Industry leaders summoned to crisis meeting on first-time buyers

smeagold

The summit will be held in London on February 15 and chaired by housing minister Grant Shapps.

Problems faced by first-time buyers include the large debts with which they leave university, the high deposits routinely required by lenders, and the increasing likelihood of interest rates rising.

According to the Council of Mortgage Lenders, the proportion of first-time buyers under the age of 30 who are able to buy without parental help has fallen from 63% five years ago to 17%.

In the last three quarters of 2010, the proportion of mortgages granted to first-time buyers with deposits of less than 10% fell to two in 100, down from almost six out of ten in 2005.

The average age of an unassisted first-time buyer is now 37.

Treasury spokesman Lord Oakeshott accused mortgage lenders of being virtually ‘on strike’ when it came to lending to first-time buyers.

He said: “The bankers’ doors are shut to first-time buyers without a big helping hand from the Bank of Mum and Dad.”

http://www.estateagenttoday.co.uk/news_features/Industry-leaders-summoned-to-crisis-meeting-on-first-time-buyers

No wonder there's a crisis meeting, these figures are horrendous. Seems like virtually an entire generation is unable to buy a house.
If there's nobody at the bottom of the chain, then there is no chain.

Loughton_Monkey

There is no problem in the longer term. There is only one 'cure' and that is time.

Imagine a 'rich' individual on £50K take home pay. He can 'spend' £50K a year and have a whale of a time for as long as his income lasts. The minute he starts spending £60K, then that is his choice. Before long, his line of credit will run out, and he will be 'forced' to spend only £50K.

Trouble is, for the next X years, he can only spend £45K on himself, and use the other £5K servicing his debt. This is a reality. He has to take 'pain' and he has to spend 'time'. At some point in the future, determined simply by a mathematical equation, he can revert to enjoying his £50K lifestyle.

You can (rightly) accuse me of being over simplistic here. But behind that is a degree of absolute truth that 'institutionally' that is exactly what this nation (and others) has been doing. So we have to (a) suffer the 'pain', and (b) wait for the appropriate time, and we can all go back to the 'proper' position and hope we don't go back to bad habits of spending more than we earn.

All that the governments, bankers, or BOE can do is perenially argue the toss about 'who' suffers the pain, and whether we want 'hard' pain for 3 years, or 'soft' pain for 5 years. All very complex and emotional, I agree, but we need to understand that this is not disaster for ever. This is not the start of an entirely new set of economic laws. It is simply a period of 'institutional madness' in which as a nation we have been spending much more than we can afford. The damage has been done. We simply have to take the pain, and in time we will return to where we were.

Once there, we can either proceed on a more sustainable basis (i.e. learn lessons from the past), or we can start all over again and 'forget' the past and re-create the same problem again. That's up to us.

Percy1983

It does seem to be the way really, will be interesting to see what comes of this.

As it is at the current rate I will be buying at 28 (unassisted), but that is a mix of a sucessful career and cheap housing locally.

By all means all they could really do is push for lower deposits whicj will take months off my buying date but push up competition, so I am happy to wait.

1984ReturnsForReal_2

If they cant even work out the fact if they dropped their massive margins on interest rates it might stir up interest what bloody good will an emergency summit do?

Thrugelmir

smeagold wrote: »

Treasury spokesman Lord Oakeshott accused mortgage lenders of being virtually ‘on strike’ when it came to lending to first-time buyers.

He said: “The bankers’ doors are shut to first-time buyers without a big helping hand from the Bank of Mum and Dad.”

Clever journalism to create a story.

This was published on the 21st December 2010 in response to CML's 2011 lending forecasts. Slightly different....

Lord Oakeshott, a Liberal Democrat Treasury spokesman, said banks are abandoning millions of young people who have no hope of buying, even if they have a good job. "There is only one bank left lending at fair rates to first-time buyers without a 25 per cent deposit – the Bank of Mum and Dad,’ he said. ‘That is deeply divisive and damaging to social mobililty."

smeagold

Irrelevent, theres a crisis meeting anyway so there must be a crisis, what will they do to keep house prices from falling?

IronWolf

Its not a crisis. Such a situation is not substainable, and so what will happen is house prices will come down.

I can never understand why people are blaming the banks for FTBs struggling, they arent the problem, HOUSE PRICES ARE!

smeagold

IronWolf wrote: »

Its not a crisis. Such a situation is not substainable, and so what will happen is house prices will come down.

I can never understand why people are blaming the banks for FTBs struggling, they arent the problem, HOUSE PRICES ARE!

and who was it fuelled the house price boom? the banks, with 125% mortgages, teaser rates, no money down, no proof of income etc. FTBs are struggling because the banks fuelled the boom, now here comes the bust

Loughton_Monkey

smeagold wrote: »

Irrelevent, theres a crisis meeting anyway so there must be a crisis, what will they do to keep house prices from falling?

Of course there's always one possible solution.

Panic
Panic
Panic
Panic
....

Trouble is, this one never works.

IronWolf

smeagold wrote: »

and who was it fuelled the house price boom? the banks, with 125% mortgages, teaser rates, no money down, no proof of income etc. FTBs are struggling because the banks fuelled the boom, now here comes the bust

I didn't mean the bubble wasn't partly their fault, but you can't blame them now for not continuing their past mistakes.

CLAPTON

I am absolutely shocked that any first time buyers are allowed to have a mortgage with less than a 10% deposit