), they'll get more experienced and so command a better salary.

The problem we are in now is that the deposit was not enforced and has resulted in significant negative equity and those within the 85% to 100% bracket, in a falling market. So it really is how low can the government allow the market to go before it scr4ws up the whole economy seriously big time.

Although I agree deposits are important but house prices are linked to salary multiples.
Salary multiples are very crude and don’t take into account interest rates but unfortunately historically that’s the way mortgages have been worked out

Kenny4315

MissMoneypenny wrote: »

100% mortgage in a rising market ....

That has been the whole problem ... of remortgaging and releasing equity. The market rise and fall isn't precise, and neither is salary caps. Deposits are precise enough to give time, to either sell or restructure debt/income/costs.