MSE News: Government house buying scheme launched

RenovationMan

spikyone wrote: »

What they're actually doing is paying more in rent than they would be with a mortgage with 0.5% base rate. If base rate hits 5% those families will probably be paying about the same amount. That's what I mean by affordability; not just "can I pay for it right now" but "can I pay for it into the future". Just look at the numbers from last week's news story on SVR increases - on a £150k mortgage, an increase from 3.5% to 3.99% works out at an extra £50 a month. It's not hard to see what happens if base rate goes back to a more realistic 5-10%...

How many FTBers do you think are getting mortgages at anywhere near 0.5%?

The_J

GMS wrote: »

Because there are agendas for different people who want house prices to crash in order to buy for the perceived 'correct' price. Years of rent payments waiting for the crash which could have paid for half of the house are forgotten.

Property needs to be viewed as a home, a place to sleep and keep the rain off your head. They are not investments unless you are able to sell them. You can't sell your home without buying another so it is not an investment.

The usual 'save more' line is beginning to wear thin. People are being squeezed for every penny they have and if rent costs more than a mortgage then how can they be expected to save?

As long as the lender and the buyer are happy with the terms and the risks involved then that should be the end of the matter. These loans will be strictly underwritten and available only to the applicants who can demonstrate good financial history. Therefore even IF there is negative equity there is nothing to suggest they would walk away from a/ their home and b/ their financial commitment.

Unfortunately some people will refer to every single incentive and stimulus as a scam.

I agree.

Although I have zero sympathy for people who cannot save. I have clients on average money who can save up a lot of money while renting. Cost of living is very cheap, you may not live like a king, their mates may laugh at their lack of a smartphone, lack of sky, lack of a flat screen tv, they may only go out once a month and shun expensive takeaways and ready meals instead cooking from scratch and learning a skill. For holidays they go camping on an English beach and presents for each other are handmade, not shop bought.

People are so blinded by consumerism that they think paying for stuff makes them happy. It is easy to save, people just don't want to.

dotchas

vzbfhr wrote: »

I don’t see where the 95% mortgage = unaffordable argument comes from?

If people are buying houses right at the top of their limit of course. But they could still do this with 20% or more.

For me. Me and my wife earn £65000 between us. Can we get a £250000 Maybe. Would I? No.

However I would like to get a £170000 mortgage but as I have little deposit I don’t have much option other then this.

So my point is that a 95% mortgage has nothing to do with over committing. It just helps with those of us that haven’t got a deposit and would like to move now.

Can you not save a deposit from your 65K.......?

dotchas

spikyone wrote: »

Whilst I agree with what you're saying, this must also apply to BTL mortgages. Simply pushing people into renting won't reduce house prices because people will still need a home, and someone has to own that home. As I understand it (and correct me if I'm wide of the mark here) landlords are currently able to use properties as equity towards their next BTL mortgage which is a preposterous situation.
We need to make sure that BTL mortgages are only given to those with a cash deposit that's just as substantial as any other mortgager. Only by reducing everyone's ability to buy homes they can't actually afford will prices go in the right direction.

Of course, the other thing needed to re-balance the market is a sensible base rate, and it seems unlikely that will happen soon either...

As far as I am aware BTL investors need a deposit of around 25% for their purchases, they may well remortgage an existing BTL to release equity.

vzbfhr

dotchas wrote: »

Can you not save a deposit from your 65K.......?

Probably. I think we could get close to £15000 within a year however if possible we'd like to move now. This scheme potentially allows that.

ashleypride

The_J wrote: »

Exactly, I cannot for the life of me work out why people don't understand this?

Because these schemes inflate house prices even further making house ownership even more out of reach for the next generation of youngsters. Which means developers and the Government have to think up another stupid idea to convince more youngsters to overextend themselves with a high LTV, and overpriced new build houses. Rinse and repeat until the market collapses, and realigns with inflation.

brit1234

vzbfhr wrote: »

Probably. I think we could get close to £15000 within a year however if possible we'd like to move now. This scheme potentially allows that.

What if prices drop 10% in that year, you would be 5% in negative equity. Where if you saved a year you would be protected from that fall and have a far better deposit on top.

I hope the I want now brigade don't come back moaning and blaming others after we have warned them.

If you make your bed be prepared to sleep in it, Newbuy is a scam.


*PS There is hope, I have never seen such a hostel audience to a government scheme ever, finally people are getting it. This is nothing about helping FTBs but a bung to builders and if goes wrong us the tax payer pays for people who can't be bothered to save.

Thrugelmir

harz99 wrote: »

and lean on the banks to ease their lending criteria slightly.

That's a non - starter . Banks are contracting lending in overall terms and will do so for the foreseeable future.

shortchanged_2

The sooner FTB's realise that the property market as it stands now is nothing more than one of those dodgy pyramid schemes the better.

Note to all FTB's out there.

Do you not realise that by paying these stupid prices to get on the ladder, all you are doing is lining the pockets of people further up the ladder and ensuring they get a load of equity that they have done absolutely nothing whatsoever to earn.

Lizling

shortchanged wrote: »

Note to all FTB's out there.

Do you not realise that by paying these stupid prices to get on the ladder, all you are doing is lining the pockets of people further up the ladder and ensuring they get a load of equity that they have done absolutely nothing whatsoever to earn.

Well, I realise that and I also realise that it’s a bung to the developers and a way to keep house prices artificially inflated. I agree that UK property is a pyramid scheme. I’d rather NewBuy didn’t exist so that just maybe house prices would fall a little.

And yet I’ll still be interested in the scheme because rent plus the money we save towards a deposit each month is more than a mortgage repayment would be on something at the very top of our budget until interest rates hit 12%. It’ll take us another 3 years to save up a 20% deposit on a small flat (we’ve got 10% now) and I’d like to buy before London prices re-inflate out of our reach.