Bank of England may put limit on mortgage ratios

julieq

Oh !!!!!! Graham, I'd forgotten how terminally obtuse you are.

It is JUST AS DIFFICULT in practical terms to save 30K and 38k. THEREFORE first time buyers are excluded even if they can easily maintain payments on a mortgage.

It doesn't matter if it's slightly easier to save £8K less than £38K. It's the first £30K that is the issue.

And you are in your usual state of complete and utter muddle about renters with deposits. YOU BROUGHT THEM into the conversation, not me. I am talking about normal people living in rented houses wanting to buy a house and saving a deposit. I didn't even mention renters with deposits until you brought them up, and you charged them 25% more interest then they'd actually pay in any realistic situation and tried to persuade me that that made no difference. I honestly have no idea what you're claiming is cheaper every year you own a house or why that's in the slightest bit relevant.

The point is simply this: the barrier to entry for first time buyers has been large deposit requirements particularly at a time when rental is increasing. Absolute prices are a secondary factor. Yes, it'd be nice for purchasers if prices fell back all other things being equal (and if lending criteria didn't stiffen), but deposit requirements are a far bigger barrier in any practical sense.

Graham_Devon

julieq wrote: »

Oh !!!!!! Graham, I'd forgotten how terminally obtuse you are.

Well hey, at least I'm not ignoring half the sentences written to put my argument forward!

Julie, you could use any figure and state that it's hard to achieve. 10k, 25k, 75k.

But the 10k is easier to achieve that the 25k and so on.

It's pure common sense. Cheaper houses are easier for everyone to buy. Renters or not. It's as simple as that.

We've only ended up here in this discussion as you are trying to suggest common sense basically doesn't apply in this situation. Which is nonsense.

You can go on and on about how much it costs to rent a property. But if you won't look at the savings over the lifetime of the mortgage for a lower cost house, then I'm afraid youare looking at it from purely one side and coming up with a debt junkie conclusion.

Theres really no point discussing this much further. A lower value house is easier for everyone to buy, regardless of circumstances.

All you can see is debt. How easy it is to get into debt, and how quickly you can get into debt. You then draw your conclusion on that. You've justified your argument yourself by suggesting "they can afford the repayments". All you can see is debt.

I honestly have no idea what you're claiming is cheaper every year you own a house or why that's in the slightest bit relevant.

Well I can honestly say I really am not surprised you are unable to work this out.

RenovationMan

shortchanged wrote: »

RenovationMan wrote: »

Anyway, you keep dodging my question, I know why but I'll keep asking it until you reply. "What scenario can you give me where a mortgage amount calculated on affordability THEN needs to be reduced by a salary multiple for the borrowers financial well being?"

I put it in red bold so you can't pretend to miss it (again).

Well obviously it will shaft you up RenoMan because you borrowed a high salary multiple. So when it comes to remortgage for you if the banks suddenly are strict with their lending multiples then you are in a sticky position and may be forced to stay on your current lenders SVR and may well be unable to remortgage with another lender.

So yes I do take your point that it will affect people who took mortgages out on a high salary multiple.

Dear, oh dear. Is that really the best you can do, shortchanged?

So you're basically saying that you can think of no scenario at all, worse you're not even going to attempt it and instead will create a strawman argument to try and deflect the discussion. Fair enough, but it shows a particularly poor lack of conviction for you to not even attempt to defend your salary multiples argument.

ukcarper

The bottom line is that is harder to save a 25% on a £130k house (£32.5k)than a 10% deposit on a £150k house(£15k), so a reduction in deposit requirements would make it easier for people on the required income to buy.

As an aside I looked to see what type of house the average house price in my postcode would buy, it would buy a reasonable 3 bed house a reasonable 2 bed would be about 20% less.

grizzly1911

CLAPTON wrote: »

basically the same as now except you see a mortgage advisor (well with building societies you always did.)

Disagree you see a sales person not a risk person.

Sales people desperate for commission/bonus will "massage" evidence if possible to get it past risk, add in some juicy cross sales and a nice up front fee and Bobs your uncle.

Once the chickens come home the sale is long forgotten and the issue is for someone else to sort out.

CLAPTON

grizzly1911 wrote: »

Disagree you see a sales person not a risk person.

Sales people desperate for commission/bonus will "massage" evidence if possible to get it past risk, add in some juicy cross sales and a nice up front fee and Bobs your uncle.

Once the chickens come home the sale is long forgotten and the issue is for someone else to sort out.

so what is your solution

rewards for success (growing the business) or rewards for failure or no rewards atall

real people or simply computer says yes or no

short term bonuses, long terms bonuses or no bonuses

rewards for the idle or the hard working?

grizzly1911

CLAPTON wrote: »

so what is your solution

rewards for success (growing the business) or rewards for failure or no rewards atall

real people or simply computer says yes or no

short term bonuses, long terms bonuses or no bonuses

rewards for the idle or the hard working?

Short term views = where we are today.

Easy credit = where we are today.

Short term personal gain with no responsibility and no long term carrot = where we are today.

Of course if those choices were so good then we wouldn't be in the mess we are.

Credit scoring can only go so far, especially when the lender has no in house history to verify. An experienced credit/risk/underwriter has (had) the ability to sift good from the bad.

Don't really understand your final comment. If hard work merely leads to a crash then why is it rewarded? Risk managers are the poor bed fellows, but as we have seen if they are rode rough shod over, to generate a few years of hyper sales, profits, bonuses, we end up picking up the pieces for decades.

If we reward sales that which have a high prospensity to fail then are we not rewarding failure?

One bad debt/sale takes tens/hundreds of good ones to recover - like for like.

There is a balance to be trod that worked well for decades, that balance was tipped up for all sorts of reasons.

Thrugelmir

grizzly1911 wrote: »

Easy credit = where we are today.

Changed more than people realise.

JonnyBravo

So essentially Graham and julieq are arguing about which scenario is best to achieve a lower deposit.

You can either lower deposit needed by 50% by
i) reducing house prices by 50% or by
ii) halving the deposit requirement..... or of course
iii) a mixture of the two.

There will be no agreement as Graham essentially wants it to be achieved by price reduction and julieq essentially wants it to be achieved by deposit requirement reduction.
Of course what is likely to happen is iii) a mixture of the two.


We could now argue about what would be best for the country but clearly that too would be an argument informed by the end scenario in mind of each participant.
We could also argue about what is likely to happen but again one party only sees doom and gloom in the economy whereas the other highlights the rosy glow of success.

Why don't you come back in a year and see that essentially it was the shade of grey that won out, not the black or white.

JonnyBravo

Oh and by the way julie.....

a 20% reduction on 150k is 120k not the 130k in your example.

HTH.