FSA advisers urge delay to mortgage reform and more 'flexible' lending

Really2

chucky wrote: »

it's the finance + ability to get together a deposit + the price you are paying + the ability to repay monthly payments defines if you can buy or not.

*there are probably other factors there that the Devonian Institute of Economics will have a little froth about.

If a person could borrow £160K @ 5% that would be £168,400 purchase limit with a 5% deposit (£8400 deposit).
If they can only get a 15% product now they need £25K deposit now to buy the same house.

They end up borrowing less but which do you think of the above situations is likely to cause the most transactions?

How can it be just the price if the price is the same yet one causes less transactions.

wotsthat

chewmylegoff wrote: »

how many people do you think add up the total cost of the property over 25 years when they are considering buying.

you might, but i shouldn't think that the majority of people do. my impression is that most people address this by saying [deposit + mortgage borrowing = maximum price (including stamp duty and other costs)].

I'm not so sure. If no-one considered the total cost of buying then we wouldn't be seeing the current record levels of mortgage overpayments - this is happening because people are actively trying to reduce the total cost of ownership. They are different sets of people i.e. existing owners and those who are considering buying but it's not too much of a stretch to conclude that lots of people do consider the total cost.

chewmylegoff

Really2 wrote: »

They cant get 30-40 year mortgages either but it's a debate?

You are completely ignoring demand in your simplistic view. The debate was never about the current time, it is obvious house prices are where they are because of the current situation.

But you can't ignore possible changes in possible supply, demand, affordability and what that would do to the market.

If it was all about price you are currently saying houses are at their correct value at the moment (I would agree with that) but I really don't think many on here would.

i'm not ignoring demand at all. what i'm saying is that "wanting" and "demand" are not the same thing. if 100 people want to buy something that costs £100, but those 100 people only have £1, then there is no demand.

demand for houses is pretty low at the moment. the main reason for this is that people who would like to buy cannot borrow enough money to buy at the price that people are willing to sell them at.

chewmylegoff

chucky wrote: »

but that's the whole point, it's just not all about price and price alone.

it's the finance + ability to get together a deposit + the price you are paying + the ability to repay monthly payments defines if you can buy or not.

*there are probably other factors there that the Devonian Institute of Economics will have a little froth about.

although you seem to believe you are saying something else, you're just writing the same equation in a different way. as i said, it's semantics.

chewmylegoff

wotsthat wrote: »

I'm not so sure. If no-one considered the total cost of buying then we wouldn't be seeing the current record levels of mortgage overpayments - this is happening because people are actively trying to reduce the total cost of ownership. They are different sets of people i.e. existing owners and those who are considering buying but it's not too much of a stretch to conclude that lots of people do consider the total cost.

i think it's more that people are paying down their mortgages because they can.

chucky

Graham_Devon wrote: »

I pick you up on an obvious error

mine was an obvious error, your whole life has been an error. either contribute to the discussion or go and be bitter some where else.

you actually make stuff up to try and convince people not to buy a house. as wotsthat says people actually read the stuff that you post and probably believe it even though it's very far from the truth.

Graham_Devon

chucky wrote: »

mine was an obvious error, your whole life has been an error. either contribute to the discussion or go and be bitter some where else.

you actually make stuff up to try and convince people not to buy a house. as wotsthat says people actually read the stuff that you post and probably believe it even though it's very far from the truth.

If wotsthat had a real issue with what people are reading, he'd pick you up, Hamish up, Sibley up etc. He only picks up people who do not conform to his view.

He doesn't have an issue with what other people are reading at all. It's a pretty see through disguise for a polite put down in a holier than thou manner. Far higher class than your attempts, and far harder to respond to.

Realise you may not see it this way. But at what other point has he ever expressed concern over telling people to get on the boat now, telling people to go into BTL as it's better than other investments, telling people to borrow the max they can.

Hence I take no notice of his "concern for others". If he was really concerned, why on earth would he post up the errors again, with the purposeful intent of making sure more people see them!? Come off it. What a crock.

Really2

chewmylegoff wrote: »

i'm not ignoring demand at all. what i'm saying is that "wanting" and "demand" are not the same thing. if 100 people want to buy something that costs £100, but those 100 people only have £1, then there is no demand.

demand for houses is pretty low at the moment. the main reason for this is that people who would like to buy cannot borrow enough money to buy at the price that people are willing to sell them at.

We agree there, but that is where it might be worth re reading over on the pent up demand graham confirmed was there.
I was saying if credit was slightly eased (like talked about in this thread but the 30-40 year old mortgage would not be the thing I would prefer)
It could lead to more sales which would then lead to more builds.

If things just stay as they are, the pent up demand carrys on increasing when availability does get easier it could end up coming out like a cork.

My point was that the current situation will be causing a bottle neck should the taps come back on rather than gental easing.
If houses don't get build because of transactions at the moment they wont be there when credit is eased etc.

chucky

Graham_Devon wrote: »

Hence I take no notice of his "concern for others".

for someone who takes no notice that was a quite a detailed post.

let's get back to the discussion or does it suit you better to go on this tangent because your point has been shot down in flames (again).

wotsthat

chewmylegoff wrote: »

i think it's more that people are paying down their mortgages because they can.

Well yes but they are doing it because it reduces the total cost of ownership otherwise few would bother (some might because being mortgage free is a means to its own end).

I've always looked at total costs of ownership. I might be a bit 'special' but I don't think you are giving people enough credit.

As an example. I can insure my car for, say, £360 and pay in full. I can choose instead to pay £35/ month instead. It can't just be me who thinks that option A costs me £360/ year and option B costs £420/ year and make a decision accordingly.

There are different ways of buying the same thing. Price is a major factor but it's not the only significant factor.