Taxpayer to take on mortgage risks of first-time buyers

the_flying_pig

grizzly1911 wrote: »

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.

As I said earlier on this thread, Hamish always blithely chucks around this assertion that huge LTVs are the historic norm.

Can anyone definitively comment on this?

e.g. didn't building societies used to have some kind of [collectively self-imposed] cap of 75% LTV - above this they collectively agreed to somehow self-insure?

A further point I would make is that interest only is now incredibly common. Historically it definitely wasn't at all. This has to be borne in mind when making comparisons with history. A 95% LTV, interest only, mortgage, is really quite something.

andybenw

shortchanged wrote: »

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.

If the intention is to buy at some point your statement re money in the bank is irrelevant as it will have to go down as a deposit at some point.

The reason most people want to take on the huge financial commitment of a mortgage is that over a lifetime paying that mortgage is usually substantially cheaper than renting. Certainly at the cheaper end of the market.

With current government policies it seems we are going to see ultra low interest rates for years. This is required to bring the banks balance sheets back into reality. To get the full benefits of owning a property the earlier you buy and pay off the mortgage the better you are. Therefore if people have the deposit then they will buy.

RenovationMan

shortchanged wrote: »

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..

You talk as though people really had much of a choice about what they had to pay for their homes. You either had to stump up the going rate, albeit with a bit of a discount if you found a 'renovator' or forced sale, or you sat and hoped and watched house prices disappear over the horizon.

Aberdeenangarse

First-time buyers are at risk of owning a home which will plunge in value under the Prime Minister’s scheme to help get them on the property ladder, experts warned.

http://www.dailymail.co.uk/money/mortgageshome/article-2064609/First-time-buyer-scheme-risks-plunge-prices.html

Thrugelmir

andybenw wrote: »

With current government policies it seems we are going to see ultra low interest rates for years. This is required to bring the banks balance sheets back into reality.

Banks need to be able to earn money from both deposits and lending. Something the current low base rate doesn't allow. HSBC being the obvious example of a well managed business that is failing to make a good return on its asset base.

gailey_2

Anyone see dave and nick in that ladys house yesterday on news.

I think it was lounge diner, wasent muych furniture in there as reckon room proprtions of the new so called new builds tiny. ie how many houses can we fit on a small plot of land and charge a fortune for it!

Graham_Devon

See Hamish ignored me.

For a change.

wotsthat

Graham_Devon wrote: »

See Hamish ignored me.

For a change.

Poor you. That Hamish is a horrid rotter isn't he? Can you get a hug off anyone?

Graham_Devon

wotsthat wrote: »

Poor you. That Hamish is a horrid rotter isn't he? Can you get a hug off anyone?

Thanks for the concern.

However, with you hugging my leg, I have got all the attention I could want, and more.

shortchanged_2

RenovationMan wrote: »

You talk as though people really had much of a choice about what they had to pay for their homes. You either had to stump up the going rate, albeit with a bit of a discount if you found a 'renovator' or forced sale, or you sat and hoped and watched house prices disappear over the horizon.

Well loose lending certainly fueled greed from vendors and just burdened buyers with massive mortgages.

Whose really benefitted from all this? Probably a lucky few and the rest can just all shut up and get on with it.