lenders warn low-deposit mortgages are over

geneer

http://www.dailymail.co.uk/money/mortgageshome/article-2057457/Owning-home-unrealistic-millions-lenders-warn-cheap-mortgages-over.html#comments

Less FTBS = less competition = no one to feed into the bottom of the pyramid.

Welcome to the new paradigm. An awful lot like the old one.

Millions of young people and families were yesterday warned they may never be able to buy their own home.

Paul Smee, the new director general of the Council of Mortgage Lenders, said many will spend far longer renting than they imagined.
His comments were echoed by deputy governor of the Bank of England, Charlie Bean, who predicted the number of homeowners will drop because lenders will stop handing out ‘imprudently generous’ mortgages that require little or no deposit.



Many people may never achieve their dream, with one expert saying renting is ‘the new normal’.
To make matters worse, it has never been more expensive to rent, with an average cost of £718 a month, and more than £1,000 in London.


For many people, it would be cheaper to pay a mortgage, but they cannot get a loan.

Speaking at the CML’s conference in London, Mr Smee said home ownership was an ‘unrealistic assumption’ for many people.


He said: ‘Our assumptions of a stable housing market will have to embrace all forms of tenure and not assume that stability can only come with ownership.

‘If we don’t, then we may have to prepare for disappointment and the indefinite postponement of Nirvana.’

Mr Smee painted a picture of a country where people will rent for years, possibly for their entire life. His comments were echoed by Mr Bean.


The days of mortgage lenders handing out ‘imprudently generous’ mortgages were over, he said, adding: ‘That implies a period during which first-time buyers and those hoping to move up the housing ladder save the necessary extra equity, low transactions and a fall in the share of owner-occupiers.’

Official figures show around one million families and young people have been forced to rent, rather than buy, over the past five years.

The government report reveals the number of households who are ‘private renters’ has rocketed from 2.4million in 2005 to 3.4million in 2009/10, the latest available figures.

The CML’s own figures show the number of first-time buyers has crashed from around 500,000 in 2000 to just 200,000 last year.

Matt Griffiths, from the first-time buyer campaign group Priced Out, said: ‘Mortgage lenders have led us not to Nirvana, but to a housing market nightmare.’

He added: ‘Unless you have wealthy parents or are very highly paid, renting is the new normal. The ladder of home ownership is being pulled out of your reach.


‘This means a new generation of families will be growing up in insecure rented accommodation.

'They will face the possibility of eviction at short notice – making it much harder to settle down and have stability in where your children go to school or nursery.’
Housing minister Grant Shapps said yesterday he was determined to ‘pull out all the stops to help those who want to take their first step onto the property ladder’.
This includes encouraging banks and building societies to offer more mortgages for those struggling to save for a deposit, as well as building more homes.

Pimperne1

Good news for bears then.

reweird

There is no new paradigm. The paradigm is as it has always been and always rightfully should be - Those who can buy, buy. Those who can't, rent.

Pimperne1

reweird wrote: »

There is no new paradigm. The new paradigm is as it has always been and always rightfully should be - Those who can buy, buy. Those who can't, rent.

That's going to be popular.

HAMISH_MCTAVISH

Pimperne1 wrote: »

Good news for bears then.

Better news for landlords.:)

ruggedtoast

Gloat all you want McTavish. What goes around comes around.

Graham_Devon

Seems bizzare that even Daily Mail readers and commentors agree that lending more isn't the solution.

Look at the worst rated comment - someone suggesting more lending is the answer.

Then look at the highest rated comment, a comment AGAINST high multiple lending.

Who's the call for lending most likely to come from? Someoe who has already bought a home. They are also in Scotland, so they can be forgiven for not having a clue.

Who's the best rated comment most likely to have come from? Someone currently priced out. I have no evidence of this....my only evidence is that even daily mail readers can see that higher prices and more debt isn't the answer.

michaels

Interesting though that no one is suggesting the fact that high ltv mortgages no longer make sense to banks due to the capital costs will therefore lead to a fall in prices. Hamish's arguement that instead it will just lead to an increase in renting now seems to be the mainstream concensus.

I would have thought that even though the banks do not have the capital to make high ltv mortgages, given how much less borrowing costs than renting that there should be some scope for an insurance product to provide the protection banks now need and still be cheaper than the premium of renting over buying.

OptionARMAGEDDON

high LTV mortgages to disappear. Theres a surprise. Not.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Look at the worst rated comment - someone suggesting more lending is the answer.

Then look at the highest rated comment, a comment AGAINST high multiple lending.
.

No wonder.

http://www.housepricecrash.co.uk/forum/index.php?showtopic=171325

Going4TheDream

michaels wrote: »

Interesting though that no one is suggesting the fact that high ltv mortgages no longer make sense to banks due to the capital costs will therefore lead to a fall in prices. Hamish's arguement that instead it will just lead to an increase in renting now seems to be the mainstream concensus.

I would have thought that even though the banks do not have the capital to make high ltv mortgages, given how much less borrowing costs than renting that there should be some scope for an insurance product to provide the protection banks now need and still be cheaper than the premium of renting over buying.

Do you mean like the old MIG that borrowers may have been required to take out? or do yo mean for th banks specifically?