Large Deposit Requirements Exclude a Generation of FTB's

ILW

Conrad wrote: »

A significant proportion that hitherto would have obtained a mortgage and of which 99% would not have been repossessed, now cannot.

I would suggest only over the last decade or so. It seems to me that the market is just going back to normal rather than the heated blip that it was in for a limited period.

Percy1983

Just consider the bulls have changed direction.

Now prices are dropping they want as many FTB's as possible to hold the market up.

As mentioned I would much rather have a lessor mortgage with high deposit then a massive mortgage with low deposit.

Being a potential FTB who has kept my finances in order and can save I am currently looking at 15% of 100k for the house I want so thats 15k deposit.

Now if prices drop 20% so the house is 80k and I need a 30% deposit that will mean I need to save 24k which will delay me 7-8 months longer.

But in case 1 I will have a mortgage left to pay of 85k in case 2 I will have 56k left to pay.

So I may lose 7 months on my life but then have a mortgage which is 66% of what case 1 would be.

Then as mentioned in the long run deposit requirements will reduce and dare I say my children (don't exist yet) may one day be able to buy a house as long as the boom and bust is over.

IveSeenTheLight

ultrawomble wrote: »

It could be, but when rates do move up so do the repayments. FTBers aren't going to be starting with 0.5% over base mortgages - they'll be starting with say 3-4% over base. So a 3-4% increase will really hurt. Better to have a smaller mortgage and be able to cope with the coming rise, or max out now and hope?

There was no direct correlation of the mortgage rates following the base rate on the way down.
there is no certainty that they will folow any increases in the base rate when they go up.

Certainly the indicators are that low rates will be arounf for some time to come.
There is no gaurantee that house prices will be lower, with the available LV mortgage products available to suit your needs.

ultrawomble

IveSeenTheLight wrote: »

There was no direct correlation of the mortgage rates following the base rate on the way down.
there is no certainty that they will folow any increases in the base rate when they go up.

Perhaps so, but there were mortgages around that tracked at 0.5% above base. Do they still exist?

IveSeenTheLight

Percy1983 wrote: »

Now if prices drop 20% so the house is 80k and I need a 30% deposit that will mean I need to save 24k which will delay me 7-8 months longer.

WOW, you can save more than £1k per month.
Maybe you should consider not buying until you can get the best rate ie. 40% deposit. It' would only take you another 7-8 months

So 15% deposit to 40% deposit within a year and a half.

At that rate you can buy this property outright in less than 7 years :T

IveSeenTheLight

ultrawomble wrote: »

Perhaps so, but there were mortgages around that tracked at 0.5% above base. Do they still exist?

I very much doubt there are BoE + 0.5% product now.
I actaully had a BoE + 0.26%, although that has elapsed and I'm on an SVR now.

Why is that?

It's because the lenders are reflecting their requirements to adjust their risk.
the risk had reduced as property rises occured in 2009 and early 2010, however the deposit requirements and interest rates will reflect in it being harder to purchase if there is a second correction.

This is what partially this thread is about. The tightening of credit means higher deposit requirements and higher interest rates

Be careful what you wish for.

Graham_Devon

Think we got the message now ISTL.

IveSeenTheLight

Graham_Devon wrote: »

Think we got the message now ISTL.

Are you sure?
I'm sure there will be another groundhog day experience in the MSE forums, coming soon to a monitor screen near you.

ultrawomble

IveSeenTheLight wrote: »

The tightening of credit means higher deposit requirements and higher interest rates

Be careful what you wish for.

And isn't that a good thing. Prices will become more realistic and FTBers with the biggest deposits will be able to get the best rates. The availability of easy credit only seems to serve those already on the ladder rather than the FTBer.

Graham_Devon

IveSeenTheLight wrote: »

Are you sure?
I'm sure there will be another groundhog day experience in the MSE forums, coming soon to a monitor screen near you.

Hey, don't get me wrong. I'm not saying I don't disagree with you. Just you said it 20 times over now no matter what anyone says.