Have BoE Lost All Credibility Over IRs?

Percy1983

HAMISH_MCTAVISH wrote: »

Nonsense.

I think 120% mortgages or 10 times salary mortgages or liar loans are ridiculous and should be banned.

But can you explain why you think a 95% mortgage on an 85K flat to a young professional on 25K a year is "lax lending"?

For example:

Flat price = £85,000
Rent = £550 per month
Deposit = 5% or £4250
Mortgage @ 5% = £473 per month
I/O component @ 5% = £333 per month

Why should this person be forced to waste so much extra money on rent for several years to save a 25% deposit?

Funnily I keep seeing 10% deals and better rates at 15%.

I agree 95% mortgages wouldn't be a problem and I would welcome the move, but as I have found myself 10% just means save a bit longer (than 5% deposit) and have a lessor mortgage for it.

If you can save 5% you can save 10% it will just take longer.

HAMISH_MCTAVISH

Percy1983 wrote: »

I agree 95% mortgages wouldn't be a problem and I would welcome the move,

So you don't think 95% mortgages are "lax lending"....

But you support restricting mortgage availability to keep prices lower by excluding most potential participants.

I take it you realise if 95% mortgages were available, prices would be rising quite strongly again? And if so, why the contradicting viewpoint?

If you can save 5% you can save 10% it will just take longer.

And likewise 15% or 20% or 25%..... It will just take longer. But time is the enemy of housing bears. Every month of rent is another month of enriching your landlord instead of yourself, in the 80% of the UK where mortgages are cheaper than rent anyway.

the_flying_pig

HAMISH_MCTAVISH wrote: »

...I take it you realise if 95% mortgages were available, prices would be rising quite strongly again? And if so, why the contradicting viewpoint?...

why "rising... strongly"? prices are only 10% or so below 2007 levels but key variables like employment, GDP, and laxity of lending [no more superliar >100% mortgages] are less inflationary than then.

HAMISH_MCTAVISH wrote: »

...But you support restricting mortgage availability to keep prices lower by excluding most potential participants...

not really.

i'm perhaps less "excluded" if my bank lends more money to me but not to the hundreds of thousands of people out there who are pretty much exactly like me.

Roger Bootle - "For an individual, the availability of more money may help them to become a property owner, but this is not true for the population as a whole. In the short run at least, the supply of housing is fixed. An increase in mortgage lending will only generate higher house prices."

http://www.telegraph.co.uk/finance/comment/rogerbootle/8306972/Why-must-we-make-the-same-old-policy-failures-in-the-housing-market.html#dsq-content

Percy1983

It isn't just the requirement for a deposit but a reasonable credit file, as in if I have a £5k deposit and £20k if debts I shouldn't be accepted.

By all means there is many times I have been accused of sitting here moaning when I should just be getting on with it, I am getting on with it and accept I need at least 10%. Now as I guess you aren't a FTB you seem more concerned about this fact than me and I am a potential FTB.

What difference does it make to you what deposit FTB's need to raise?

FTBFun

Percy1983 wrote: »

It isn't just the requirement for a deposit but a reasonable credit file, as in if I have a £5k deposit and £20k if debts I shouldn't be accepted.

I had to tell the bank about adverse credit when applying for my mortgage last year. You're not suggesting anything new.

Percy1983

I know its nothing new, but not too long ago it would have made less (if not no) difference to the application.

Thrugelmir

Percy1983 wrote: »

I know its nothing new, but not too long ago it would have made less (if not no) difference to the application.

Only with certain mortgage lenders.

whatyadoinsucka

"***95% mortgage on an 85K flat to a young professional on 25K a year is "lax lending"?

For example:

Flat price = £85,000
Rent = £550 per month
Deposit = 5% or £4250
Mortgage @ 5% = £473 per month
I/O component @ 5% = £333 per month

Why should this person be forced to waste so much extra money on rent for several years to save a 25% deposit? ***"

Hamish in leeds for example flat prices are more like £125k, very few graduates earn £25k immediately. (so its more like 6-8 x salary)
Many graduates would not want to buy a flat, as its as dead money (if not more so than Renting)
there are so many empty flats, rentals can be negotiated with ease and a months notice after the minimum tenancy and your out of there. No worries of selling on.

whats your point again !

Percy1983

I will add not many are forced to rent, many choose to rent.

Actions & Consequences...

Thrugelmir

Percy1983 wrote: »

I will add not many are forced to rent, many choose to rent.

Actions & Consequences...

The workforce in the UK is far more mobile than 30 years ago.