should erps be banned?

ILW

ninky wrote: »

to which centuries and territories are you referring?

Pre 20th century virtually everywhere, unless you know better.

ninky_2

ILW wrote: »

Pre 20th century virtually everywhere, unless you know better.

well let's look at the influence of mortgages on housing affordability. mortgages as we know them have really only been around since the 1930s and have been common only much more recently than that.

in 1930 the average UK house cost £590. the price had actually fallen to £545 by 1938. if price rises had kept in line with other basic needs such as clothing or food most people would now be able to save up and buy a house outright. just as the majority are now able to feed and clothe themselves much better now they would similarly be able to house themselves much better now.

it is mortgage lending that has seen prices escalate to a ridiculous degree. so much so that as a double income household with no children in our 30s we can not afford to buy (mortgage) a property that my parents could afford on a fairly low single income with two children when they were in their 20s. instead we live in a one bed flat in a "cheap" area.

is this the 'wealth creation' that mortgage lending would like to take credit for?

SandC

It boils down to both the consumer and the lender. If lenders never started offering to take two salaries into consideration, or upped the criteria so that people were borrowing 5x and more their salaries then house prices would be nowhere near what they are today.

People used to save up for cars too remember. Like some of us still do.

ninky_2

SandC wrote: »

It boils down to both the consumer and the lender. If lenders never started offering to take two salaries into consideration, or upped the criteria so that people were borrowing 5x and more their salaries then house prices would be nowhere near what they are today.

People used to save up for cars too remember. Like some of us still do.

but i think you can see the argument against ridiculous lending criteria as an argument against mortgage lending in general. without the lending there would be greater affordability. however, i would concede there is a possible middle ground of very little highly regulated lending. erps certainly wouldn't feature in this.

(our car cost £300 and has got through several MOTs with little bother)

michaels

I have signed up for a mobile phone contract, and was given a nice handset with all the bells and whistles in return for which I agreed to pay £20 per month for 18 months.

However I think this is not fair and I should be allowed to stop paying after 2 months if I want to just because. Can anyone see any problems with this?

Also I think everyone should be able to afford a nice 4 bedroom detached house even if on minimum wage. I am sure that if mortgages did not exist prices would be lower (after all it must be because people can borrow money that prices are so high) and everyone in the country would have their nice house. I am not going to let the fact that there are not enough such houses in the country get in the way of my argument.

SandC

I do understand where you are coming from but if I wanted no ERPs then I would go on SVR and stay there. I'm not sure I'm going to even look for a deal when my tracker ends is it next year or year after? For years I was not offered the best rates by any lender cos I wasn't seen as that good a customer. Know why that was? Cos the amount I was borrowing was too low. Competitive rates for a loan of less than £45k just one/two years ago were not that easy to come by. Although I guess even if the rate wasn't competitive the payments would still always be affordable.

Now it's all gone pete tong with banks I'm a very welcome customer thank you very much. It's all about LTV now not about 'why don't you borrow another £25k then you can have a better rate and spend it on whatever you want?'.

But hey ho, that's life isn't it?

ILW

ninky wrote: »

in 1930 the average UK house cost £590. the price had actually fallen to £545 by 1938. if price rises had kept in line with other basic needs such as clothing or food most people would now be able to save up and buy a house outright. just as the majority are now able to feed and clothe themselves much better now they would similarly be able to house themselves much better now.

?

I believe in 1930, home ownership was approx 30% of the population. I would question whether that is better than today when it is nearer 70%

Conrad

ninky wrote: »

before mortgages were 'invented' people paid cash for land and built their own homes.

Building societies were created by groups of renters pooling cash to enable each member to gradualy buy and not be in hoc to a greedy feudal lanlord


Im happy to be tied in in return for a lower rate - perfect common sense.

Ninky - you plan your finances and work, and of course lenders to need to have a good handle on thier accounting ins and outs on the horizon. Imagine trying to run a Bank and deal in money markets without knowing how many mortgage holders were likely to remain in the comming 12 months.

As I say, the deal is I get a lower rate in return for agreeing to remain a while - utter business common sense.

Conrad

NINKY - I'd like to employ you (and your staff and resources) for a while, but I'm not able to tell you how much I will pay you, is that ok? That's in esscence what you want a Bank to do.

ninky_2

ILW wrote: »

I believe in 1930, home ownership was approx 30% of the population. I would question whether that is better than today when it is nearer 70%

but do even 30 percent actually OWN their home (as in 1930), or do they have a loan against it (i.e. mortgage). only 40 percent of "owners" today actually own their home outright. so there has really been drop in genuine home ownership in the population since 1930.