Have BoE Lost All Credibility Over IRs?

Percy1983

I completely agree that more houses are needed, which is the overall answer.

But in the shorter term to 'artificially' keep prices down makes the most sense, as I say lower prices benefit everybody, yes some in bad situations need to sort that out but the overal end product is better for them. Or we can carry on with the free for all which caused the boom which is nothing to do with how people manage there finances but who got the the bank first and said 'give me some money'.

As I say the current system to which I support is actually delaying us, part of the delay is due to that our finances weren't in perfect order (perfect credit files but high levels of debt), to which we have made a strict budget and cleared the debts and continued to save a deposit.

Now this is where in someways I do believe people need saving from themselves, a year ago if 100% mortgages where available we could have jumped in with a high level of debt and would probably be fine but we would be a lot closer to the edge than we will be when we buy in a year or so.

In short I wasn't the most financially savvy but the current system has meant I have had to book my ideas up, sort out spending habits and budget which are all great things to do before you buy a home.

So right now I have been a bit delayed due to my own actions which is fair enough, but to be delayed due to ever growing house prices because i was born too late isn't my fault.

So should we price out the young or the financially inept while we build more houses? which do you choose.

Percy1983

HAMISH_MCTAVISH wrote: »

So what about those with no debt, and little savings, who are savvy enough not to run up debt but also happen to live in a place where rent is far higher than mortgage payments?

Their capacity to save a deposit is minimal, but their ability to pay a mortgage is beyond reproach.

They were never excluded from buying before..... But you suggest they should be now?

Well they have decided to live there, 2 options.

1, Earn more
2, Rent somewhere cheaper

Personally I have been slowly upping me earnings while living somewhere very cheap to rent, its not the ideal situation but a sacrifice I have made to make getting a deposit quicker.

HAMISH_MCTAVISH

ILW wrote: »

There is no mortgage rationing, unless you have your own definition of "rationing".

From Barrons Banking Dictionary.

Method for limiting the purchase or usage of an item when the quantity demanded of the item exceeds the quantity available at a specific price.

In this case, rationing of the product (money) in limited supply is achieved through raising credit score criteria and deposit levels until demand is reduced to balance supply.

ILW

Surely the term rationing implies some sort of sharing. (In the most common use of the word).

I do agree there is a shortage of mortgage money.

Percy1983

ILW wrote: »

I do agree there is a shortage of mortgage money.

I think we all agree there, to which I question should it just go to those who ask first (pricing out the young) or should it go to the financially able (pricing out the financially inept)?

Linton

Percy1983 wrote: »

........
So should we price out the young or the financially inept while we build more houses? which do you choose.

Your definition of eptness is the ability to put together a large deposit. Fair enough. But isnt that pricing out the young, who wont have had the time to accumulate a large pot of wealth and giving the relative advantage to older people and those younger people from wealthy families?

Is that what you want to do?

HAMISH_MCTAVISH

Percy1983 wrote: »

Well they have decided to live there, 2 options.

1, Earn more
2, Rent somewhere cheaper

Personally I have been slowly upping me earnings while living somewhere very cheap to rent, its not the ideal situation but a sacrifice I have made to make getting a deposit quicker.

So what if they live in a 1 bedroom flat, can't rent anywhere cheaper, but the cost of rent is still more than the cost of a mortgage?

By "place" I meant "area", not specific house. There are plenty of areas where the cost of buying is far cheaper than the cost of renting, in all categories of housing. People may not be able to downsize, perhaps they have a family with children, perhaps a disabled partner, etc etc etc. Yet you suggest people on moderate incomes who live in these areas should be excluded from buying houses?

In my own town for example, the cost of a full repayment mortgage would in almost all cases be less than the cost of renting the same house.

Thrugelmir

HAMISH_MCTAVISH wrote: »

In my own town for example, the cost of a full repayment mortgage would in almost all cases be less than the cost of renting the same house.

Thats market normality.

As the cost of buying a property to let with a mortgage exceeds that of a individual repaying a mortgage. As the capital to repay the mortgage for the leveraged investor has to be paid out of taxed income. Not with standing the fact that commercial lending rates are higher as well and the let property is fully maintained.

ILW

What about limiting supply on a cost/risk basis. eg High risk borrower pays base +10%.

Percy1983

Linton wrote: »

Your definition of eptness is the ability to put together a large deposit. Fair enough. But isnt that pricing out the young, who wont have had the time to accumulate a large pot of wealth and giving the relative advantage to older people and those younger people from wealthy families?

Is that what you want to do?

Good point and to be honest the is no perfect answer right here.

I will discount wealthy people from this as they will fund there children no matter how to do it.

My point is if we just leave it as the free for all it was all the young will be priced out as prices keep getting further out of reach, in short people will suffer for being born to late.

If we go with how things are and prices remain stable then it will be a fairer playing field, the ones who can't buy will be the ones unable to budget/save or just can't keep there spending in check and run up credit cards.

The current system is much more fair, instead of being priced out due to something you can't contol (year of birth) you are priced out due the decisions you have made in life.