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

chucky

chewmylegoff wrote: »

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.

i don't think i am completely.

i'm saying as well as what you're saying is that if more mortgages were easily available more people could buy and price would not be the main issue.

wotsthat

Graham_Devon wrote: »

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.

Errors! You've made 36,000 posts on the debate house prices and economy board and it's come to light that you think a debt is bigger if it's to be serviced by a repayment method rather than IO.

You make your own mistakes but don't encourage others to follow you based on flawed thinking.

chewmylegoff

chucky wrote: »

i don't think i am completely.

i'm saying as well as what you're saying is that if more mortgages were easily available more people could buy and price would not be the main issue.

if prices stay the same (or rise) but buyers can borrow more, then, then demand would increase, yes.

shortchanged_2

I think basically we are all looking at affordability.

Chucky uses his examples of the 15 year mortgage versus the 25 year mortgage and yes of course the 25 year mortgage is going to be more affordable to everyone even though you ultimately pay more through interest.

The point I'm trying to make is that by having higher house prices in the first place, buyers are much more exposed to the effects of interest rate rises as there is always a much larger debt to service in the first place. This then has an impact on their standards of living as they will end up having much less disposable income if interest rates do go up.

I've used this example before but just to highlight it again;

If you have 2 people who earn the same amount of money and have very similar expenditure and buy the same type of house

Chap 1 buys his house for £100,000 on a 25 year mortgage
Chap 2 buys his house for £130,000 on a 25 year mortgage

Which one would you rather be?


And also in referral to whoever said that loads of people are paying down their mortgages at the moment that is only through luck not judgement due to the unheard of sustained period of low interest rates that nobody would have forseen.

Really2

shortchanged wrote: »

I've used this example before but just to highlight it again;

If you have 2 people who earn the same amount of money and have very similar expenditure and buy the same type of house

Chap 1 buys his house for £100,000 on a 25 year mortgage
Chap 2 buys his house for £130,000 on a 25 year mortgage

Which one would you rather be?

The one on the 0.49% life time tracker

But it is like saying being borne early is better? IR rates will go up but we wont see the abnormally high rates of the 70's & 80's.(this cycle)

Also if rates go up in general it is in answer to inflation so you are missing out the fact they will most probably be earning more so the impact may well not alter their living standards.

The 70's is a great example of this.

If you chopped house prices 50% and made mortgages freely available (95% + decent rate) how long do you think it would take them to be back up to current levels or over? (ignoring the collapse of the economy just as a hypothetical situation where prices were lower and credit was easier)
There are far more things to think about than price.

shortchanged_2

Really2 wrote: »

The one on the 0.49% life time tracker

But it is like saying being borne early is better? IR rates will go up but we wont see the abnormally high rates of the 70's & 80's.

Also if rates go up in general it is in answer to inflation so you are missing out the fact they will most probably be earning more so the impact may well not alter their living standards.

The 70's is a great example of this.

Both are on 0.49% life time tracker

However, whichever way you look at it the person who buys the house for £100,000 (assuming they have similar mortgage deals) is always going to have more disposable income as they will be spending less to service their mortgage debt.

Come on Really2 apart from property investors who can really say that higher house prices are really beneficial to most folk.

Really2

shortchanged wrote: »

Both are on 0.49% life time tracker

However, whichever way you look at it the person who buys the house for £100,000 (assuming they have similar mortgage deals) is always going to have more disposable income as they will be spending less to service their mortgage debt.

Come on Really2 apart from property investors who can really say that higher house prices are really beneficial to most folk.

People who purchased at the height of the boom? the banks that lent the money? It was not a point of higher (they could stay the same and deflate in real terms) but lower has implications which you seem to ignore.

I think this is a good point, sorry I edited it in later.

Really2 wrote: »

If you chopped house prices 50% and made mortgages freely available (95% + decent rate) how long do you think it would take them to be back up to current levels or over? (ignoring the collapse of the economy just as a hypothetical situation where prices were lower and credit was easier)
There are far more things to think about than price.

shortchanged_2

Yes but thats an example of lax lending really2 and there are others on here who will openly deny that lax lending practices helped fuel booming prices.

We all know the price of things are determined by supply and demand. So if in your example there is plenty of supply and demand it would not mean that house prices would rocket.

Demand can also be stiffled as is now with banks being much stricter with their lending.

Both can be manipulated but it's all about getting a nice healthy balance of supply and demand to try to create a sustainable market.

chucky

shortchanged wrote: »

Yes but thats an example of lax lending really2 and there are others on here who will openly deny that lax lending practices helped fuel booming prices.

really? who?

Really2

shortchanged wrote: »

Yes but thats an example of lax lending really2 and there are others on here who will openly deny that lax lending practices helped fuel booming prices.

We all know the price of things are determined by supply and demand. So if in your example there is plenty of supply and demand it would not mean that house prices would rocket.

Demand can also be stiffled as is now with banks being much stricter with their lending.

Both can be manipulated but it's all about getting a nice healthy balance of supply and demand to try to create a sustainable market.

So we are getting there.
It is not all the price.
It's the market factors that set the price for a sale.

So in reality is about everything else but the price, the price is incidental of market factors.
I think I may have been saying that all thread but was told it was all down to the price.

I knew we would get it right in the end.

PS a 95% mortgage is not lax lending in reality. 100% is and 100%+ is, in a stable market 95% should be OK