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Taxpayer to take on mortgage risks of first-time buyers
Comments
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Graham_Devon wrote: »Hamish, question if I may...well maybe two.
1. Would you reccomend any member of your close family made use of this scheme?
2. Do you agree or disagree this is the government ushering people into instant negative equity? Afterall, new builds are overpriced in general, it's accepted by around 10%. Just like cars, as soon as they are resales, they lose a significant amount of value. With the builder paying 3.5% into a fund, this will push prices up further, so we could see 12% instant negative equity.
If prices fall just 5% over the next 2-3 years, you are looking at 12% total negative equity (due to the 5% deposit). Would you agree or disagree with this?
The only good thing about this scheme, in my mind is that it creates more houses. However, the price paid by the individuals buying, and possibly us, the taxpayers is significant. While I think the building of more houses is a good thing, I don't particularly think that building more houses and injecting more acute problems to an already distressed situation is a good thing.
In all honesty, I hope it's somewhat a failiure, like the other homebuy schemes (hence the need for this). I personally don't like to see people ushered in to be impailed on a spike.
How long do you expect FTBs to keep to paying off rich landlord's mortgages? Prices have not moved in any significant way since 2009 and there is absolutely no sign that they will do so in the near future.
A Eurozone default may well bring prices down as that would most definitely freeze lending, but what are the chances? Are you going to tell FTB's to hold out for a potential eurozone crisis whilst they pay extortionate rents?
You're version of negative equity isn't quite right is it? Where do the repayments go? That repayment money would otherwise go to a landlord and would be money "lost" anyway. Might as well go into wiping out the POTENTIAL negative equity whilst they can have the peace of mind of owning their own home.0 -
As I've always said on here, if the banks won't open their vaults the government will. Get in.0
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It's a small mortgage guarantee scheme rather than some sort of strange and unusual punishment.
If it helps some FTB's into ownership and out of the rental market that sounds like a good thing.
Worth a punt I would have thought.
What more can the government do - they can't make banks lend and they can't make builders build.
well
those people will almost certaintly be in 20-25% negative equity the day they move in
why is that a good thing?
OK in times of massive house price inflation then fine but that is unlikely to be the case for some time0 -
You're version of negative equity isn't quite right is it? Where do the repayments go? That repayment money would otherwise go to a landlord and would be money "lost" anyway. Might as well go into wiping out the POTENTIAL negative equity whilst they can have the peace of mind of owning their own home.
As long as they retain employment sufficient to cover the repayments and allow them to live and buy "stuff". Of course if they are constantly worried by the debt on their shoulders, then they are unlikely to have "peace of mind".
Heaven forbid interest rates should ever rise blowing them into oblivion because they have over committed.
The landlord has probably done his maths and isn't on such a tightrope. He also knows that if "X" stops paying then he can easily find another tenant or the state will pick up the payments.."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
HAMISH_MCTAVISH wrote: »Oh right.
So basically ... 5% deposits are historically normal, prudent, and sensible lending.
Why do keep spouting this drivel - three totally incorrect statements."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »Why do keep spouting this drivel - three totally incorrect statements.
You should really take off those bear blinkers.
95% LTV mortgages were common in the 1960's, 70's, 80's, 90's, as well as the 2000's, and in fact 100% mortgages were available at least as far back as 1982.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
well
those people will almost certaintly be in 20-25% negative equity the day they move in
why is that a good thing?
I'm not sure that it's almost certain that they'll be in negative equity on day one. I'm not sure 20-25% is realistic either.
The lifetime costs of renting are massive. The question is is it better to save for longer, build up a better deposit, get a better mortgage and start with some equity in the bank OR start with a lower deposit and divert monthly rental payments into the mortgage?
I'm uncomfortable with the government guaranteeing the debt of those who cannot save a decent deposit but this might make a small difference.0 -
Is is sub-prime because it is tax-payer guaranteed mortgages, the banks will lend like crazy as their is not risk to them, there only concern will be to lend as much as possible to maximise their bonuses (which they will).
It complete lunacy.:mad:
Calm down! This is in no way a return to crazy lending. The banks are not going back there so dont worry.
Its the suckers who will fall for this scheme that i feel sorry for.0 -
HAMISH_MCTAVISH wrote: »You should really take off those bear blinkers.
95% LTV mortgages were [STRIKE]common[/STRIKE] available in the 1960's, 70's, 80's, 90's, as well as the 2000's, and in fact 100% mortgages were available at least as far back as 1982,at a premium, rationed and with hefty fees and MIGs[/QUOTE
Think your editing wasn't quite right so I have amended it to reflect reality.
Full borrowing has always been available. The more desperate people are the higher the price."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
HAMISH_MCTAVISH wrote: »You should really take off those bear blinkers.
95% LTV mortgages were common in the 1960's, 70's, 80's, 90's, as well as the 2000's, and in fact 100% mortgages were available at least as far back as 1982.
But you'll probably find that the earnings multiples were far stricter back then, therefore people were not taking out colossal debts in the first place.
Of all the things that baffles me about house prices is why anyone really sees it as a good thing that people want to take on such a huge financial commitment and think that it's a good thing. Surely anyone with a crumb of sense would rather have more money in their pockets or in the bank.0
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