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MSE News: High mortgage rates hit Government new home scheme
Former_MSE_Darryl
Posts: 210 Forumite
"The NewBuy scheme to help people buy a new-build home has had a "disappointing" take-up, builder Redrow says ..."
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The bottom line is that houses are way overpriced and most 'ordinary' people cannot ever hope to afford even quite a modest loan. This is just market force in action. If the buyer doesnt have capital, they cannot purchase at the price requested by the vendor. Its that simple.
Eventually, vendors will understand that they are living in cloud cookoo land if they think their house is still worth 2008 prices and the overall prices will fall.
No government tinkering necessary...that's what got us into this mess in the first place.Debt Free! Long road, but we did it
Meet my best friend : YNAB (you need a budget)
My other best friend is a filofax.
Do or do not, there is no try....Yoda.
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The new builds are being set at unrealistic prices. Whilst older terraces in my area are selling for 55-80, Derwent want 120 for our new build, despite being made of what I can only assume is cardboard rather than bricks, given the noise that seeps through walls. Why would I bother with 10% deposit on this house when I can have 20% of a +house across the street?0
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Fishbowler wrote: »The new builds are being set at unrealistic prices. Whilst older terraces in my area are selling for 55-80, Derwent want 120 for our new build, despite being made of what I can only assume is cardboard rather than bricks, given the noise that seeps through walls. Why would I bother with 10% deposit on this house when I can have 20% of a +house across the street?
If you are a mortgage company would you want to get stuck if things went really wrong with a cheaper property that you know would stand for longer than the term of the mortgage, or an overpriced property that is likely to be knocked down near the end of the term?
Seriously the new builds made by those big building companies for these schemes are of shocking quality and like 60s tower blocks I wouldn't be surprised if lots of them were knocked down in 30-40 years.I'm not cynical I'm realistic
(If a link I give opens pop ups I won't know I don't use windows)0 -
As a wannabe first time buyer I have no intention of buying with the new buy scheme, even though the interest rates for newbuy are slightly less than I can get otherwise. All the new homes I've seen are horrible pokey little places - the rooms are small and there are far too many plots crowded onto the tiniest little pieces of land. And, they're stupidly overpriced, typically asking for prices that would lead to 3% stamp duty for a house that preowned would be under the stamp duty threshold in the area I'm looking at. It's not as if the scheme gives me any protection or assistance in meeting the cost of buying a home - it just protects the banks if I am unable to pay. This scheme replaced the stamp duty holiday for first time buyers, which did at least reduce up-front costs for FTBs.
I'm not surprised that only 63 people have taken up the scheme - and I'd suggest that these people would have bought a new house whether the scheme was available or not.
:TThank you to everyone who posts competitions!:T0 -
63 is just for redrow.
I think its more like 13000 -
You must understand that when you buy a new build you are also paying for your share of the affordable housing levy and the local infrastructure levy. Theselevies are hidden in the price which means the prices are too much in relation to the product.
If you buy an old house thenyou dont pay these levies.
So when ever you hear about affordable housing you know how its being funded.0 -
Still boils down to saving for a decent deposit to get the best rates which will then give far more choice of houses and products.Remember the saying: if it looks too good to be true it almost certainly is.0
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Developers put 3.5% of the value of every NewBuy home sold into a pot, which is used to protect the lender in the event of a default.
That's generous, especially when the property is probably 30%+ overvalued.
The banks can see buyers go into instant negative equity with this so of course they will charge higher rates due to the higher risk. I just wish developers would stop moaning about the mortgage market when its their high prices which are the problem. They just want irresponsible lending to prop up their prices.
First time buyers stay away unless you want to get burnt.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
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rates being offered by lenders do not reflect the fact that NewBuy loans are less risky because they are guaranteed by the Government.
The potential loss of a repossion is reduced, but the change of it happening isn't, and if you can't afford to save for a deposit can you really afford to buy? What will happen when you need that expensive repair that isn't covered by insurance?
They should just let the market fall to affordable levels, then it wouldn't need schemes like this.Note: Unless otherwise stated, my property related posts refer to England & Wales. Please make sure you state if you are discussing Scotland or elsewhere as laws differ.0 -
They should just let the market fall to affordable levels, then it wouldn't need schemes like this.
The problem with that is that new builds are also part of the wider housing market, and it has a nasty tendency to keep falling for quite a while once it starts, because buyers (understandably) tend to sit back and see if the prices drop further.
Falls like that end up sweeping up larger numbers of homeowners into negative equity, which makes remortgaging or moving at that particular point a lot more challenging, and almost inevitably a lot more expensive.
If people can't afford that more expensive rate, foreclosures start rising. Then banks get incredibly jittery not just about first time buyers, but also existing homeowners whose deposits are not high enough to cope with short-term market movements, so mortgage rates rise and the whole cycle gets worse until, eventually, a level of sanity returns.
Having that go off would really not be helpful when we're already in a recession.
Its also a slightly roundabout way of the government subsidising the developers to build new homes now rather than sit back and wait for a recovery. Not necessarily the world's most effective way to do this, but its almost certainly part of the picture.0
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