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Renters: Angry and Insecure
HAMISH_MCTAVISH
Posts: 28,592 Forumite
http://www.guardian.co.uk/society/2010/aug/15/renting-buying-homeAngry and insecure – the renting Britons with no hope of buying a home
House prices dominate headlines but, with a lack of affordable property, a growing number of Britons will never own a home and face a lifetime in the unregulated rented sector.
The Chartered Institute of Housing (CIH) warns today that the "golden age of home ownership" is coming to an end. In the most expensive parts of the country, lenders are demanding deposits of £40,000 for even the cheapest properties – requiring a level of savings that most renters could only dream of.
In Bristol, it is easy to find the same sense of disaffection and a distinct perception that renting carries a stigma. "I feel like a second-class citizen for not having a house," admits Malcolm Elstone, a 40-year-old who is renting a three-bedroom property. He lives with his wife, Elaine, who is pregnant, her mother, Shirley, and two children, Oliver, 12, and Abby, 10. "It is crowded – we are on the verge of having to move."
Malcolm grew up in the 1970s when buying a house was not seen as the ultimate priority. "But now it is. It is the yuppie effect: if you have not got a house it is as if you have nothing behind you, no backing. But that will have to change."
He admits that until now the prospect of spending £100,000 has been "daunting" and "out of my league", but the Elstones believe they are now at the foot of the feted property ladder, and may well purchase something soon.
Others are not so lucky.
One hundred and eighty miles to the north, Rachel Fraser, a 32-year-old single mother from Stalybridge, near Manchester, feels trapped. She separated from her husband three years ago and says it is as if she has become a first-time buyer all over again. At the moment she is renting a three-bedroom home with her two children, Josh, five, and Amy, seven. She works full-time, earns £20,000 and says she takes nothing but child tax credits from the government.
"But to look at buying – there is no chance for me," she says. "The worst thing is the deposit. I've looked on the internet and it is 10% or 20%. If we buy somewhere for £100,000, that is at least £10,000 – it would take me 10 years to save it.
"I want to be able to say to my children, 'this is our house'. I earn £1,380 after tax. I spend £475 on rent, then food, bills, council tax, children's clothes. There isn't much left for me."
It's unfortunate that mortgage rationing is pushing home-ownership out of reach for so many at the moment when prices are affordable in so many places.
And with the ongoing shortage of housing and increasing population, price rises in the future will lock out even more.
No wonder Rightmove noted the "buying window" is the next 12-18 months.
“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”
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”
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Comments
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HAMISH_MCTAVISH wrote: »
It's unfortunate that mortgage rationing is pushing home-ownership out of reach for so many at the moment when prices are affordable in so many places.
If prices were affordable, mortgage "rationing" as you keep referring to it as wouldn't push people out.
They are pushed out because of the deposit required, which they can not lay their hands on. The deposit being large, because of the price of property.0 -
Graham_Devon wrote: »If prices were affordable, mortgage "rationing" as you keep referring to it as wouldn't push people out.
They are pushed out because of the deposit required, which they can not lay their hands on. The deposit being large, because of the price of property.
Can't you see it's something you're not going to agree on again?
To halve her deposit of £10k to £5k, it needs either the deposit needed to go from 10% to 5% or prices to halve.
Both of you will claim your view point to be the most reasonable.
Of course a mix of the two is most likely, and probably, most desirable. Desirable, in that it is a viewpoint not being espoused by a "zealot" unable to see the other side.
HTH.0 -
that makes no sense - you're contradicting yourself.Graham_Devon wrote: »If prices were affordable, mortgage "rationing" as you keep referring to it as wouldn't push people out.
They are pushed out because of the deposit required, which they can not lay their hands on. The deposit being large, because of the price of property.
you've said that prices are not affordable due to the size of the deposit currently required so the opposite of that must be that property is affordable if a smaller deposit was required.
first it's prices but now it's the deposit amount - would you be happy with a smaller deposit amount?
which is it... the answer has to be somewhere in the middle i reckon0 -
JonnyBravo wrote: »Can't you see it's something you're not going to agree on again?
To halve her deposit of £10k to £5k, it needs either the deposit needed to go from 10% to 5% or prices to halve.
Both of you will claim your view point to be the most reasonable.
Of course a mix of the two is most likely, and probably, most desirable. Desirable, in that it is a viewpoint not being espoused by a "zealot" unable to see the other side.
HTH.
I'm quite happy to say it's simply not affordable. What I don't like is being told it's affordable, just people can't afford it, and then the blame to be put onto "mortgage rationing" which doesn't even exist.
The mortgage market is what it is at any point in time. It's not being "rationed" by anyone.0 -
Graham_Devon wrote: »What I don't like is being told it's affordable, just people can't afford it, and then the blame to be put onto "mortgage rationing" which doesn't even exist.
The mortgage market is what it is at any point in time. It's not being "rationed" by anyone.
So you don't think the banks are holding back on some mortgages?
You don't think they have been turning down perfectly reasonable applicants?
All these examples in the press are made up?
Incidentally I'm not suggesting going back to slack lending or "2007 levels".... and of course I wholeheartedly agree the market is what it is. Doesn't stop me realising what it is.0 -
Graham_Devon wrote: »I'm quite happy to say it's simply not affordable. What I don't like is being told it's affordable, just people can't afford it,
It's the deposit size that is locking people out of home ownership, not the ticket price. If the mortgage payments are similar to rent, and you can afford rent, then you can afford the mortgage.
It's not unaffordable.... If it weren't for the abnormally high deposit requirements, which are only in place to ration a limited pool of mortgage funding.and then the blame to be put onto "mortgage rationing" which doesn't even exist.
The mortgage market is what it is at any point in time. It's not being "rationed" by anyone.
Oh really.......
http://www.bbc.co.uk/news/business-10836519Mortgage deals still being rationed by lenders.
Mortgage lenders continue to ration the size of their loans to home buyers and people remortgaging.
.
http://www.channel4.com/news/articles/business_money/years+of+mortgage+rationing+ahead/3524802
The UK faces mortgage rationing for many years to come unless the Government reforms the way lenders can raise money, a trade body has warned.
And here's an older one with the BoE explaining how banks ration a limited pool of funding.
http://www.telegraph.co.uk/news/uknews/1583857/Half-of-lenders-to-ration-mortgages-says-Bank.htmlThe Bank of England has warned that almost half of all lenders are preparing to ration mortgage deals over the next three months as the credit crisis worsens.
It said that 43 per cent of banks and building societies were planning to "tighten" mortgage availability, fuelling fears that millions could struggle to find deals they can afford.
Many lenders are expected to increase rates on mortgages, others will raise the minimum deposit, some will tighten their credit checks and a handful of banks are expected to follow First Direct and withdraw entirely from the mortgage market.“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 -
I suppose if your definition of rationing is just not giving a mortgage to anyone that asks for one.0
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I suppose if your definition of rationing is just not giving a mortgage to anyone that asks for one.
Oh dear.
Another zealot.
No, that's not my idea of rationing.
I'm suggesting the banks are holding back and could lend more (to acceptable risk patrons) but don't want to. (For a variety of reasons).
Sorry, doesn't that make for a good enough fight?
Shame.0 -
I suppose if your definition of rationing is just not giving a mortgage to anyone that asks for one.
My definition of rationing is that banks only have a third of the funding to lend that they had previously.
As with anything in short supply, they must find a way to ration it.
In this case, by increasing deposit requirements until the pool of borrowers matches the available funding.“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 -
you also have to consider the Risk factor and risk profile of borrowers in there too - which is part of the reason for the low lending as well.HAMISH_MCTAVISH wrote: »My definition of rationing is that banks only have a third of the funding to lend that they had previously.
As with anything in short supply, they must find a way to ration it.
In this case, by increasing deposit requirements until the pool of borrowers matches the available funding.
why lend 5 times income to a 90% LTV 25 year old when banks can lend to a 40 year old couple on a 50% LTV with 3 times income at a much lower risk
it's quite simple which the banks would rather lend to.0
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