Will Mortgages Get Back to 95 or 100%

oppo99

What does anyone think?

I'm completely against irresponsible lending but deposits required for first time buyers are proving a real hurdle

sonastin

90% or 95% maybe. 100% unlikely.

Hammyman

Seconded. They got their fingers burned so 100% and higher is out for a good few years . Expect income multipliers to drop more towards the traditional 3.5x income as well.

I expect it'll be back to 125% mortgages as soon as the next boom comes though

Turnbull2000

Absolutely. The political and industry pressure will become too great. When you listen to the media, the Council of Mortgage Lenders, the regulators and practically anybody else, the problem is always a lack of cheap, low deposit mortgages - not high house prices.

With house building practically abolished by Labour, the Tories and older NIMBIES, we're set for a perfect storm.

myhouse_2

Absolutely not a chance - that's what got us into all the current problems and it won't be tolerated by the govt or FSA until they have forgotten all about the bursting of this bubble which will take 10-15 years.

LilacPixie

A few lenders already doing 95% for FTB's I think. Clydsdale bank, nationwide and yorkshire bank.

dizziblonde

LilacPixie wrote: »

A few lenders already doing 95% for FTB's I think. Clydsdale bank, nationwide and yorkshire bank.

I know locally The Nottingham does too - but on very very tight income multiples.

Post Office seems to be one of the big ones for 90% mortgages, but obviously it's got the Bank of Ireland link going on that may be a problem for some (ours has gone through fine there thank God).

brit1234

oppo99 wrote: »

I'm completely against irresponsible lending but deposits required for first time buyers are proving a real hurdle

I think you will find its too high house prices which are the problem to ftbs not deposits. The lower house prices the lower deposits.

Deposits are high at the moment because banks think house prices are going to fall which they are doing.

Once house prices have hit bottom deposits will decrease however there could be another 30-40% falls coming.

Best save like everyone else and enjoy the price falls.

jcbl

Perhaps I'm biased and desperately optimistic, being a couple of weeks away from completion on our first house. But I think it's possibly naive to think that greater access for FTBs is coming via large price drops. How many people do we all know that, faced with needing to move house and not getting the offers they want, have access to sufficiently low mortgage offers to convert their primary property to BTL, rent out and buy again? We are in a vicious circle: access to low interest rates for those with equity is prompting speculative investment; this investment keeps entry-level property scarce, scarcity keeps prices high, high prices keep prospective FTBs off the market, prospective FTBs need to rent, more rental demand leads to more scope for BTL. There is a new generation of semi-professional landlords in their 40s and 50s, developing portfolios of 1 - 2 bed properties that won't see the market again for a generation. The disparity between mortgage rates available for these folk, and their FTB competitors, exacerbates the issue.

The fact is that based on salary multiple, prices in SE England do not have a long way to go to be, in theory, widely affordable again. Shared ownership entitlement kicks in at 60k combined salary, and indeed 2 x 30k salaries would be the norm in London. Yet Zones 4 - 6 of South London are not short of 2 bed terraces in the 220 - 240k asking price range. Yes, it's a stretch: but 60k x 3.75 is a 225k mortgage, so at 90% LTV, a budget of £250k.

The problem is in getting a 90% ltv mortgage: and even if you can, at an affordable rate, and the property survives the attentions of a twitchy surveyor, without parental support the cash to transact is still an enormous proportion of take home salary to have saved beforehand (paying those inflated rents to BTL landlords at the same time, mind). For many, the goal will seem so distant, why bother at all? As for paying stamp duty, for all but the super-affluent, forget it: a 270k purchase will normally need 85% LTV, so that's over £50k cash on hand to complete.

If this or future governments want us to be a nation of homeowners, with an accessible housing market, a correction to the competitive environment between owner-occupiers and investors, via the taxation system or some other mechanism, may be required. I have nothing against landlords - they are taking advantage of a perfect environment and I do not begrudge that. Yet the current market dynamic is clearly socially regressive in the long term. In the meantime, IMO, there is very little to suggest BTL will not fill the gap left by FTBs.

hazyjo

Seen it all before - yep, course it will happen again, but not for a very long time, IMO. I give it 6-8 years or so - it'll be when house prices are rising quickly, everyone putting theirs on for more than the last one sold for, and people naively thinking they can never lose money in property and it can only go up, so 100(+)% mortgages will be given out again. Absolute madness. Should be legally banned. People should have to prove they can save a deposit before taking on a mortgage. Mind you, some will just be given it, but never mind. Should always need a deposit of sorts.

Jx

brit1234

jcbl wrote: »

IMO, there is very little to suggest BTL will not fill the gap left by FTBs.

Sorry where on earth will buy to let get the fiance for this especially with the buy to let lending clampdown.

Widespread repossessions, rising interest rates, access to credit and falling prices suggests BTL will not fill the gap.

Remember buy to let is seen as the Achilles heel of the housing market as widely reported in the Treasury Select Committees.

Housing benefit cuts, rising unemployment and the end of interest only mortgages will make BTL even harder.

As for the accidental landlords their consent to let is limited and will have to go on more expensive buy to let mortgages eventually.