UK Government to Underwrite New Mortgage Lending

Jimmy_31

MrRee wrote: »

The UK Housing market DRIVES the UK Economy - it has been like this for decades now.

The Housing market, if very healthy, lifts growth hugely.

People move, people buy carpets, furniture, everything ... they hire in painters, plasterers, they build extensions - employing others - who then buy tools and hire others who buy clothes and cars and food and houses ....

It's the circle of life - and the Government needs to step in to breathe some life into it .... why don't they buy every house builders can build at cost price + 20% and sell at their cost +5%?

Everyone wins .....

Your idea sounds like a complete rip off to me.

MrRee_2

Jimmy_31 wrote: »

Your idea sounds like a complete rip off to me.

That's simply because you are not part of it yet, that's all.

Jimmy_31

MrRee wrote: »

That's simply because you are not part of it yet, that's all.

Its a 5hit idea.

How about the government release land to the public and let us build our own houses.

People could self build or employ the currently unemployed in the construction industry to build them a house. The currently unemployed would be glad of a fair wage and nothing else, no profits from made up asking prices, just a fair days pay for a fair days work.

People get a house for cost plus labour.

This would get thousands into work and off benefits.

Economy gets a boost.

homelessskilledworker

DaddyBear wrote: »

The housing market will not recover until property becomes more affordable for a larger percentage of the population without relying on government subsidy. Projects like this get the bulls excited but have about as much impact as a fart in a hurricane.
There is a lot of pain ahead for the bulls. You can't have a ten year long party without clearing up afterwards. The problem is that the party finished 4 years ago and nobody has cleared up, in fact the mess had been added to.

I with you on this, simple fact is that average people are taking home between £1000 and £1500 per month, and the average home is £160k, it really does not take a rocket scientist. Jobs are becoming more scarce, inflation is high, and I suspect working class inflation is double.
What I am watching is a housing market that looks like a creaky old dam trying to hold back the mother of all floods, it's propped up with sticks and desperate people untill suddenly WHOOSH!!! at all collapses.

Emy1501

HAMISH_MCTAVISH wrote: »

I'm not surprised that people with income in the top 20% of households and the ability to save £35,000 can get a mortgage.

Hardly representative for most FTB-s though, is it?

In London a joint income for 2 people looking to buy in their late 20's to early 30's of 60K is probably less than average and again as most people will have to find at least 10% having 25k saved between 2 people trying to buy is nothing special these days especially as people have known since 2008 than in reality they will need a 10% deposit to get a mortgage these days.

So that excludes the majority of the population then.:cool:

Which is my point.

Banks are cherry picking only the very best, so they can ration limited funds. This means they have to exclude the majority of ordinary families and most of the younger generation.

I rather suspect this scheme, if it goes ahead, will be designed specifically to help the average person, with average income, and average credit scores.

We don't need to help the elite... they can already get a mortgage.;)

I dont know what the average credit rating is but in these times I doubt the government are going to lend to people with defaults, loads of late payments and those who cannot prove their income. So I doubt much will change.

The articles I have read suggest this is likely to be for new builds only for those who can only raise 5% deposit but we will have to wait for a week or so to find out

reweird

Don't understand others resentment to this idea as it's a fabulous way for the so-called priced out renters to get their first crucial step onto the ladder. And the muppets over on HPC moan that the government does nothing for them. Idiots.

Turnbull2000

Looks like this is due to be formally announced on Monday. Our very own state backed mortgage market is due to arrive.

Sound pretty much like our own Annie Mae and Freddie Mac (which was disastrous for the US), but the government is well aware that we don't have a high supply of housing and the assets they're guaranteeing against should hold their value.

The UK government will have a greater incentive than ever to boost prices and constrain supply once this is up an running.

Turnbull2000

homelessskilledworker wrote: »

I with you on this, simple fact is that average people are taking home between £1000 and £1500 per month, and the average home is £160k, it really does not take a rocket scientist..

For a 160K property with a 145K mortgage (10% deposit), you're only talking about 900 quid or so per month (assuming 5.5% rate). You seem to forget that people use two wages to buy property these days, not one. So that 1000-1500 is actually 2000-3000, and therefore 900 quid is quite affordable.

With the emergence of state backed mortgages, we'll perhaps start seeing rates of around 4% for those with a 10% deposit, so that 900 becomes only 775. House prices will likely experience a noticeable rise on the back of this, but many more will get on the ladder than do now.

HAMISH_MCTAVISH

Emy1501 wrote: »

I
I dont know what the average credit rating is but in these times I doubt the government are going to lend to people with defaults, loads of late payments and those who cannot prove their income. So I doubt much will change.
t

Wow, you really just don't get it, do you?

No defaults, no late payments, and proof of income is no longer enough to get a mortgage.

The banks are rejecting loads of those applicants every month because they have to ration mortgages.

Assume a pool of 100 borrowers, all with zero late payments, zero defaults, zero CCJ's and stable jobs. All wanting a 90% LTV mortgage.

The bank will reject somewhere around 90% of them, because the new capital adequacy rules mean they simply do not have the money to lend any more. That's how bad it is in the real world.

Just 1% of mortgages issues last month were at 10% or less deposit level. Versus 13% in 2007.

The ratio of mortgages being issued at 90% LTV has fallen by 93% since 2007.

If you or anyone else think that the only people being refused mortgages are those with bad credit, you're delusional. If a million people showed up tomorrow morning with spotless credit wanting 75% LTV loans, the banks would still have to find a way to reject 95% of them, because they simply do not have access to enough money to lend.

Emy1501

HAMISH_MCTAVISH wrote: »

Wow, you really just don't get it, do you?

No defaults, no late payments, and proof of income is no longer enough to get a mortgage.

The banks are rejecting loads of those applicants every month because they have to ration mortgages.

Assume a pool of 100 borrowers, all with zero late payments, zero defaults, zero CCJ's and stable jobs. All wanting a 90% LTV mortgage.

The bank will reject somewhere around 90% of them, because the new capital adequacy rules mean they simply do not have the money to lend any more. That's how bad it is in the real world.

Just 1% of mortgages issues last month were at 10% or less deposit level. Versus 13% in 2007.

The ratio of mortgages being issued at 90% LTV has fallen by 93% since 2007.

If you or anyone else think that the only people being refused mortgages are those with bad credit, you're delusional. If a million people showed up tomorrow morning with spotless credit wanting 75% LTV loans, the banks would still have to find a way to reject 95% of them, because they simply do not have access to enough money to lend.

No I do get it as no one I know matching the criteria you mention has been turned down for a mortgage and I know about 4 who have gone through the process in the last year.

Stop talking nonsense. Anyone with the criteria you have mentioned will get a mortgage if they want one. the simple facts are there are not enough people with the type of credit history you are talking about or the deposit to get a mortgage.

You have to wonder why lenders are bothering to advertise etc if they are turning down 90% of applicants who have excellent credit ratings, the deposit and a secure job.