Banks will only lend to well-off homeowners. That’s bad news for first-time buyers

michaels

The bank of mummy and daddy is mentioned and if you link this to the earlier mention that mummy and daddy are exactly who the banks want to lend to and that they probably have loads of equity there is still plenty of scope for mummy and daddy to mew to pay the deposit on flats for Tarquin and Fiona

It was also suggested that a 15% deposit should be plenty - is this the case? Repossession takes a long time with arrears mounting up, prices may well fall again - not a certainty but if you imagine a BoE style probability fan then some parts will be negative more than 15%. And of course forced sale at auction will net a lot less than open market sale price. Oh not forgetting that whilst average prices may not fall very much different regions / property classes may well do - but no one can know in advance which properties those will be.

So is 15% really 'sufficient' to protect the lender?

chucky wrote: »

interesting article - if you agree with the sentiment or not.

will future property owners be even older than they are now?





http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6801131.ece

Graham_Devon

This gives an indication of where banks actually think house prices are heading in my opinion.

They are calculating their exposure to risk first, and then trying to eliminate it, as all business would.

chucky

Graham_Devon wrote: »

This gives an indication of where banks actually think house prices are heading in my opinion.

They are calculating their exposure to risk first, and then trying to eliminate it, as all business would.

i think that they may be taking this a bit further than just looking at the property value and looking at the type of property buyer. they maybe assuming a single FTB to only buy with a high LTV (90%/95%) and an FTB couple having a higher deposit and a 2nd mover to have a higher deposit.

these are assumptions of course but it would make sense

Dan:_4

Graham_Devon wrote: »

This gives an indication of where banks actually think house prices are heading in my opinion.

They are calculating their exposure to risk first, and then trying to eliminate it, as all business would.

More and more banks are starting to re-introuduce 90% LTV mortgages for FTB and remorgages.

For me, this gives an indication of where banks think house prices are heading.

Graham_Devon

Dan: wrote: »

More and more banks are starting to re-introuduce 90% LTV mortgages for FTB and remorgages.

For me, this gives an indication of where banks think house prices are heading.

They may be introducing them. But as you can see from the story above, it does not mean they are actually using them.

Having them there, and actually giving them are two different things.

Dan:_4

Graham_Devon wrote: »

They may be introducing them. But as you can see from the story above, it does not mean they are actually using them.

Having them there, and actually giving them are two different things.

Sure, they are not giving them away like before, but some will qualify. The rates are high though - My Sister who has recently put her flat on the market has been approved for a 90% LTV mortgage with the Halifax - but it's something like 7.09% fixed for 3 years!

chucky

Graham_Devon wrote: »

They may be introducing them. But as you can see from the story above, it does not mean they are actually using them.

Having them there, and actually giving them are two different things.

you need to take that point a bit further and ask yourself why they aren't giving them out... is it?

1. They are only providing 90% loans to maybe high earning professional career people
or
2. They have a limited number of funds and can't give finance to everyone that applies.

Jonbvn

chucky wrote: »

1. They are only providing 90% loans to maybe high earning professional career people
or
2. They have a limited number of funds and can't give finance to everyone that applies.

Why not both?

ruggedtoast

At the end of the day low LTV ratios means less purchasing power to FTBs and lower house prices in the end.

I find a paradigm where the older property owning "classes" manage to organise themselves enough to manipulate both rents and house prices while simultaneously MEWing to keep their own children in the loop in a higher interest rate environment; and also paying for their own retirements - a bit unlikely.

But what do I know - it just doesnt seem to reflect whats happening now.

shakerbaby

Another nail in the coffin of the housing market. :T