FTB's to struggle until prices rise....

HAMISH_MCTAVISH

New Halifax research suggests a huge improvement in first-time buyer affordability. But that good news will have a bitter aftertaste for many aspiring buyers, who will realise this year that they have no greater chance of realising their ambition. The outlook in 2010 remains gloomy for those who cannot rely on their parents for a deposit, for example.

What kind of deposit will I need?
A minimum of 15 per cent of the property’s purchase price; the average last year was 22 per cent, according to Halifax. Some lenders, such as Nationwide, are offering 90 per cent loan-to-value (LTV) mortgages. But the credit-scoring process that assesses your ability to meet repayments is now much tougher. It’s unlikely that a first-time buyer will qualify.

So what kind of mortgage am I likely to get?
Do not expect a competitive rate, particularly if you have a deposit of “just” 15 per cent. The Co-Op is offering a fee-free three-year fixed rate of 6.09 per cent, at 85 per cent LTV, and Furness BS has a three-year discount rate of 4.94 per cent, with a £699 fee, at 90 per cent LTV. Melanie Bien, of Savills Private Finance, says much more choice is available if you have a deposit of 20 per cent or more. For instance, if you have a 40 per cent deposit, HSBC is offering a two-year discount at 2.29 per cent, though the fee is an eye-watering £1,499.

Will there be much choice?
More homes could come to the market if interest rates are raised later this year, as more homeowners would be unable to afford their mortgages. But Simon Smith, of Kinleigh Folkard and Hayward, the agent, warns: “If you’re looking at the cheapest properties in an area, there is never going to be that much choice.”

So, is it time to compromise?
No, in this market first-time buyers, like most others, are getting pickier. Lindsay Cuthill, of Savills, the estate agents, says: “Back when everyone could get 100 per cent mortgages, they geared themselves to the limit and bought the most they could afford. But now they are more nervous. They want to know that everything — from the boiler to the wallpaper — is in good condition.”

Can I still get a bargain?
Most asking prices are now more realistic, so your scope to negotiate is limited, especially now the market is improving. But as you are not in a chain, make sure you use this fortunate position to your advantage. Getting yourself in a position where you can move quickly will also help to make you attractive to sellers (be warned, for instance, that mortgage applications now take many more weeks to complete than in the past).

Is shared ownership an option?
The slump in housebuilding and the difficulty of getting funding means that there are fewer “affordable” properties for sale. Under a shared ownership arrangement, you buy part of the property and rent the rest. It’s different from shared equity. Money has recently been brought forward by the Government for more affordable housing schemes, including an extra £278 million announced this week, but this could mean that there is little funding left for the next two years. About two thirds of the £9 billion available for 2008-11 has already been allocated.

Are there other options?
Funding for shared equity is also running short. Under shared equity, you buy the whole of the property with a loan from a lender and an interest-free loan from the developer. Richard Stone, director of Savills’ affordable housing division, said: “There is going to be less of a focus on shared equity in 2010 as the current schemes — MyChoice HomeBuy and HomeBuy Direct — are running out of funds.”
To make it worse, many who would like to buy find that there are even fewer competitive mortgages for these special schemes.
Private developers are coming up with incentives, such as paying stamp duty, to help first-time buyers — or at least convince them to sign up.

Could this situation change?
If the housing market continues to recover, there could be more affordable properties available, as developers would finally be able to build more.

But public spending cuts, likely whatever the result of the election, will mean future challenges. Richard Donnell, director of research at Hometrack, suspects that the shortage will continue: “We’re going to have to live on lower rations.”

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article6979251.ece

Lower prices ensuring less affordable housing is built, and compounding the shortage for FTB's. Who'd have thought it....:rolleyes:

And it seems this crash did not help most FTB's at all, even with existing stock.

The very same drought of mortgage lending that precipitated the drops, also froze FTB's out of the market, with 25% deposits out of reach.

And higher mortgage rates for FTB's are eliminating gains made from lower prices.

So existing homeowners didn't benefit, and it turns out upsizers didn't benefit either as the gap between FTB and 2TB properties actually widened in this particular crash. And now most potential FTB's didn't benefit.

A few STR speculators may have, but only if they sold in 2007, and bought back in last february.

For eveyone else though, it does rather seem to be a bit of a waste of time, really.

nembot

. <-- pinch of salt

Emy1501

HAMISH_MCTAVISH wrote: »

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article6979251.ece

Lower prices ensuring less affordable housing is built, and compounding the shortage for FTB's. Who'd have thought it....:rolleyes:

And it seems this crash did not help most FTB's at all, even with existing stock.

The very same drought of mortgage lending that precipitated the drops, also froze FTB's out of the market, with 25% deposits out of reach.

And higher mortgage rates for FTB's are eliminating gains made from lower prices.

So existing homeowners didn't benefit, and it turns out upsizers didn't benefit either as the gap between FTB and 2TB properties actually widened in this particular crash. And now most potential FTB's didn't benefit.

A few STR speculators may have, but only if they sold in 2007, and bought back in last february.

For eveyone else though, it does rather seem to be a bit of a waste of time, really.

FTB properties are still the same as they were in Feb 2009 in my area. The type of properties I would like are more but flats have not gone up. Of course with prices not really expected to rise in the near future I'm sure FTB's are better off staying with Mum and Dad and saving up a 15 % deposit.

Of course you keep telling us that more and more Higher LTV mortgages are coming to the market and therefore sooner or later FTB's will be in a decent position.

Mr.Brown_4

Dear HPC.

Please will you allow Hamish to become a member again?

Yours,

Mr. Brown.

DaddyBear

HAMISH_MCTAVISH wrote: »

http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article6979251.ece

Lower prices ensuring less affordable housing is built, and compounding the shortage for FTB's. Who'd have thought it....:rolleyes:

And it seems this crash did not help most FTB's at all, even with existing stock.

The very same drought of mortgage lending that precipitated the drops, also froze FTB's out of the market, with 25% deposits out of reach.

And higher mortgage rates for FTB's are eliminating gains made from lower prices.

So existing homeowners didn't benefit, and it turns out upsizers didn't benefit either as the gap between FTB and 2TB properties actually widened in this particular crash. And now most potential FTB's didn't benefit.

A few STR speculators may have, but only if they sold in 2007, and bought back in last february.

For eveyone else though, it does rather seem to be a bit of a waste of time, really.

What a load of dross. Highly questionable conclusions from a poorly written article. Par for the Mctavish course.
Things are bad for FTBers because houses are still overpriced. Simples.
With things being so bad for FTBers, prices only have one way to go.

carolt

And the moral is...good time to wait.

HAMISH_MCTAVISH

Emy1501 wrote: »

Of course with prices not really expected to rise in the near future

Really?

From todays Sunday Times

The upbeat among the commentariat (mostly banks) expect increases of 5-10 per cent in 2010, driven by a lack of homes for sale and the housebuilding slump.

CEBR, the economics consultancy, predicts a rise of 4 per cent, again because of the “substantial supply shortage”. Some experts are not convinced that Britain has too few homes, or base their predictions purely on affordability.

But Doug McWilliams, the CEBR’s chief executive, points to the “atrocious track record” of these “housing shortage deniers”.

Housing shortage deniers..... who have an atrocious track record.

Sounds pretty familiar around here.

I'm sure FTB's are better off staying with Mum and Dad and saving up a 15 % deposit.
.

They'd better be quick.

Prices up by 10% in 10 months, and predicted to be up another 15% plus by 2012.

25% + in 3 years is faster than most FTB's can save, no matter where they live.

HAMISH_MCTAVISH

DaddyBear wrote: »

With things being so bad for FTBers, prices only have one way to go.

Yes, the same way prices went when things were equally bad for FTB's all this year.

Up 10% in just 10 months......;)

Mr.Brown_4

HAMISH_MCTAVISH wrote: »

25% + in 3 years is faster than most FTB's can save, no matter where they live.

Which is why it is an utter nonsense and falsehood peddled by those desperate to prop up a bubble. It is an insult to the intelligence to suggest that something that relies on a 'ladder' has no possible bottom rung.

Unless you are planning on reliving the glory days of InsideTrack and the Wilsons of course.

Emy1501

HAMISH_MCTAVISH wrote: »

Really?

From todays Sunday Times



Housing shortage deniers..... who have an atrocious track record.

Sounds pretty familiar around here.



They'd better be quick.

Prices up by 10% in 10 months, and predicted to be up another 15% plus by 2012.

25% + in 3 years is faster than most FTB's can save, no matter where they live.

Sorry forgot that how stupid of me. Someone say house prices will rise by 25% and we must take it as gospel because Hamish says so. Of course you ignore the likes of NW Halifax etc who say prices will be flat:rolleyes:

Of course you have ignored the fact that in many areas FTB properties will be no different now than they were 10 months ago

HAMISH_MCTAVISH

Mr.Brown wrote: »

Which is why it is an utter nonsense and falsehood peddled by those desperate to prop up a bubble. It is an insult to the intelligence to suggest that something that relies on a 'ladder' has no possible bottom rung.
.

And yet prices are up by 10% in 10 months anyway.....

The middle-aged own their houses — and have the capacity to accumulate buy-to-let investments — thanks to past tax breaks and their current easy access to cheap borrowing.

These opportunities have been denied to twentysomethings who did not benefit from lower house prices, unless they enjoyed an inter-generational subsidy allowing them to become owner-occupiers.

BTL replaces FTB..... Nothing new there.;)