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

ruggedtoast

shakerbaby wrote: »

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

Die housing market. Die!

:money::money::money:

3x spinning Martins = doubleplusgood.

chucky

Jonbvn wrote: »

Why not both?

spot on... my next question would then be.... why is the cost of borrowing getting more expensive with rates edging upwards.

1. Because the banks don't have enough money to go around and it's more scarce so they charge more... hence increased margins...
or
2. Because the current fund allocations are being snapped up so the next tranche will have to be more expensive. the market always dictates the price of money...

it can't really be both this time becuase if they didn't have any funds to lend they wouldn't coming out with new fixed rate products every month with increased rates...

or could it be both... and they're now telling us that buying a house isn't for everyone and that if you can't afford it get yourself a bigger deposit and rent till then... it's looking that way...

JonnyBravo

ruggedtoast wrote: »

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.

You're right. It doesn't reflect what's happening now.
It's a low interest rate environment and they're not keeping prices at their peak.... perhaps just keeping them from the large fall that would happen without them? Oh and rents have fallen too.
I'm not sure why there hasn't been a larger fall so far this year but there must be some reason.... perhaps it's now at a level where the support can be provided by some parents without jeopardising their future? Perhaps there is only a small amount of people willing to do this and the effect will be short lived (God knows I wont be MEWing to get my kids a house). Perhaps it will support the market for years.
Time will tell.

the_ash_and_the_oak

chucky wrote: »

spot on... my next question would then be.... why is the cost of borrowing getting more expensive with rates edging upwards.

1. Because the banks don't have enough money to go around and it's more scarce so they charge more... hence increased margins...
or
2. Because the current fund allocations are being snapped up so the next tranche will have to be more expensive. the market always dictates the price of money...

it can't really be both this time becuase if they didn't have any funds to lend they wouldn't coming out with new fixed rate products every month with increased rates...

or could it be both... and they're now telling us that buying a house isn't for everyone and that if you can't afford it get yourself a bigger deposit and rent till then... it's looking that way...

agree w this, falling prices not going to result in increased ownership imo. buying a house has been getting more difficult and will continue to do so. this is a problem for future buyers, and also for future sellers who will have a significantly smaller pool of potential buyers to sell to. this isn't a problem if you ended up with your lifetime home, but for those on the interim rungs right down to the 1bed flats.. is more of a problem

marklv

Yawn. It has always been difficult for first time buyers who are unable to tap into the 'bank of mum and dad' - nothing new here. I think now it's harder still, but that's a good thing because it puts off people who should not be buying anyway. It's not a good thing to have loads of 20 year old kids buying properties when they can barely rub two copper coins together. Better to wait until you are 30, have saved up adequately and nicely settled in your chosen career.

I would like to see the 25 year mortgage killed off next - make 20 years the maximum.

Mips

Historical research shows that the UK housing market follows a similar pattern of growth after each property price crash or economic recession. Leading property professionals Savills are predicting property market growth of approximately 10% across the UK within the next three years, followed by a further spike taking the total growth from today’s prices to over 30% in just five years (from Savills Residential Property Focus Research May 2009). Similar growth figures have also been quoted by the Oxford Economics as can be seen in the graphs below.
After 14 months of continual price drops across the market, April and May 2009 showed an increase in first time buyer purchases - the industry’s usual indicator of a property market recovery.
The following graphs show predictions of market growth across the UK as predicted by property and economy experts Savills and The Oxford Economics (May 2009).
UK House Price Growth Predictions


Source: Savills (Click to enlarge)
House Price Growth in London and the UK

Really2

Dippychick wrote: »

Nice to see a graph done on nominal price changes rather than"real"

chucky

Dippychick wrote: »

if you take the period after 1982 on the above chart and compare it to the below it is similar... which means that we are now in the Return to Mean stage...

JonnyBravo

FallenAngel9898 wrote: »

It's no real surprise, the money doesn't exist anymore, either to lend FTB'rs with little or no deposit, or to keep property at current levels. My opinion is there should be much less debt than is around today, it's caused untold misery to large swathes of the population, I for one would like to see at least 20% deposit as a mandatory minimum as a deposit for all purchases and 50% deposit if it's a BTL purchase.

It would teach prospective homeowners the value of money and it teach BTL'rs that they should be gambling with there own money and not someone elses.

I'd change it to 15% and 50% but that's just a minor quibble. I can go with that.

:T

marklv

50% deposit is simply an impossibility for the overwhelming majority of the population. I would reckon that 25% is an acceptable target minimum and even that would be challenge. As I mentioned before it's not just the size of deposit that is the issue, but the length of the mortgage; 25 years is a hugely long time, surely we need to limit it to 20 years?