We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
Debate House Prices
In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non MoneySaving matters are no longer permitted. This includes wider debates about general house prices, the economy and politics. As a result, we have taken the decision to keep this board permanently closed, but it remains viewable for users who may find some useful information in it. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Ban on 100% mortgages to be dropped.
HAMISH_MCTAVISH
Posts: 28,592 Forumite
http://www.guardian.co.uk/money/2009/jul/12/ban-100-home-loans-droppedTough new curbs on mortgage lending to limit loans and force homebuyers to come up with far bigger deposits are being eased amid fears that they could wreck the emerging recovery in the housing market.
Earlier this year, Gordon Brown asked the Financial Services Authority, the government watchdog, to consider a ban on mortgages with a high loan-to-value (LTV) rate - such as those requiring deposits of less than 10% - and on so-called high-multiple mortgages, which allow buyers to borrow more than three or four times their income.
FSA executives told a parliamentary committee last week that such restraint could lock first-time buyers out of the market just as they were starting to regain confidence. Their warnings reflect a growing consensus in Whitehall that banning higher-risk mortgages may be counterproductive.
The rethink comes at a critical moment for the property market, with many experts now arguing that the worst of the crash is over.
.
“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
0
Comments
-
There isnt a ban on 100% mortgages in place. It is the banks that have decided that 25% mortgages are sensible not the government. With a second round of heavy bank losses coming up, I wouldnt be waiting for a return to 100% mortgages. I would be surprised to see any new mortgage deals with less than 10% deposit requirement with affordable rates for a very long time yet.
What your article doesnt mention is the 10% deals that are in place come with rates that are 4%+ above BOE BR and are massively unaffordable once rates go back up.0 -
Mmmm, don't really see any emerging recovery in the housing market except perhaps in the minds of VI's, we are still going downhill. As far 100% mortgages go, do they really need banning anyway after what has happened in the last 18 months ?, you would seriously have to be a knob of epic proportions to take one out, even if they if/when they come back.
Saving the largest deposit you can over the next 4-5 years is surely the best way to go about things, reducing the mortgage that you will have to take out, therefore reducing not only the amount of interest you will be paying the bank, but more crucially putting yourself in a good position to ride out IR hikes and economic downturns in the future.0 -
There isnt a ban on 100% mortgages in place.
No you're right.
There is currently no ban, there was however an assumption from many bears on many forums that such a ban was now almost guaranteed following Broons statements about 100% mortgages and Turners comments in the review.
The idea of a ban on high risk mortgages is what has been dropped, but that wouldn't fit in a thread title.:D
As for the rest, no chance. Liquidity for new lending is increasing, and will likely continue to do so. There will be no further big falls, although some retrenchment over next winter is likely.
The crash has run it's course, and we are now in the "bump along the bottom" phase. Further small gains and small falls will be common over the next 6-18 months, before prices start rising consistently thereafter.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »The crash has run it's course, and we are now in the "bump along the bottom" phase. Further small gains and small falls will be common over the next 6-18 months, before prices start rising consistently thereafter.
The money does not exist to push prices up from their current levels in 18 months time, as far as the crash has run it's course, how do you work that out when all the indice's trends are down ?, and that is after the spring bounce. Let's see where we are at Christmas hey.
The last crash lasted 84 months, this one you think is over in 18..... mmmm like I say, let us see.0 -
Saving the largest deposit you can over the next 4-5 years is surely the best way to go about things, reducing the mortgage that you will have to take out, therefore reducing not only the amount of interest you will be paying the bank, but more crucially putting yourself in a good position to ride out IR hikes and economic downturns in the future.
For the last couple of years, in the middle of a crash, your theory makes sense, IF you live in an area where rent is cheaper than mortgage payments, AND where prices have dropped by 25% or so, and of course for large parts of the country that is not the case.
But when prices are rising, even by just a few percent a year, such an approach makes much less sense. Just a 5% per year rise for 5 years is a total rise of almost 30%. Very few people can save enough to compensate for an additional 30% on prices in just 5 years.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »No you're right.
There is currently no ban, there was however an assumption from many bears on many forums that such a ban was now almost guaranteed following Broons statements about 100% mortgages and Turners comments in the review.
The idea of a ban on high risk mortgages is what has been dropped, but that wouldn't fit in a thread title.:D
As for the rest, no chance. Liquidity for new lending is increasing, and will likely continue to do so. There will be no further big falls, although some retrenchment over next winter is likely.
The crash has run it's course, and we are now in the "bump along the bottom" phase. Further small gains and small falls will be common over the next 6-18 months, before prices start rising consistently thereafter.
It doesnt make a difference. And, no mention of Multiples limits in the article, a much fairer and effective way of controlling the market. No interference from rich parents for example.
The next 12 months will prove your "bump along the bottom" theory completely wrong. No YOY positive till 2013 at the earliest.0 -
The money does not exist to push prices up from their current levels in 18 months time,.
People were saying that in February this year as well.
They were wrong then too.;)“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »But when prices are rising, even by just a few percent a year, such an approach makes much less sense. Just a 5% per year rise for 5 years is a total rise of almost 30%. Very few people can save enough to compensate for an additional 30% on prices in just 5 years.
Agreed, however there will be no YoY rises in the housing market for many years, possibly a decade.0 -
HAMISH_MCTAVISH wrote: »People were saying that in February this year as well.
They were wrong then too.;)
We have a third of 2007 lending levels, and that's with QE, the future is not bright.0 -
And further bank losses coming soon...0
This discussion has been closed.
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352.1K Banking & Borrowing
- 253.6K Reduce Debt & Boost Income
- 454.3K Spending & Discounts
- 245.2K Work, Benefits & Business
- 600.8K Mortgages, Homes & Bills
- 177.5K Life & Family
- 259K Travel & Transport
- 1.5M Hobbies & Leisure
- 16K Discuss & Feedback
- 37.7K Read-Only Boards