Home ownership back to 1988 levels.....

Graham_Devon

ukcarper wrote: »

I’m not against renting and as you say a lot of people are renting because they have no other option but in most parts of the country the thing that is stopping people buying is the size of the deposit required.

As my figure show if someone living in Hampshire could get a Mortgage they would be able to afford the repayments as they are probably paying the same if not more in rent.

They'd be able to get a mortgage if house prices were lower (in theory at least) as it would become affordable.

It's swings and roundabouts. Everything is catch 22.

ukcarper

Graham_Devon wrote: »

They'd be able to get a mortgage if house prices were lower (in theory at least) as it would become affordable.

It's swings and roundabouts. Everything is catch 22.

At the moment that couple would need £26k for the house if the price dropped to a £100k they would need £20k easier to save yes but a lot harder than £6.5k.

Your argument that it is mainly the price that makes them unaffordable is as bad as the bull who argues the high loan to salary multiplies didn’t effect the price.

HAMISH_MCTAVISH

ukcarper wrote: »

At the moment that couple would need £26k for the house if the price dropped to a £100k they would need £20k easier to save yes but a lot harder than £6.5k.

Exactly.....

A 10% fall in house prices turns a 5% deposit into a 5.5% deposit.

A 20% fall in house prices turns a 5% deposit into a 6% deposit.

Neither of which get you remotely close to the 25% deposit banks currently want for a competitive rate.

There is no doubt deposit requirements are the biggest barrier to homeownership today.

Graham_Devon

HAMISH_MCTAVISH wrote: »

Exactly.....

A 10% fall in house prices turns a 5% deposit into a 5.5% deposit.

A 20% fall in house prices turns a 5% deposit into a 6% deposit.

Neither of which get you remotely close to the 25% deposit banks currently want for a competitive rate.

There is no doubt deposit requirements are the biggest barrier to homeownership today.

A 20% fall in a house priced at 140k reduces the house to £112,000.

Why you insist on talking about 25% deposits when you are talking about barriers to home ownership, but are happy to highlight 10% deposits when talking about how it's as easy to buy a house today as it was in yesteryear is beyond me.

Anyway. A 20% fall on the 140k house turns a 25% deposit from £35,000 to £28,500. I don't know what £6,500 is to you, but to many, it's a lot of money. Simply writing it off as "not much difference" is naive at best.

It also decreases monthly outgoings by £130 every single month, or £1,560 per year. £39,000 extra over the lifetime of the mortgage at constant 6% rates. If someone spent £39,000 in rental payments, you'd be all over the thread ridiculing them.

You are going to have to argue very hard to make the case that it's actually more beneficial to pay a higher deposit and higher monthly payments and actually the price of the product isn't the most important aspect.

Edit: LOL...you've just this minute gone on to write a thread including the fact that more 10% deposit mortgages are available....PMSL!

ukcarper

You are very good at missing the point I'm not arguing that is better to pay a higher price with a lower deposit just that people are finding it very hard to save deposit and can't buy simple as that.

Graham_Devon

ukcarper wrote: »

You are very good at missing the point I'm not arguing that is better to pay a higher price with a lower deposit just that people are finding it very hard to save deposit and can't buy simple as that.

I don't believe I'm missing the point.

The problem with matching funding to high prices is it just pushes prices higher (which is a big reason Hamish wants to see funding increase). You have the same problem all over again within a couple of years. So you have to increase funding again...

It's what we have just been through. I'm not sure how much further it could have gone. Hamish is simply asking for more.

ukcarper

I'm not sure what matching funding to high prices as got to do with lower deposits if you leave earnings to loan ratios people would not be able to borrow more. Are you really saying that if you lowered deposits more people wouldn't be able to buy even if earnings to loan ratios stayed the same.

Graham_Devon

ukcarper wrote: »

I'm not sure what matching funding to high prices as got to do with lower deposits if you leave earnings to loan ratios people would not be able to borrow more. Are you really saying that if you lowered deposits more people wouldn't be able to buy even if earnings to loan ratios stayed the same.

If you lowered deposit requirements - yes more people would be able to buy quicker.

I'm not and never have, denied that.

All I'm saying is....lowering the deposits now will push prices higher. We'll be back to square one before you know it.

ukcarper

But if the arguments that high earnings to loan ratios were the cause of high prices if you maintain them at reasonable levels prices wouldn't increase.

Graham_Devon

ukcarper wrote: »

But if the arguments that high earnings to loan ratios were the cause of high prices if you maintain them at reasonable levels prices wouldn't increase.

Yes, correct.

But no one is talking about earnings to LTV ratios. Hamish is solely talking about deposit requirements and rationing.

I've had the earnings ratio arguement with him before now, and from what I could gather, he doesn't believe in such a thing as everyones earnings and spending is different.