MSE News: Help for struggling mortgage borrowers urged

grey_gym_sock

beckythemadcow wrote: »

If people sold their homes before they were repossessed, relying on a prudent emergency savings pot to cover the mortgage whilst that happened, there would be little need for housing benefit.

there would still be a need, because then they would then need to rent somewhere, and often couldn't afford to, given that repossessions are often due to unemployment.

i do agree that many have borrowed irresponsibly (the borrower and lender both have some responsibility for irresponsible lending), but not all repossessions are due to that, and it doesn't follow that we shouldn't care at all what happens now to irresponsible borrowers.

I'm sorry I can't understand your second point...

i was trying to point out that there can be good public policy reason for public spending (such as SMI) which only directly benefits 1 specific group of ppl. some ppl benefit from 1 bit of government spending, other ppl from other bits, and it should all roughly balance out. i'm not saying it does all roughly balance out, but it should and it could.

FYI it is not due to my irresponsibility or inadequate savings that I cannot get a mortgage, it is the perceived risk as neither my husband nor myself have a permanent contract. I will not accept that that is our fault as we have both been educated to postgraduate levels and are competant in our own industries, but due to the economy it is very difficult to find permanent positions.

it doesn't have to be anybody's fault that you can't get a mortgage.

If prices weren't be artificially propped up, we could afford a property that we would be happy with outright.

i disagree. prices have deflated far enough from the peak that it's now not very obvious whether they're under- or over-valued.

many factors influence the housing market. calling some of them - e.g. keeping interest rates low - artificial is itself artificial. there is no natural level for interest rates. (what interest rates do chimps use?)

1 thing affecting the housing market is the wealth distribution problem. a few ppl have got a lot richer, whilst most ppl have had small rises or falls in income. 1 consequence is that fewer can afford to buy, and more properties are bought up by a few landlords.

tgroom57

I'd just like to pick up on two points :

The second is a temporary extension to the size of loans covered by SMI from £100,000 to £200,000, which the CML says is an accurate measure of typical house prices.

What relevance is 'typical house prices' ? Isn't SMI meant to cover pre-existing mortgages, presumably taken out a few years ago when house prices were lower ie, not current house prices.

Secondly, I am perturbed that

The CML suggests some long-term claimants of SMI could incur a charge levied on their property...

owing to my own circumstances, which are not ideal.
I would probably be classed a 'long-term claimant' - my mortgage interest being £100 a month, substantially less than the rent on adjacent social housing. I think if they must levy a charge against property it should only be applied for those who are taking advantage of the temporary extension of the rules ie higher loan (mortgage) values between £100,000 and £200,000. The current wording suggests otherwise.

brit1234

grey_gym_sock wrote: »

i disagree. prices have deflated far enough from the peak that it's now not very obvious whether they're under- or over-valued.

The IMF said last month they were 10-15% overvalued. On a historical terms they are far more overvalued than that and in London thy are monstrously overvalued.

http://www.estateagenttoday.co.uk/news_features/Britons-anticipate-rises-in-house-prices-and-rents

For our economy to return to growth we need free markets. Low interest rates, SMI and other schemes designed to keep an overvalued housing market inflated damage this.

Just imagine a property market where first time buyers could afford to buy again and all the services and goods they would purchase. Then you would have chains completing and further benefits to our commercial and service sectors.

At the moment every thing is being held back.

ess0two

Tiddlywinks wrote: »

Help for borrowers???

When is someone going to help savers? Do we really have to keep propping everyone else up whilst our money loses value?

The days of sitting on your !!!! are gone,plenty of options out there except now you neeed to take more of a risk.

grey_gym_sock

brit1234 wrote: »

The IMF said last month they were 10-15% overvalued.

perfectly plausible. this isn't an exact science.

On a historical terms they are far more overvalued than that and in London thy are monstrously overvalued.

(if we ignore luxury properties bought by rich foreigners, which is not relevant to most of the market ...) prices rising in london, falling in some other regions, is an accurate reflection of the economic imbalance in the country's economy. this unbalance has lots of unfortunate consequences, including the difficulty many have buying in london.

i'd prefer house prices to be lower, but not by any means necessary, certainly not via lots of repossessions. why do you think only potential FTBs matter, and anybody in their way can be dispensed with?

jamesd

brit1234 wrote: »

No its a giant housing bubble created out of mass fraud, irresponsible lending and too low interest rates.

There has been a housing bubble but that still doesn't prevent someone who is strongly keen on owning their own place from buying a flat for £25,000. Or broadening the scope and going for one for £40,000 or a house for that or more. It may take flexibility and moving but the options are there.

brit1234 wrote: »

jamesd I suspect you like SMI and emergency interest rates of 0.5% because it protects your equity in your buy to lets.

I'm unlikely to be eligible for SMI and don't own any BTL property.

brit1234 wrote: »

In the mean time prudent savers being robbed/tax payers who fund this suffer and are prevented on getting on the housing ladder because of high prices.

I don't consider a £25,000-£40,000 flat to be expensive for someone who's so keen to get a place of their own that they are willing to do what it takes to buy that. It's worth a look at nationwide property prices to see what's around with any particular budget.

Meanwhile this particular prudent saver could have cleared his mortgage on the day he got it if he'd wanted to and bought at an income multiple below 2, having been saving and investing more than 60% of his income for several years, something that continues. I'm one of those savers who you suggest are being unfairly disadvantaged.

I agree that there has been a housing bubble and that prices were too high. Still are but the correction is going to be done by inflation.

jamesd

beckythemadcow wrote: »

If prices weren't be artificially propped up, we could afford a property that we would be happy with outright.

It is supposed to be a housing ladder, so no need to start with something that is a dream home if you're trying to save rent or accumulate money for a bigger or better place. A relatively cheap starter flat would be enough to get things going and have the money going to your own equity instead of a landlord's mortgage. Maybe that would have a longer commute, be in a less nice area than you'd like or mean moving to a different part of the country but it's probably doable if you care enough about it.

With high incomes and a properly well below the price you could stretch to you can end up with many years worth of spending in the form of savings to manage the work unpredictability. Get as keen as I've been and you can get to the point where you can do it indefinitely.

What's stopping you from looking on globrix and buying what you can afford, with comfortable safety margin in the form of savings, and mortgage?

wymondham

grey_gym_sock wrote: »

so taxpayers should be happier to pay a larger amount in housing benefits for ppl who've had their homes repossessed, rather than a smaller amount in SMI to prevent it?

Why should the tax payer fund someones private purchase? Do they fund your car purchase, and would you expect them if you could not afford it? ok I know it's not a great comparison, but what I'm trying to get at is we are mixing social responsibility and private financal decisions.

I would be happy to pay someones rent in a council house if they could not afford their mortgage, after all this is social housing and social responsibility. The person is not gaining a financial asset at my expense, but is getting housing.

I'm not happy to pay for someone to live in a purchased house that they cannot afford, for whatever reason.

It's one direction or the other..... the two are incompatible... nobody should gain financially from this.

catluverr50

We keep hearing that the interest rate is being kept low, so if this is the case why have the Bank of Ireland just put our interest-only mortgage up twice in the space of six months? Is this legal even?
Has anyone else had this problem? It's forced me back into full time work just to cover the extra. The bank know we've no other options available to us as our loan to value is too high on our house. We are proverbially up the creek without a paddle. Can we appeal?

Also, we started out with a Bristol and West mortgage which has somehow become a Bank of Ireland one. Can we appeal on the grounds that the loan has been sold on? Any help most welcome!!:mad:

wymondham

catluverr50 wrote: »

We keep hearing that the interest rate is being kept low, so if this is the case why have the Bank of Ireland just put our interest-only mortgage up twice in the space of six months? Is this legal even?
Has anyone else had this problem? It's forced me back into full time work just to cover the extra. The bank know we've no other options available to us as our loan to value is too high on our house. We are proverbially up the creek without a paddle. Can we appeal?

Also, we started out with a Bristol and West mortgage which has somehow become a Bank of Ireland one. Can we appeal on the grounds that the loan has been sold on? Any help most welcome!!:mad:

Hi, you've gone a bit off topic with this thread - you'd be better starting a new one which would get more responses...