MSE News: Guest Comment - Glimmer of hope for first time buyers

brit1234

First time buyers want, need lower house prices. We don't want shared ownership, we don't want a return to irresponsible mortgage lending.

All these schemes are designed to keep house prices inflated and the house bubble going.

HAMISH_MCTAVISH

tara747 wrote: »

Prices are still falling... :cool:

In Northern Ireland. Where you're from.

Prices are now rising again in the mainland UK.

HAMISH_MCTAVISH

FATBALLZ wrote: »

As a FTB I'm quite happy for mortgages to continue to be restricted thanks. .

So your 'solution' to some people being priced out of the market, is to prevent even more people being able to buy through refusing to give them mortgages.

Genius.

HAMISH_MCTAVISH

Turnbull2000 wrote: »

.

You'd have a point if masses of first-time buyers were entering the market at prices below peak. They aren't. A lucky minority might find a bargain, but most are handing over large deposits thanks to their parents, taking up shared-ownership or renting.

Precisely.

All that's happened with the mortgage famine is rents have soared, and a generation of people who should have been years into a mortgage by now are stuck in rented enriching their landlords.

In the meantime, rent is now more expensive than a mortgage payment in 80% of the UK, and the housing shortage is worsening every year, as 250,000 new additional households are created but just 100,000 houses are built.

The number of FTB-s has fallen off a cliff since 2007. It is demonstrably the case that more people could buy with higher prices and higher interest rates than can today with lower prices and lower rates. So mortgage rationing is clearly not enabling more FTB-s to buy houses.

Buying a house has always been hard for young people. It's even harder when you're forced to buy a good chunk of one for your landlord as well.....

franklee

Extract: "Firstbuy works along the same principle where those who qualify (with a household income of less than £60,000 a year) will be eligible for an equity loan worth up to 20% of the value of a new build property, jointly funded by the Government and house builder."

Sixty grand isn't exactly low so a household earning up to £60,000 a year qualifying for help tells us that property is well overpriced!

Turnbull2000

franklee wrote: »

Extract: "Firstbuy works along the same principle where those who qualify (with a household income of less than £60,000 a year) will be eligible for an equity loan worth up to 20% of the value of a new build property, jointly funded by the Government and house builder."

Sixty grand isn't exactly low so a household earning up to £60,000 a year qualifying for help tells us that property is well overpriced!

It's tells you that the government and industry want to keep prices where they are and higher.

Procrastinator333

FATBALLZ wrote: »

As a FTB I'm quite happy for mortgages to continue to be restricted thanks. So I'm not competing for properties with financial incompetents who have never saved more than a couple of quid and therefore are willing to bid higher and higher for properties since they don't understand the vast extra debt burden they are putting on themselves.

Agreed. The article borderline annoyed me. I see all of the things discussed as a hindrance to FTB's, not a help. The government should leave it be.

jamesd

It's worth emphasising that the FirstBuy scheme is a shared appreciation mortgage, about which there was much fuss a few years ago.

One risk with such products is that the 20% of home value can increase greatly if property values increase, potentially trapping people in their homes, unable to sell because they are unable to catch up with the rate at which their debt is increasing. Borrowing £10,000 would see an increase of the debt to £15,000 if property values increased by 50% over six years. In effect the interest rate on the loan is the advertised rate plus the rate at which property prices are increasing, but payments are only the advertise interest rate, so the debt increases.

If property values fall a first time buyer is still likely to be trapped, due to an inability to repay the remaining 75% of the loan out of the proceeds of the sale, even though the SAM portion is now reduced.

J_i_m

If I can manage it, as a FTB I'd rather be able to afford a mortgage to be a 100% owner. However if circumstances mean that shared ownership was the only viable way for me to get on the property ladder at all, then I would consider it.

jamesd

It is worth considering, just watch out for the potentially very high cost of the shared appreciation part and get rid of that as fast as possible. Long term increase in residential property prices is around 8% a year and you don't want to have that level of capital instead of interest liability around your neck for long. In the short term, a couple or three years, prices probably won't rise at that rate, but it's a bigger risk for the future.