First time buyers priced out...

B_Blank

Loughton_Monkey wrote: »

B Blank stands for Brains Blank, as obviously applies to you!

Tell me where I am saying that lowering the price doesn't make it more affordable?

Please try to understand!

If you once needed to 'afford' 5% deposit. Now deposits have gone up. Whilst deposits stand at 15%, there is only one way to they can be 'more affordable' and that is a drop in price of the house by 66.6%. Once yesterday's £100K house (£5K deposit) drops to £33,333 (£5K deposit at 15%), the deposit is just as 'affordable'

You have just proved yourself to be the same type of idiot to which I was referring. Those who are capable of no clarity of distinction between on the one hand total house prices, and on the other hand, the massive increase in deposit (%) now required. From 0% to 5% - up to 15%/20%

Yup, and you are so mature and intelligent that you get angry and are rude to people who dont agree with you online. Sad.....

Loughton_Monkey

Jimmy_31 wrote: »

Loughton Monkey are you seriously saying that i should be sat here hoping for the houses that i want to buy to increase in value.
Its not about wanting lower deposit requirements for most sensible FTBs, i do not want the banks to start accepting low or no deposits again because look at the mess that has made, if house prices rise i have to give the sellers and banks even more money for doing absolutely nothing and if house prices go back to normal then the deposit ive currently got in the bank suddenly gets bigger and bigger. Theoretically i could go and buy my first home tomorrow if i wanted to but i wont be doing that because prices are too high.

Why don't people read posts before deriding them?

I am not suggesting that if you want to buy a house, but cannot, that you should sit there hoping they increase in value. Why on earht do you get that message? I am suggesting that they will stagnate.

You state (above) that the deposit is not your own problem.

OK, then don't bother reading my post at all, which is mainly about the fact that people cannot afford because of the much larger deposit and that lower house prices are no the panacea to change that.

Of course if prices come down, you can afford it marginally better. But what will they come down? 10% 20% even? Pie in the sky, but believe that if you wish.

At what price reduction will you 'jump' and buy one? 30% reduction?

Well again, read the post. The day after you get your 'affordable' mortgage, rates are going to go up. Probably doubling over a short space of time. So the price drop was all a waste of time. You'll be unaffordable again. Do I care?

myhouse_2

HAMISH_MCTAVISH wrote: »

Even when renting for life will cost you two or three times as much as buying at peak in 2007????

That's by far the best example of cutting off your nose to spite your face we've seen in months around here.

Well done. :T

Only if he's wrong!
By most measures, prices are high - it's entirely reasonable to expect that short-term renting will prove a very good investment.

HAMISH_MCTAVISH

myhouse wrote: »

Only if he's wrong!

No, what he said was if prices don't fall to a point he sees value, he may never buy.

Which would be a terminally stupid thing to do, on a financial level.

By most measures, prices are high - it's entirely reasonable to expect that short-term renting will prove a very good investment.

Well it hasn't so far in most areas.... I'd argue there's every reason to expect that trend will continue.

Jimmy_31

Loughton_Monkey wrote: »

Why don't people read posts before deriding them?

I am not suggesting that if you want to buy a house, but cannot, that you should sit there hoping they increase in value. Why on earht do you get that message? I am suggesting that they will stagnate.

You state (above) that the deposit is not your own problem.

OK, then don't bother reading my post at all, which is mainly about the fact that people cannot afford because of the much larger deposit and that lower house prices are no the panacea to change that.

Of course if prices come down, you can afford it marginally better. But what will they come down? 10% 20% even? Pie in the sky, but believe that if you wish.

At what price reduction will you 'jump' and buy one? 30% reduction?

Well again, read the post. The day after you get your 'affordable' mortgage, rates are going to go up. Probably doubling over a short space of time. So the price drop was all a waste of time. You'll be unaffordable again. Do I care?

I got that idea from your previous post. The smarter potential house buyers will be (a) saving like there is no tomorrow, and (b) hoping that prices do not drop - and perhaps rise a bit -.

I am hoping they drop i do not want a price increase, prices have already dropped an average of 20% in my area in the last 12 months and lots of them are still not selling. I may bite at a 30% reduction but cant say for sure because we are not at that level of reductions yet, but when we are ther ei will make a decision to buy or to wait.

Mortgage rate increases will only affect me marginally as i will be paying off the mortgage as fast as possible.

The reason housing is unaffordable for some people hasnt got anything to do with the size of a deposit required to purchase, the asking prices are too high to begin with

Cleaver

Dave101t wrote: »

i wish houses were still 30k like they were 10 years ago, happy times...

Thought it would be interesting to compare ten years ago with now.

The average house price in 2001 was around £92,000 and the base rate was around 5% for the majority of the year, with two year fixed rate or SVR mortgages around 5.5%. The mean average wage was £19,490 according to ONS. So the average house with a 10% deposit would require a mortgage of 4.24 times the average wage and your mortgage repayment on a five year fix would have been around £514 a month, or 31.6% of your gross monthly pay.

The average house price in 2011 is £162,000 according to Nationwide and the base rate is 0.5% with two year fixed mortgages or SVR available at around 4%. The mean average wage is around £25,424 according to ONS (it's 2010, sorry, couldn't find 2011 but bound to be similar). So the average house with a 10% deposit would require a mortgage of 5.73 times the average wage and your monthly repayment on a five year fix would be £770 a month, or 36.3% of your gross pay.

Summary

2001
£92k average house
5.5% mortgages
£19,490 average wage
4.24 x average lending
£514 monthly mortgage payment
31.6% of gross pay on mortgage payment

2011
£162k average house
4% mortgages
£25,424 average wage
5.73 x average lending
£770 monthly mortgage payment
36.3% of gross pay on mortgage payment

Obviously this is just a bit of fun; a snapshot of averages for the two years which are very general and just look at the initial payments on a mortgage. Obviously the real picture is a lot more complex. And I've used 10% deposit figures, which are obviously hard to get at the moment, but use 20% and you'd get similar figures.

Cleaver

Jimmy_31 wrote: »

The reason housing is unaffordable for some people hasnt got anything to do with the size of a deposit required to purchase, the asking prices are too high to begin with

I think it's both. If I were a FTBer in the South East earning £30k and wanted to buy a 2-bed flat for £200,000 which required a £50,000 minimum deposit then both the ticket price and the deposit requirement would put me off buying.

Obviously if I were a FTBer in Manchester earning £20k and wanted to buy a 2-bed house or flat for £80,000 which required a £20,000 minimum deposit then I think it'd be the deposit requirements that stopped me buying more than the ticket price.

Le_Chuck

Loughton_Monkey wrote: »

B Blank stands for Brains Blank, as obviously applies to you!

Tell me where I am saying that lowering the price doesn't make it more affordable?

Please try to understand!

If you once needed to 'afford' 5% deposit. Now deposits have gone up. Whilst deposits stand at 15%, there is only one way to they can be 'more affordable' and that is a drop in price of the house by 66.6%. Once yesterday's £100K house (£5K deposit) drops to £33,333 (£5K deposit at 15%), the deposit is just as 'affordable'

You have just proved yourself to be the same type of idiot to which I was referring. Those who are capable of no clarity of distinction between on the one hand total house prices, and on the other hand, the massive increase in deposit (%) now required. From 0% to 5% - up to 15%/20%

But the value of houses, and what % deposit the banks require are 2 seperate things. IF house do rise, there's no guarentee that the banks will reduce the % the want as a deposit.

Cleaver

Le_Chuck wrote: »

But the value of houses, and what % deposit the banks require are 2 seperate things. IF house do rise, there's no guarentee that the banks will reduce the % the want as a deposit.

True, but generally lenders would be more flexible with their lending criteria for an asset when that asset is generally rising in value. Not that I'd ever advocating it ever happening again, but look at certain lenders offering 125% mortgages. They presumably did this because they felt that the asset they were lending on would be worth 125% of its value pretty quickly.

Le_Chuck

Cleaver wrote: »

True, but generally lenders would be more flexible with their lending criteria for an asset when that asset is generally rising in value. Not that I'd ever advocating it ever happening again, but look at certain lenders offering 125% mortgages. They presumably did this because they felt that the asset they were lending on would be worth 125% of its value pretty quickly.

but having had their fingers burnt, is it likely we'll see high LTV mortgages again?