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Debate House Prices
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Likely effect of the stamp duty elimination on house prices
Comments
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The vast majority of FTB's borrow the money from the bank of Mum and Dad who probably have little problem finding the extra 2k for a deposit if necessary. Therefore as usual Hamish's theory is nothing more than a pipe dream.
The only beneift would have been thought of people buying now in the belief that it would be withdrawn in 21 months time. The fact the its a Conserative policy anyway means it wont be withdrawn so will have little effect on prices.
Have you real evidence that the vast majority of FTB are getting their deposits from their parents.0 -
Graham_Devon wrote: »
We are all VERY clear on the deposit fund having an extra grand or two in it. No one has actually questioned that.
I'm going to say this really slowly, and in a bunch of different ways, in the (probably pointless) hope that you can get it.....
MOST FTB'S NEVER REACH MAX LTI...
The deposit is the chokepoint at the moment, not the income multiples!!!!!
If an FTB couple make 60K, it doesn't matter if they will be loaned 180K based on 3 times income, if they only have a 10K deposit they will only be loaned 100K!!!!!!
The deposit size is the biggest problem for buyers today, not the income multiple.
How many more times, in how many different ways, do I have to say this before it permeates your conciousness!!!!!!!!!!!“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Have you real evidence that the vast majority of FTB are getting their deposits from their parents.
The CML have said that the FTB's market is pretty much exclusive to the Rich, STR's, Divorced couples and the Bank of Mum and Dad. Very few can afford to save a deposit to buy their first house and we know only genuine FTB's will benfit for the holiday0 -
there should be no stamp duty at all for anyone buying a residence to live in.0
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HAMISH_MCTAVISH wrote: »I'm going to say this really slowly, and in a bunch of different ways, in the (probably pointless) hope that you can get it.....
MOST FTB'S NEVER REACH MAX LTI...
The deposit is the chokepoint at the moment, not the income multiples!!!!!
If an FTB couple make 60K, it doesn't matter if they will be loaned 180K based on 3 times income, if they only have a 10K deposit they will only be loaned 100K!!!!!!
The deposit size is the biggest problem for buyers today, not the income multiple.
How many more times, in how many different ways, do I have to say this before it permeates your conciousness!!!!!!!!!!!
You can say it over and over again.
You are deliberatly avoiding the question.
Now, here's what you stated as fact....Not just once, but twice. It's THIS that I am questioning.HAMISH_MCTAVISH wrote: »That extra 2K saved on a 200K house equates to an extra 2K on the deposit, which then gets you between an extra 6K and 18K of borrowing.;)
The stamp duty holiday just increased buying power by as much as £20,000.HAMISH_MCTAVISH wrote: »Since forever..... A larger deposit increases the size of loan eligibility, as for most people saving the deposit is a bigger hurdle than the LTI ratio.
Example:
Previously: Savings of £20K for deposit + £2K for stamp duty......
90% LTV, 10% deposit, = £180K mortgage, £20K deposit, and total purchasing power of £200K
Now: Savings of £20K for deposit, + £2K no longer needed for stamp duty, so deposit of £22K. 90% LTV, 10% deposit, = £198K mortgage, £22K deposit, and total purchasing power of £220K.
You can now borrow another 18K, based on an extra 2K deposit at 90% LTV.
I've even highlighted the bit's I am pointing out to you in red, so you don't get too confused as to what I am asking you to explain.
You have STATED a 2k saving in stamp duty = extra borrowing of 18k.
Please explain. Please don't purposly ignore what I am asking and pretned i am asking something else and confusing myself.
If you can't explain it "I can't" as a response will do fine.0 -
HAMISH_MCTAVISH wrote: »I'm going to say this really slowly, and in a bunch of different ways, in the (probably pointless) hope that you can get it.....
MOST FTB'S NEVER REACH MAX LTI...
The deposit is the chokepoint at the moment, not the income multiples!
There is also the fact that a large LTV pushes up the IR you will be offered. Thus anything that increases deposit size makes houses more affordable and will therefore push prices up.
There are only a finite number of houses out there. To enable more people to buy you can
a) build more houses
b) decrease the number of existing houses that aren't being lived in - eg get empty houses back into the system
c) decrease the number of households - eg decrease immigration or birth rate, increase emigration or encourage multigenerational households, increase marriage and/or cohabitation, decrease relationship breakdown,or else have an epidemic or something that wipes out lots of people (but not a war because that would also destroy houses).
d) switch more houses from the rental stock to the owner-occupied stock - eg decrease BTL
[ETA I am not suggesting that all of these are desirable!]
Anything else you do might change who can buy houses, but not how many people can, because it will be a zero sum game, and so prices will adjust until the number of people able and willing to buy the houses fits the number of houses. At least, that's true in the medium and long term. Because HP react slowly to changing conditions, there will be a delay before the adjustment sorts itself out.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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Graham_Devon wrote: »
You have STATED a 2k saving in stamp duty = extra borrowing of 18k.
Please explain. Please don't purposly ignore what I am asking and pretned i am asking something else and confusing myself.
If you can't explain it "I can't" as a response will do fine.
Joe earns £50k so 3x salary is £150k, he has £11k saved and that is his 10% deposit + 1% stamp duty because he can only get a 90% mortgage he can only borrow £90k.
Now he doesn’t need stamp duty so he has £11k deposit and can therefore borrow £99k.
Is that clear0 -
Joe earns £50k so 3x salary is £150k, he has £11k saved and that is his 10% deposit + 1% stamp duty because he can only get a 90% mortgage he can only borrow £90k.
Now he doesn’t need stamp duty so he has £11k deposit and can therefore borrow £99k.
Is that clear
Nope. He can't "borrow" anymore.
He can borrow the same amount, but the deposit is a larger pecentage of the house price.
If Joe has a 50k deposit, he will still be able to borrow the same amount. But will be able to afford a more expensive house as he has more to put down.
Some serious twisting of the terms "borrowing" here. And some unrealistic salaries having to be used to twist it this bad!0 -
The CML have said that the FTB's market is pretty much exclusive to the Rich, STR's, Divorced couples and the Bank of Mum and Dad. Very few can afford to save a deposit to buy their first house and we know only genuine FTB's will benfit for the holiday
I'm surprised that the vast majority of FTB are being bank rolled by the bank of mum and dad because I don’t know any mind you I don’t move in the circles where the parent could afford to give their children £20k. But then how many real FTB are there in the market. Does Rich exceed Bank of mum and dad.0 -
Graham_Devon wrote: »Nope. He can't "borrow" anymore.
He can borrow the same amount, but the deposit is a larger pecentage of the house price.
If Joe has a 50k deposit, he will still be able to borrow the same amount. But will be able to afford a more expensive house as he has more to put down.
Some serious twisting of the terms "borrowing" here.
Why can't he borrow more please explain0
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