First time buyers priced out...

Cleaver

Le_Chuck wrote: »

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

Dunno, depends on your opinion. Although my personal opinion is that of course we will. No one ever tends to ever learn anything new from anything that happens and during the next housing boom we'll probably see all sorts of mortgage products again, although maybe not to the extent of the 125% mortgages. Banks want to make money, so if the risk / reward ratio is appealing to them then they'll lend money. Then house prices will crash, and we'll have the same discussion again, then boom, then crash, then... <repeat to fade>.

Pick any financial crash from the past 200 years. Has anyone really learned anything from these crashes, or do we just keep on going through them again and again and again?

HAMISH_MCTAVISH

Le_Chuck wrote: »

, is it likely we'll see high LTV mortgages again?

OF COURSE it is.....

I absolutely guarantee you that at some point in the future, another generation of incredibly bright young financial wizards will think they've figured out why "it really is different this time".

They'll be wrong of course. But the lure of profit and confidence in their own abilities will be irresistible.

What should really happen if you want to tame the boom/bust cycle is contra-cyclical lending practices. So after a bust dirt cheap 100% mortgages and the like should be freely available to any old Tom, !!!!!! or Harry with the ability to pay. And as the boom progresses, lenders should gradually reduce the LTV and implement higher rates.

But this will also never happen.

Because like many things to do with the economics of the housing market, it's counter-intuitive to your average tabloid reading idiot...

Ron2256

Le_Chuck wrote: »

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

The banks had their fingers burnt, not the bankers. The bankers will be pushing for the lending bonanza asap or as soon as they can get away with it.
They work in their own interest (bonuses) and not for the interest of the organisation. Heads they win, tails we all lose.

the.ciscokid

Loughton_Monkey wrote: »

Missing the point! You were almost there. Now you're 15 miles away. That's disaster. 13.5 miles doesn't really change the issue does it? And yes, repayments might be smaller, but repayments (historically) are much less than house price inflation. I'd rather have 10% extra house inflation in the longer run.

Why would you rather have HPI? Inflation means more debt. Is debt good?

Do you want it to ensure others are priced out, because you are alright? What happens when house prices are too high, and even 5% is too dificult to save?

In the medium term, the deposit requirement brings asset prices down, which is good for society.

Loughton_Monkey wrote: »

Same as above. OK, the 10% makes it marginally more affordable. Why can't you understand that it's the 'giant leap' in deposit requirement that suddenly makes them unaffordable in the short term?

Ahh, so you apparently do understand that eventually asset prices would balance it out by decreasing.... but you don't want that.

Loughton_Monkey wrote: »

If we had a Stock Market crash of 20%, are you the sort of person who would say "Brilliant. Good News. It was only 18%"?

I couldn't care less about a stock market crash. Why should I?

Loughton_Monkey wrote: »

Still missing the point. Where did I say buy in a high interest environment? I said we are in a low interest rate environment and that if you are worrying about affording in the futre, then double it because they will doubtless go up.

You can sit there 'hoping' rates will go down all you like. But it won't happen.

Yes, I know what you said, but it seems you didn't understand me. I am saying it is far better to buy in a high interest rate environment, which you, in a round about way seem to agree with. Which probably also means deep down you realise house prices are too high.

Loughton_Monkey wrote: »

Obvious isn't it? Living at home on 'free' rent and buying while base rate is 0.5%. As opposed to renting at market rate, so you cannot save easily and by the time you have the deposit, base rate will be 2.5%

Now I am confused, you think it is better to buy when the base rate is low? Above you basically said if you do, you are setting yourself up for a fall, as interest rates will rise.

Loughton_Monkey wrote: »

These things don't happen, or reduce quickly. They creep up and then you notice it. In my own case, my wfie was working but earning probably 1/5th of my own salary.

Inflation peaked at 27%. Never got pay rises anything like that.

House price inflation? What were the salary rises like, roughly. 10%? 15%?

You might be aware of the increase in house prices over the last decade... pretty sure wages have risen in line. You appear to be arguing that this isn't a problem. Funny how if it is inflation in other necessities, then this is a bad thing.

Loughton_Monkey wrote: »

I'm saying that if (when) you are spending half your income on a mortgage, then your friend who doesn't could save a deposit in 6 months by taking the same pain.

What, back in your day? I certainly don't know many people who could put together a 15% mortgage in 6 months. I mean, that would mean saving 15K in 6 months for a very humble flat. You would need to be earning, what, 80K a year to be able to do that? Do you agree what you said is therefore nonsense?

the.ciscokid

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%

Nope.

As discussed, if you save a bit more deposit, you will get better interest rates, and have to pay back less over the life of the mortgage.

House prices will also trend downwards to become more affordable, making it better for everyone.

The problem here is you only care about the individual, and right here and now, rather than a longer term view. For example, the "housing ladder" (which I think is a load of horseshit made up to get people into more debt, but that is another story)... as you move up, you will invariably incur larger debts. If house prices have reduced due to larger deposit requirements, then you will be even more better off. Plus, you will no doubt save money on fees and taxes on the way.

Bigger picture view required.

the.ciscokid

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.

To be clear, you said:

Loughton_Monkey wrote: »

Lower house prices are simply not the panacea for better affordability. The rules have changed. You now need a much bigger deposit. Tough. Live with it. Moan about it by all means. Curse the bankers. But don't think lower house prices are going to solve that.

and

Loughton_Monkey wrote: »

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 - so that lenders become slightly more confident and perhaps lower the deposit requirements. Smarter youngsters will do (a) while still living at home scrounging almost-free rent from parents. That way they will get their mortgage way before renters. Either way, we are simply looking at 'time'.

People are questioning you on these things.

I would suggest what would be better for everyone in the long run is far lower prices and 0%HPI. Hamish (obviously) thinks that is wrong, but hasn't replied as to why. What do you think?

Loughton_Monkey wrote: »

Do I care?

I don't think so. Maybe that is the problem?

HAMISH_MCTAVISH

the.ciscokid wrote: »

I would suggest what would be better for everyone in the long run is far lower prices and 0%HPI. Hamish (obviously) thinks that is wrong, but hasn't replied as to why.

What was the question?

the.ciscokid

HAMISH_MCTAVISH wrote: »

What was the question?

The one you just quoted.

Edit: link

julieq

Ron2256 wrote: »

The banks had their fingers burnt, not the bankers. The bankers will be pushing for the lending bonanza asap or as soon as they can get away with it.
They work in their own interest (bonuses) and not for the interest of the organisation. Heads they win, tails we all lose.

No-one had their fingers burnt, the loans are being repaid.

ukcarper

bizarebazaar wrote: »

Well last time we had a recession, I seem to remember house prices falling :-O And thats exactly what should be happening, but sellers, banks and estate agents have conspired to greedly keep prices up.
Heres a statistic to base the figures on.
10 years ago my run down ex council house was £65k, 3 years ago £132k and now £135k ?????
My income 10 years ago was £14k and its still the same.
Fact:- the price of a house should only go up with inflation, ie for 10 years 25% max and not double in price within 7 years.

I believe the 2008 crash was the biggest in nominal terms and the other crashes have mainly been in real terms and house prices are still falling in real terms.