Availability of Credit or are We just Skint?

Graham_Devon

mbga9pgf wrote: »

Last month I saved 90% of our joint salary after rent payments.

Its called making sacrifices.

And did you do that on 23k, or a much much higher amount?

Thrugelmir

Kev09 wrote: »

No my point is that deposit is not the be all and end all! mortgages should be based on affordabilty if the guy is only buying a 70k house and his affordabilty is ok then the banks should stop following equally stupid business models and lend to these people. If he wants 200K then by all means 50k deposit would be reasonable.

I really do not know where you are going with this pious attitude that in order to buy a home you should be first made to prove that you can save therefore must be responsible!

But you seem to agree with what the banks are doing and as we all know the guys at the banks never get it wrong do they?

Why should the value of the house matter? Local variations in both salaries and house prices make this no better a system than a basic requirement to save for a deposit.

By saving for a deposit this enables other people to borrow money. Principle of mutual building societies. It creates a self funding , self supporting and commiunity based system.

mbga9pgf

Graham_Devon wrote: »

And did you do that on 23k, or a much much higher amount?

Combined salary of around 67K.

Kev09

Thrugelmir wrote: »

Why should the value of the house matter? Local variations in both salaries and house prices make this no better a system than a basic requirement to save for a deposit.

By saving for a deposit this enables other people to borrow money. Principle of mutual building societies. It creates a self funding , self supporting and commiunity based system.

Why should the value of a house matter? is that a serious question? of course it matters.

The lower the value of the loan, the less the bank will potentially lose if the loan defaults, loans should only be dished out on affordabilty. When I bought my first house 7 years ago myself and my wife borrowed our deposit money out of a credit union so it didn't show up on credit searches, the next time i took out a 125% NR effort, there was never a problem as I have always had a decent cashflow, I am not saying deposit is not important, it is, but you are putting way too much emphasis on it, my savings I have rammed into properties, stocks and my businesses, I just don't keep money in the bank. Should I be made to put my profits into a savings account?

Graham_Devon

mbga9pgf wrote: »

Combined salary of around 67K.

3x the salray in the OP makes a slight difference

Thrugelmir

Kev09 wrote: »

Why should the value of a house matter? is that a serious question? of course it matters.

The lower the value of the loan, the less the bank will potentially lose if the loan defaults, loans should only be dished out on affordabilty. When I bought my first house 7 years ago myself and my wife borrowed our deposit money out of a credit union so it didn't show up on credit searches, the next time i took out a 125% NR effort, there was never a problem as I have always had a decent cashflow, I am not saying deposit is not important, it is, but you are putting way too much emphasis on it, my savings I have rammed into properties, stocks and my businesses, I just don't keep money in the bank. Should I be made to put my profits into a savings account?

I'm trying to put the whole issue into perspective. As to why 90% funding across the board is unrealistic.

Whether you call it deposit or savings or cash. Doesn't matter as it money.

In LLoyds 2008 accounts their shareholders capital was £9 billion pounds.

Their total lending was £400 billion.

So £391 billion of cash comes from consumers, Governments and Companies. This is money they lend.

So for every £1 they lend. Only 97.75% comes from cash deposits.

Without enough deposits they can't lend. Fact.

NR is a classic example of an unsustainable business model. In the end they ran out of cash. As nobody (wholesale money markets) would lend to them as they were regarded as to high risk.

nearlynew

nearlynew wrote: »

Does all that include your empty "large detached rural property" ?

That must cost a bit in maintenance.

Why haven't you answered my question, Mctittish?

I am genuinely interested in whether your monthly outgoings include maintaining your large detached rural property.

tara747

Graham_Devon wrote: »

I very highly doubt 10k is just another year saving on 23k.

How is the person supposed to live while they save more than half their take home pay!?

I'm saving at least half my take home pay at the mo. I earn a good bit more than £23k and my overheads are not that big, so I'm not saying it's possible for everyone! But it is doable. My savings are for a house deposit (not planning to buy till about 2011). I see it as short term pain for long term gain. OH is well and truly on board and saving half his salary too (although he needs a car for work so his outgoings are a little higher than mine).

Having said all that, if you're living somewhere where rent is high, you need a car for commuting or have children (I hear they're very expensive!), it must be very frustrating trying to save and I do sympathise.

the_ash_and_the_oak

kinda feeling this kind of thread misses the point. its not really about IF saving a deposit is doable imo - its whether people in sufficient numbers are doing so. if they are not, then there will be insufficient FTBs to meet lending criteria and price levels cannot be maintained.

kriss_boy

Unless the lenders relax there criteria and allow 10% deposits again in the future.

The difference between 10% and 20% is more than double if you consider most people will have at least some cash in the bank. Saving a further 2 or 3 grand is a lot easier than a further 7 or 8.