Telegraph: Lending main obstacle for buyers, causing Brits to "give up"

HAMISH_MCTAVISH

Graham_Devon wrote: »

Missing your cheap credit binge Hamish?

Nope.

I have all the cheap credit I need and then some, thanks...

Deposits may not have been a problem pre-2007, for a few years, but look at the problems that have stemmed from it.

No problems have stemmed from it.

UK mortgage lending standards were never the problem.

Oh I forgot, the massive problems were only a problem because lenders reduced credit in Hamish's little world. If they had just kept lending and lending forever more, we wouldn't have had problems.

See "Australia" for the answer.

No credit rationing, no crash, no recession, no problem.

And all that with the highest house prices relative to income in the developed world.....;)

B_Blank

If you get your financial news from the telegraph/guardian/times/mail/sun or any of the other rags then you are in trouble and probably have no idea about anything.

In the UK the FT is, in my view, the only paper you can read unbiassed financial discussion on. All other papers have vested interests and often lack expertise.

If you want to form your financial opinions reading rags like the telegraph thats fine, but then you are basically a moron whose view nobody should care about because it is uneducated rubbish

Graham_Devon

HAMISH_MCTAVISH wrote: »

No problems have stemmed from it.

You are officially frootloop.

FATBALLZ

I agree lending is the main obstacle, if the banks hadn't lent so much money to idiots pre 2008 then prices would never have been driven up and I'd have been able to buy a place with a mortgage of £30k or so. Instead I have to borrow 4 times as much. What a load of !!!!!!.

mcc100

HAMISH_MCTAVISH wrote: »

Quite bizarre that you celebrate young FTB's being locked out of the market through mortgage rationing.

Complete b******s.

The local developer in my town is refusing to lower the prices of 2 up 2 down rabbit hutches from £120k, so he is renting them all out. Apart from the 25% - 33% that he has to sell to the local housing association.

In the local rag there are national chains advertising for managers offering salaries of £15k.

And then you try to blame mortgage rationing for the fact that FTB's are locked out of the market ......

Loughton_Monkey

What we are seeing at the moment can only be 'good'.

This country has had a severe 'sickness' for at least a generation, in which one large proportion has sat idling at home on generous benefits, while a larger proportion has prospered, pigged out on credit, spent every penny, and yet quite happily lied about salaries to get 5Xtimes mortgage representing 115% of value (thanks to laxity by the banks).

It got so bad that it was not good enough to 'slow down'. It has effectively 'stopped'. I think it will now breed a generation who start, once again, to recognise the value of money and the need to save. The clever ones, of course, will save while still young, childless, and (maybe) living at home or certainly in a cheap rented bedsit/small flat. They don't fully realise it yet, but by the time they have saved up their £30K deposit, the prices will have moved a fraction so they need £33K, and then they'll have to pay 6%/7% mortgage rate [about the minimum in 'normal' times].

These will be the 'clever' ones. The rest have already committed themselves to children and/or 3-bed houses only are renting them. So they are paying someone else's mortgage and will never be able to afford to save their own deposit. Eventually, however, their only hope is that when their parents will die, they will leave a house.

But hopefully this will introduce a budgetting/savings culture into the next generation of adults, which might also get them thinking about saving for old age as well. Many of us older ones remember mortgage rates that represented far more than 50% of take home pay. This is actually good medicine for a while since once you learn to live within your means, you continue to do so when the rates go down again.

Have no fear, though, with all the money being saved in banks, they will get so 'flush' with cash that it won't take long for them to 'agree' that house prices are stable enough to start lending 90% again. The clever ones are already doing that.

All in all, a very expensive 'education' but probably worth it in the end.

zappahey

Mrs_Arcanum wrote: »

Average valuation offered for our old house in 96 was £165,000. Following the death of my Mother in 2002 we were offered £450.000 subject to planning permission.

The words in bold suggest the offer wasn't just based on the value of the existing house, though you don't say if it was actually obtained.

vaporate

Hardly 'news' per se.

property.advert

HAMISH_MCTAVISH wrote: »

You're not taking into account interest rates reducing over the last couple of decades.

The cost of homeownership involves two equally important factors.

1. The sticker price of the house.

2. The cost of funds for the mortgage.

The proof of this is that mortgages for FTB's, as a percentage of after tax income, are now just 29%, versus an all time high of 68% in 1990, and 45% briefly at the peak in 2007.

The total cost of buying a house is dramatically cheaper today than it was when I first bought in 1990... Even though the sticker price of the house is higher.



Wages have increased by inflation plus 2% on average for the last few decades. House prices by inflation plus 2.8%.

However the cost of other things has fallen dramatically. Food used to be 20% or 30% of a families income. Now it's just 9%. Clothing and electronics are also vastly cheaper than they used to be. etc.

There is much validity to your argument but your theory misses a couple of key items.

It is not after tax income which is important but disposable income after paying for food, utilities and everything they need to bring in their income. It does not include rent as there is direct transposition between rent and the mortgage though any variance should be accounted for. Extra costs particular to house ownership should also be included, such as buildings insurance and saving into a repairs fund etc.

This will probably not skew your argument much but may increase the percentage of income needed to service the debt.

Finally, if we are indeed going through a period of higher inflation, it would be prudent to include an inflation discounter on their static mortgage borrowing.

geneer

Its that pent up demand again isn't it.

Theres also a huge pent up demand for ferrari's and lottery wins I hear.