Large Deposit Requirements Exclude a Generation of FTB's

IveSeenTheLight

Batchy wrote: »

The supply demand theory, suggesting there are more properties than WILLING buyers is ridiculous, the problem with the buyers is the UNWILLINGNESS of the banks for allowing them the finance. There is so much pent up demand, its ridiculous.

It's not pent up demand you decribe but pent up desire.

Demand = The Desire and Ability (Access to funds)

I may desire a Porche, but I canlt be included in the demand figures as I can't afford one.

You do point out though that if ease of access to funds was available there would likely be a greater increase in effective demand and this would push price upwards.

You do also point out that if there is not sufficient effective demand, potential sellers can reduce their contribution to the stock as they do not need to sell.

It;s a fine balance.

MoneyMiser

doire wrote: »

We have a live one here

Sorry, I dont follow??

doire_2

MoneyMiser wrote: »

Sorry, I dont follow??

You said that as a FTB you dont want houses to get any cheaper. Why not? It would save you money

MoneyMiser

doire wrote: »

You said that as a FTB you dont want houses to get any cheaper. Why not? It would save you money

No,

What I said was "i'm not looking for further house price decrease's"

Basically implying that what is MORE IMPORTANT to me as a FTB is actually getting the mortgage in the first place.

Every FTB's situation is different in regards to the length of time it would take to save for a deposit. The deposits that the banks are asking for now are pricing many out of the market. Some may only need a year to save whilst some may need three to four years.

However, if many banks only required a 5% deposit, this would help so many and we would see an influx of FTB's to the market, hopefully kick starting the economy. Supply would decrease, whilst demand would increase seeing an eventual rise in house prices.

I'm not saying go back to the days of irresponsible lending (i.e. 100% - 125% LTV), but at least give some people a fighting chance.

MM

ultrawomble

MoneyMiser wrote: »

However, if many banks only required a 5% deposit, this would help so many and we would see an influx of FTB's to the market, hopefully kick starting the economy. Supply would decrease, whilst demand would increase seeing an eventual rise in house prices.

Recent experience should have taught us that basing an economy on rising house prices by borrowing against the asset and spending the dosh on imported tat and holidays is not a wise thing to do.

Graham_Devon

MoneyMiser wrote: »

However, if many banks only required a 5% deposit, this would help so many and we would see an influx of FTB's to the market, hopefully kick starting the economy. Supply would decrease, whilst demand would increase seeing an eventual rise in house prices.

...Which would result in FTB's having to take longer to save deposits.

Were back to everything you said was a problem?

MoneyMiser

Graham_Devon wrote: »

...Which would result in FTB's having to take longer to save deposits.

Were back to everything you said was a problem?

But surely you agree that a 5% deposit, regardless of house price is much more affordable for FTB's than a 10% - 25% deposit.

MM

davilown

MoneyMiser wrote: »

But surely you agree that a 5% deposit, regardless of house price is much more affordable for FTB's than a 10% - 25% deposit.

MM

Why? You need to look at other factors such as IR. The panoramic view is what you need, not the just the actual price.

MoneyMiser

davilown wrote: »

Why? You need to look at other factors such as IR. The panoramic view is what you need, not the just the actual price.

I agree, the IR is going to be higher on these deals but if people do not try to overstretch themselves then they can still be affordable. Once the term has finished, a equity has been built up, then these people can get a better deal.

The way I view it, is that a FTB's first home does not need to be their dream home, it is merely a stepping stone.

MM

Percy1983

MoneyMiser wrote: »

The way I view it, is that a FTB's first home does not need to be their dream home, it is merely a stepping stone.

MM

I would disagree to a point. If i wasn't completely priced out in my younger days then maybe I would be in a 2 bedroom 'starter' terrace house now, but due to being froze out for so long my life has moved on so now I am looking at going straight to the 3 bed 'dream home' semi as there won't be much of a gap between house/marriage/children all being well.

In short my whole life has been on hold for a good few years until I can buy a house, so I am skipping the first few steps to catch up.