MSE News: First-time buyer mortgage famine gets worse

Options
This is the discussion thread for the following MSE News Story:

"The number of mortgages available to those with a small deposit has fallen by 17% since the beginning of the year, research reveals.

The trend is likely to hit first-time buyers (FTBs) the hardest ..."
«1

Comments

  • brit1234
    brit1234 Posts: 5,385 Forumite
    Options
    As a first time buyer this is good news for me. Loose lending and mass mortgage fraud promoted this huge house price buble that is now bursting and will continue to fall for years.

    Higher deposit mortgages are good for the following reason. It will mean people will have to save again and stop being so reckless. It will also reduce prices back to normal levels otherwise the seller can't move on.

    What troubles me most is all the people on these forum pages who haven't saved deposits at all and want to get on the property ladder anyway with shared equity or shared ownership homes. It is truely scary they don't seem to care about negative equity or buying a overvalued property. Lets end this I want now society and promote saving again likeour parents and before.

    Banks are not silly, they know prices are going to continue to fall, so they need bigger deposits to protect themselves. A 10% deposit could easily be wiped out in 12 months with falls as unemployment rises.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • mr_fishbulb
    Options
    MSE_Guy wrote: »
    This is the discussion thread for the following MSE News Story:
    I thought a story had a beginning, a middle and an end. Or at least some sort of point to it.

    That article is just loads of facts. There is no editorial opinion.

    Bit boring to me I'm afraid :(
  • Sooler
    Sooler Posts: 3,108 Forumite
    First Post First Anniversary Combo Breaker
    edited 22 September 2009 at 4:58PM
    Options
    MSE_Guy wrote: »
    "The number of mortgages available to those with a small deposit has fallen by 17% since the beginning of the year, research reveals.

    How does this compare with the number of FTB's who have a deposit?

    It's just a correction in the level of suppply to match the level of demand.
  • tek-monkey
    tek-monkey Posts: 1,434 Forumite
    First Post First Anniversary Combo Breaker
    Options
    brit1234 wrote: »
    What troubles me most is all the people on these forum pages who haven't saved deposits at all and want to get on the property ladder anyway with shared equity or shared ownership homes. It is truely scary they don't seem to care about negative equity or buying a overvalued property. Lets end this I want now society and promote saving again likeour parents and before.

    You seem to avoid answering everywhere else, so I'll ask again here. Why do you assume all SE/SO schemes are going to end in NE, surely they have EXACTLY the same chance of NE than other homes if purchased for the right amount? TBH if you're buying a new build expect to get ripped off regardless of your payment method, but you always harp on about SE/SO and never back it up.

    SE/SO does not immediately mean new build, and even if it did you should be moaning about new builds and not the schemes.
  • Lube
    Lube Posts: 1,495 Forumite
    Options
    If banks are not silly why are we and many other countries in the mess we are on now in.

    Answer because they lent money through complicated mechanisms reselling to sub prime market to people who could not afford to pay back. So are they really so sensible, nope they were greedy.
    brit1234 wrote: »
    Banks are not silly, they know prices are going to continue to fall, so they need bigger deposits to protect themselves. A 10% deposit could easily be wiped out in 12 months with falls as unemployment rises.
  • Sooler
    Sooler Posts: 3,108 Forumite
    First Post First Anniversary Combo Breaker
    Options
    That article is just loads of facts. There is no editorial opinion.

    There is an opinion in the title ... it says "worsens" ... but the opinion is not justified in the article as to why it is considered to be negative, what with banks being criticised for risky lending and all that!
  • Sooler
    Sooler Posts: 3,108 Forumite
    First Post First Anniversary Combo Breaker
    Options
    tek-monkey wrote: »
    Why do you assume all SE/SO schemes are going to end in NE, surely they have EXACTLY the same chance of NE than other homes if purchased for the right amount?

    The poster didn't say they would always end in NE, just pointing out the posibility - that effects any poperty. I think the point was using SE schemes to buy a property you can't afford.

    Aren't SE schemes where you own part of the property and pay rent on the rest - while being reponsible for 100% of the maintenance costs?
  • brit1234
    brit1234 Posts: 5,385 Forumite
    Options
    tek-monkey wrote: »
    You seem to avoid answering everywhere else, so I'll ask again here. Why do you assume all SE/SO schemes are going to end in NE, surely they have EXACTLY the same chance of NE than other homes if purchased for the right amount?

    Sorry, never knew you were chasing me :rotfl:

    I'm sure I have answered this many times, but I will happily do it again as we travel back in time.

    Back in the USA when the dot.com bubble burst and 9/11 Alan Greenspan cut US interestrates to exceptionally low levels. Cheap money floooded the world and as a result lending became very relaxed leading to a number of assest bubbles including house prices here in the UK.

    This soon priced out buyers so banks lowered criteria further 100 -125% mortgages, liar self certs, 6-7 x salary. Highly irresponsible lending that pushed prices even higher.

    The govornment at the same time was under preasure to produce affordable housing. However approaches from builders lobby groups and increased stamp duties revenues saw Labour abbandon their cheap housing. They then came up instead with evermore ways to fuel house prices with shared ownership/equity and more. Like with the 125% mortgages they fueled prices up further. As this happened the percentage buyers could afford from shared ownership fell from about 75% down to about 25% and with some schemes at the peak 10%.

    The crash then started and the risky lending from banks ended putting a downward preasure on property. However despite the credit crunch the govornment kept its risky schemes going. The only problem is it is in huge debt and looking to cut spending.

    Now at the moment the only buying is from cash buyers (looking for better return due to low interest rates), foriegn nationals (weak pound), bank of mum and dad for children and government schemes.

    Shared Equity and Ownership has effectively made people overpay by loads. Yes all properties have chance of negative equity, with poor quality new builds at the most risk. The simple fact that people with shared equity/ownership are in genral likely to be less well off to survive the continuing house price crash. This is based on their inability or reduced ability to save a deposit.
    :exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

    Save our Savers
  • geoffky
    geoffky Posts: 6,835 Forumite
    Options
    It is nice to see the value of your house going up'' Why ?
    Unless you are planning to sell up and not live anywhere, I can;t see the advantage.
    If you are planning to upsize the new house will cost more.
    If you are planning to downsize your new house will cost more than it should
    If you are trying to buy your first house its almost impossible.
  • tek-monkey
    tek-monkey Posts: 1,434 Forumite
    First Post First Anniversary Combo Breaker
    edited 22 September 2009 at 8:54PM
    Options
    I can only quote from my personal experience, so forgive me if I'm wrong, but I'll outline my position.

    I used ownhome, I can buy any property I like and get 20-40% of the equity paid for. I can either own 100% of a 100k house, or 60% of a 165k house. I pay no rental til year 5, at which point it costs me 1.75% interest. At year 10 it increases to 3.75%. My plan is to sell at year 5, and use the equity I should have built up to fund my second house.

    To lose out my house will need to have decreased by more than my rental costs over the period, minus any repairs I need doing. Therefore this £165k house will need to reduce by 5x12x550 (5 years at current rent, assuming no rises). Therefore the house must cost 33k less in 5 years time as it does now, before I start to make an actual loss. Otherwise, I've gained.

    It all depends on whether £165k houses sell at a better or worse rate than £100k houses in 5 years time, and has nothing to do with how I purchased it. If the cheaper houses are in a better position when I want to sell, I 'may' have been better off buying a 100k property on my own. If you assume a constant increase against all properties, I'm in exactly the same position as if I'd purchased a 100k property on my own.

    Unless I'm missing something here, how is this different to anyone purchasing a house at 100k and then trading up in 5 years? Other than I get a 165k house to live in while I wait? What do you expect prices to be in 5 years, compared to now?

    EDIT: Forgot to say, my share of this house is around 3.7 times my salary.

    EDIT2: As my house was open market, it was directly affected by those buying on their own. Therefore people buying 100% on their own have actually increased my costs, so they are as much to blame for house prices as I am. In fact they are more at fault, as more houses sell at 100% ownership than shared equity. So SE/SO has not increased prices, apart from idiots buying new builds (insert new car analogy here). From this I have issue with your "SE/SO is a scam!!!111" posts/sig, as they affect nothing but new builds and people buy those without SE/SO. Still, I'm sure the sig will change when you hope nobody is looking.
This discussion has been closed.
Meet your Ambassadors

Categories

  • All Categories
  • 343.6K Banking & Borrowing
  • 250.2K Reduce Debt & Boost Income
  • 449.9K Spending & Discounts
  • 235.8K Work, Benefits & Business
  • 608.8K Mortgages, Homes & Bills
  • 173.3K Life & Family
  • 248.4K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards