100% Mortgages

kaych

I think they should simply reduce the price of houses across the country (in particular, within the M25 areas!!) rather than giving out 100% mortgage!

100% mortgage = encourage house prices to remain high!

Prices get higher and higher = become more and more difficult to repay = longer mortgage term! next thing you know, it will be the norm to have a 50 year mortgage!

sunshinetours

kaych wrote: »

I think they should simply reduce the price of houses across the country (in particular, within the M25 areas!!) rather than giving out 100% mortgage!

100% mortgage = encourage house prices to remain high!

Prices get higher and higher = become more and more difficult to repay = longer mortgage term! next thing you know, it will be the norm to have a 50 year mortgage!

Who is "they"?
Market forces decide the prices (mainly although goverment/BOE intervention does affect it of course)

Funnily enough 100% mortgages would work reasonably OK in a stable housing market where low HPI was present as houses wouldn't be used as investment tools so much

However the traditional method of saving a 5% or 10% deposit is probably the best overall compromise to keep a sensible mortgage lending market

koopa_coffee

Homersimpson wrote: »

I completely agree that they should set limits but I know that they wont as it will limit house price inflation and may cause a drop in the short term.

On this basis a single person on 30k would be able to borrow 120k + a 10% deposit would give a maximum of 132k. Around by me that won't by a nice three bed semi and you would struggle with a two bed in a nice area.

Won't even get you a 1 bed flat round here...

firsttimetom

Quite why the banks thought lending 150k to someone who couldn't save up 5% of that was a good Idea i'll never know.

95% should be the absolute maximum. I can remember my mother telling me that you needed to save up 10% of a houses value to be able to get a mortgage. I must have been about 10 at the time as a figure of £6000 sticks in my mind.

Unfortunately you always get wallys like new_home_owner who think that ftbs should enslave themselves with masses of debt just so their house can keep making them money.

FYI - the market doesn't need to 'recover' it needs to be taken down by at least a third, probably nearer half. Then people will have some disposable income to spend in the real economy and not wasting it on £800pm + mortgage payments.

sunshinetours

firsttimetom wrote: »

Quite why the banks thought lending 150k to someone who couldn't save up 5% of that was a good Idea i'll never know.

95% should be the absolute maximum. I can remember my mother telling me that you needed to save up 10% of a houses value to be able to get a mortgage. I must have been about 10 at the time as a figure of £6000 sticks in my mind.

Unfortunately you always get wallys like new_home_owner who think that ftbs should enslave themselves with masses of debt just so their house can keep making them money.

FYI - the market doesn't need to 'recover' it needs to be taken down by at least a third, probably nearer half. Then people will have some disposable income to spend in the real economy and not wasting it on £800pm + mortgage payments.

Odd post.

If the market dives by a third or half even then how will that put money in the pockets of the majority of existing home owners? I appreciate it will help first time buyers who are a minor (but important) part of the house owning public.

DVardysShadow

sunshinetours wrote: »

Odd post.

If the market dives by a third or half even then how will that put money in the pockets of the majority of existing home owners? I appreciate it will help first time buyers who are a minor (but important) part of the house owning public.

I think his argument is that if house prices were lower, then people would not be so committed on their mortgages and the surplus would be money into the real economy.

angel.cake_2

verytricky69 wrote: »

I think people should save for a deposit- Whats wrong with saving for something you want to buy?

10% deposits should be saved.

Nothing wrong with saving, but I am sure it is very difficult if you are paying £sss/month rent money when this could be going towards a mortgage and then some!

10% deposit would be great but this is just not practical for eveyone. Does not mean they cannot afford to pay a mortgage just because they can get £15k together.

JayZed

I'm surprised that so many people think that they won't come back. If there's one lesson that history teaches us, it's that some people never learn.

sunshinetours

DVardysShadow wrote: »

I think his argument is that if house prices were lower, then people would not be so committed on their mortgages and the surplus would be money into the real economy.

As I said it would help first time buyers but how would that help the millions with already sizeable mortgages or indeed the mortgage free?

The best compromise is that house prices remain stagnant or drop in real terms for a number of years. That makes it less painful for the majority who have mortgages as they continue to repay the debt and makes it gradually more and more affordable for those who aren't yet on the ladder

Back to the OP, the 100% mortgage actually then works in the longer term (to a better degree) in a stagnant market more so than in a "bubble market" as long as traditional lending criteria are upheld so people aren't overstretching affordability wise

overandout_2

JayZed wrote: »

I'm surprised that so many people think that they won't come back. If there's one lesson that history teaches us, it's that some people never learn.

Same here - I think most ppl here would hope that it will never come back. But personally, I think it is unlikely. It would come back - the world of finance is all about the money. Hence once all the crisis is over, they will start lending again. The more they can lend, the more they get in return. It's all about money~~

Not saying that I want the 100% mortgage to come back, I have saved over 20% deposit to buy my house last year.....but looking at history, ah we have a short memory