Large Deposit Requirements Exclude a Generation of FTB's

Conrad

If anyones interested, I have a reply from my MP on my 'millions of would be owners frozen out' letter. His response is that my letter is being considered at the Treasury - lol! No doubt sitting in the shred pile.

ILW

Please can someone tell me where is the problem for a FTB with a 10% deposit and a sound credit history getting a mortgage for a reasonable earnings ratio.

shupufski_2

IveSeenTheLight wrote: »

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?

Just an FYI, the deposit requirements in my example increase by 40% as prices fall by 37.5% - a change from 25% deposit to 35% is not an increase in deposit demanded of 10% - that would make it 27.5%

Thus

25% deposit demanded at 160k = 40k

35% deposit demaned at 100k = 35k

better for the FTB!

IveSeenTheLight

shupufski wrote: »

Just an FYI, the deposit requirements in my exmaple increase by 40% as prices fall by 40% - a change from 25% deposit to 35% is not an increase in deposit demanded of 10% - that would make it 27.5%

Increasing the seposit from 25% to 35% surely is an additional 10%
I didn't mean it was an additional 10% of the 25%.

When discussing the deposit percentage its in relation to the property value.

Example, a property valued at £100k needing a 25% deposit means that £25k is required.
If the deposit requirements increase to 35% (of the property value) then its an additional 10% (of the property value) not an additional 10% of the 25% deposit

IveSeenTheLight

shupufski wrote: »

25% deposit demanded at 160k = 40k

35% deposit demaned at 100k = 35k

better for the FTB!

As I showed, it depends on the figures, below I show a 20% drop in prices with an increase depost requirement of 10% and it's worse for the FTBer

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.

ultrawomble

The above is true, but the bonus for the FTBer is that they'll be taking on a mortgage of £128K rather than £180K.

IveSeenTheLight

ultrawomble wrote: »

The above is true, but the bonus for the FTBer is that they'll be taking on a mortgage of £128K rather than £180K.

Presuming they have can get the additional 60% deposit (32k / 20k * 100%)
How long will it take to save the additional £12k deposit?
What will happen to prices in the meantime?

Interests rates are low now, the longer you wait the closer they will become to being higher. Is it not best to take advantage of the lower rates for as long as possible.

It's not as easy as you think.
Lowering prices, could price out many FTBers from having the option?

Conrad

ILW wrote: »

Please can someone tell me where is the problem for a FTB with a 10% deposit and a sound credit history getting a mortgage for a reasonable earnings ratio.

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

ultrawomble

IveSeenTheLight wrote: »

Interests rates are low now, the longer you wait the closer they will become to being higher. Is it not best to take advantage of the lower rates for as long as possible.

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?

doire_2

FTB's should have had their head screwed on and been saving for a few years.

Anyone with a bit of sense must have known the boom times would have finally gone bust.

Those that have been saving will now have the upper hand.

Saving for your home or going cap in hand to a bank expecting a 95, 100, or 125% mortgage? I know which camp i'd rather be in. Thankfully im in it.