Large Deposit Requirements Exclude a Generation of FTB's

des_cartes

HAMISH_MCTAVISH wrote: »

The one thing that first time buyers pray for to help them achieve their goal will, ironically, probably make the situation even worse.

You remind me of trying to have a conversation with a foot stamping 2 year old child. When you have trouble deciphering the 2 year old's ramblings, they just shout a bit louder in the hope that their incoherent message will be heard. Eventually of course they calm down, get their nappy changed after wetting themselves and continue to learn that content beats volume when it comes to communicating effectively. Alternatively you could try bold arial 24 caps lock. You know it will make your message more credible.

antrobus

This reminds me of the similarly worthy report issued in June 2007 by the National Housing and Planning Advice Unit which announced that house prices would grow "inexorably" and that the next generation of homebuyers would have to borrow ten times their salaries to afford a house.

RenovationMan

Graham_Devon wrote: »

Or are you just nudging me to go out and get that LED TV?

I saw a really nice one, Samsung I think, that was 3D ready and had the Love Film app built in, plus capability to stream films from a server.

However, with all our renovations and mortgage overpayments, I simply cant justify the £3k it cost (not that I could every justify spending £3k on a tv! :eek:)

Running_Horse

antrobus wrote: »

This reminds me of the similarly worthy report issued in June 2007 by the National Housing and Planning Advice Unit which announced that house prices would grow "inexorably" and that the next generation of homebuyers would have to borrow ten times their salaries to afford a house.

I can remember headlines in the 80s in Today (whatever happened to them?) predicting average houses would be £750,000 by the year 2000. I can also remember you needed to pay for your lender's insurance against you defaulting if you wanted to borrow more than a certain percentage. Although houses in Chatham were selling for £20,000 to £30,000 in auctions in the 90s.

MoneyMiser

As a FTB looking to buy in March 2011 i'm not looking for further house price decrease's as in my area the prices are fairly cheap anyway. What I think all FTB's need now more than anything are more competitve 95% LTV mortgages. This will allow more people to buy IMHO.

MM

IveSeenTheLight

Graham_Devon wrote: »

Probably now?

Anyway, yes, you are correct. Will make the situation worse....

FOR A WHILE.

Once the dust settles, will make the situation ten times better:
- Lower deposits
- Easier deposit saving targets
- Lower mortgage payments
- Lower overall debt

The thing is Graham, you ae looking at this from a potential FTB purpose.

Extrapolate this and the debt the mortgage lenders have a=on already lent assetts and it would mean that deposit requirements would be higher.

I'm sure I've shown before the example of a property vallued at £200k needing a 10% deposit (£20k) lowers 20% in value.

The value is now £160k, however the deposit requirements have increased to 20% (£32k)

Your deposit requirements havent lowered, they've risen.

Additionally, we see that the interest rates applied to that mortgage products would increase, meaning you have to pay a higher repayment.

It's not as simple as you are portraying.

shortchanged_2

Look HAMISH face facts.
It's all thanks to bulls like yourself who helped create the horrendous mess we are in now is the fact that many FTB's are unable to get on the property ladder now.

ultrawomble

Why's Hamish so desperate for FTBers to get on the ladder? Does he want to get off himself?

michaels

Against my better judgement I'm afraid I have to agree with Hamish that falling prices are not going to help first time buyers except those bank-rolled by the bank of mummy and daddy.

Firstly saving for a deposit. Student loans (on the up as discussed elsewhere) and high rents (as a result of the underlying imbalance between supply and demand) are likely to make saving for a deposit hard / prolonged and where rent payments are higher than mortgage payments more years spent renting and fewer years spent owning means higher housing costs overall.

Then when it comes to buying, the FTBs may have fewer other FTBs to compete against but there are still investors - lower prices means better returns for the same rent, well funded investors will have access to cheaper mortgages than all but the best capitalised FTBs and with little return on capital available for most investments those juicy 8-10%s available on property start to look very attractive for long term investors.

So overall it may be good for 'the country' but I don't think FTBs will benefit.

IveSeenTheLight

shupufski wrote: »

Let’s see...

25% of £160k is £40k

35% of £100k is £35k

Seems perfectly ok to me.

The flaw in your argument

I guess this depend of the figures.
the flaw in your argument is you are referring that house prices drop nearly 40% while the deposit requirements increase only 10%

Would the same analogy work if the deposit requirements increase 15 or 20%

how about my example above where I showed a 20% reduction in the price but only a 10% increase in the deposit requirements?

I'm sure I've shown before the example of a property vallued at £200k needing a 10% deposit (£20k) lowers 20% in value.

The value is now £160k, however the deposit requirements have increased to 20% (£32k)

Your deposit requirements havent lowered, they've risen.