Average first-time buyer age to rise to 43

Graham_Devon

IveSeenTheLight wrote: »

The property is the security.

Exactly.

And we are in a position where prices could fall. If this happens, the security is wiped out instantly, and the banks are left exposed.

I don't understand why you would push this concept as sensible.

LilacPixie

surely thats what car HP is though?? The fnance is secured on a depreciating asset.

Thrugelmir

IveSeenTheLight wrote: »

I'm simply saying that you should be able to borrow up to the valuation of the property.
The property is the security.

But would you be prepared to pay a MIG (Mortgage Guarantee Premium) of 5% on the advance over 75%. Makes current product fees look cheap. But this was is what used to be charged in the past, in order to underwrite the risk.

macaque_2

JimmyTheWig wrote: »

Average age of 43? Blimey.

I wonder if first-time house buying is worth it beyond that age. A 25-year mortgage would take you past retirement, for example!

No no no! The prince of house bubbles (Gordon Brown) had already already seen that one coming and was ahead of the game.


http://www.independent.co.uk/news/uk/politics/government-to-raise-the-retirement-age-ahead-of-schedule-479633.html

Procrastinator333

IveSeenTheLight wrote: »

There needs to be more and better priced higher LTV products.

I don;t think there is nothing wrong with 100% mortgages, as long as there is a repayment vehicle.

If I went into my bank and asked for a loan of £5,000, I wouldn't be asked to put down a £1,000 deposit would I?

I'm pre-empting you all saying the lender want to reduce his risk, well that's what the interest rates are for. The higher the LTV, the higher the rate.

If prices were to drop, I'm sure there could be included into the small print something to ensure that all the capital needed to be repaid, regardless if the property covered the outstanding amount or not.

Personally I disagree. If I put myself in the position of a bank. I appreciate what you are saying about just charging more to cover the additional risk, but banks already charge 4, 5, 6% for the 90, 95% LTV. What would they charge for 100%? 7%, 8%?

A mortgage is different to that of say a £10k loan.

£10k loan, it is unlikely you owuld ever chose bankruptcy over repaying that. It is also quite possible they will be able to get the money out of you at least in part through the court system. Haven't lenders found ways of claiming against other assets such as the house for unsecured lending?

So if someone stops paying a £10k loan, there is probably something to be recovered (e.g. car), the courts to try and get the rest back and because it is smaller, you can charge 7, 8, 9, 10%. The risk is also mitigated by lending it out to more people.

A mortgage is differnt in that when someone gives up on a mortgage, it is about the last thing they give up on. Chances are they are going bankrupt. No amount of small print is going to help you recover your cash. So I think it then in part becomes a risk mitigation tool. If I were sitting there as a bank, limited lending resources, I would want a deposit to limit my exposure, cover a small fall in prices and really lock the homeowner in to the house purchase - a £20k deposit is a big incentive for the homeowner not to give up and walk away.

Further to this, if I could I would try and act as a bit of a cartel, agree with the other banks in a totally off the record way that we would choke off finance just enough to stop prices rising, but not so much as to cause falls. As a bank, I think they would like to see inflation adjusted prices come down. but not nominal. Choke off finance to keep nominal flat and let inflation do the work. Far better than having a balance sheet ful of reposessed property.

Anyway, that is just me. You would lend more and charge more. But neither of us count so we will just have to see what they do!

macaque_2

Procrastinator333 wrote: »

Personally I disagree. If I put myself in the position of a bank. I appreciate what you are saying about just charging more to cover the additional risk, but banks already charge 4, 5, 6% for the 90, 95% LTV. What would they charge for 100%? 7%, 8%?

A mortgage is different to that of say a £10k loan.

£10k loan, it is unlikely you owuld ever chose bankruptcy over repaying that. It is also quite possible they will be able to get the money out of you at least in part through the court system. Haven't lenders found ways of claiming against other assets such as the house for unsecured lending?

So if someone stops paying a £10k loan, there is probably something to be recovered (e.g. car), the courts to try and get the rest back and because it is smaller, you can charge 7, 8, 9, 10%. The risk is also mitigated by lending it out to more people.

A mortgage is differnt in that when someone gives up on a mortgage, it is about the last thing they give up on. Chances are they are going bankrupt. No amount of small print is going to help you recover your cash. So I think it then in part becomes a risk mitigation tool. If I were sitting there as a bank, limited lending resources, I would want a deposit to limit my exposure, cover a small fall in prices and really lock the homeowner in to the house purchase - a £20k deposit is a big incentive for the homeowner not to give up and walk away.

Further to this, if I could I would try and act as a bit of a cartel, agree with the other banks in a totally off the record way that we would choke off finance just enough to stop prices rising, but not so much as to cause falls. As a bank, I think they would like to see inflation adjusted prices come down. but not nominal. Choke off finance to keep nominal flat and let inflation do the work. Far better than having a balance sheet ful of reposessed property.

Anyway, that is just me. You would lend more and charge more. But neither of us count so we will just have to see what they do!

Good grief, its Friday night. This post is far too long and thoughtful. Don't you ever drink?

Sneezy

Its not just house prices and banks that are the problem its also the companies that employ those first time buyers. Some private sector companies haven't given pay rises in (coming up to) three years on an already lower than average wage that isn't really helpful for FTB.

As a 23yo single woman i've given up the idea of being able to buy a house (though i'd love to) on my own, i'd have to wait to find a friend/wait for my sister to save half a deposit.

Procrastinator333

macaque wrote: »

Good grief, its Friday night. This post is far too long and thoughtful. Don't you ever drink?

Not as much as I should!

Just loitering at the moment as I have to go pick up my better half from the station shortly.

PasturesNew

When I wanted to buy a mobile home, I had to put down a 25% deposit as it was a personal loan. There are no mortgages for mobile homes (residential).

I think I borrowed the amount over 3 years.

I, and my father, were both FTBs at 40. Without parental help. So it's not unusual for people to be late buyers. I'd waited 20 years to be able to afford a house/be mortgageable.

Emy1501

IveSeenTheLight wrote: »

What do you think is causing the FTBer age to rise?

Before you say prices, prices were higher in 2007, so hard to say it's solely down to prices.

The link gives a clue in the first three words "Without parental assistance".
This is inferring that people need larger deposits thus assistance from the parents before they can buy.

There needs to be more and better priced higher LTV products.

I don;t think there is nothing wrong with 100% mortgages, as long as there is a repayment vehicle.

If I went into my bank and asked for a loan of £5,000, I wouldn't be asked to put down a £1,000 deposit would I?

I'm pre-empting you all saying the lender want to reduce his risk, well that's what the interest rates are for. The higher the LTV, the higher the rate.

If prices were to drop, I'm sure there could be included into the small print something to ensure that all the capital needed to be repaid, regardless if the property covered the outstanding amount or not.

In some ways I agree. I can't see anything wrong with lending to young people in secure jobs with good prospects 3x single or 2.5X joint on a 100% mortgage. The problem is though that in a market where prices are struggling its likely once you take into account selling fees etc the buyer will be in NE as soon as they walk through the door. Even if one buys at say 200K and then gets into trouble a year later and the house is still worth 200K. The selling fees will be at least 5k and if it takes 6 months to sell there will arrears as well. Also what if the buyer refuses to leave if they get into arrears? Banks are currently waiting maybe 12-24 to repossess etc.

Also as far as I'm aware banks need to hold more capital these days and also with limited amounts of money around why lend to a young couple 100% mortgage when you lend someone else 70%. Banks are turning down people with defaults of £20 3-4 years ago for mobile phone bills they did not even know were outstanding etc these days. With limited amounts of money around they can pick and choose who they lend to and people wanting 100% mortgages would be way down the list. Also I suspect you would need to have an amazing credit history which I suspect few of the young of today will have.