Pensions to be used for mortgage guarantees?

shortchanged_2

michaels wrote: »

But is this the case? Consider a 10 year fix available at 5-6% (with a sufficient deposit to allow lenders to meet Basle 3 capital rules) For many people such mortgages would be cheaper than the amount they currently pay in rent. Doesn't this suggest that property prices are not unaffordably high?

Don't you think too much of the nations income is sucked up by housing costs?

And lets be honest how suitable are 10 year fixes for many people with the large exit fees etc?

And interest rates will go up eventually therefore the higher the capital exposure the worse the effect of interest rate rises.

michaels

chewmylegoff wrote: »

Sounds ridiculous to me.

The only thing I can see "working" in the current climate is the government just giving FTBs a deposit.

What prevents the govt from gaurenteeing the 'equity' tranche' between say 75% and 90% of property purchase price for first time buyers to protect the lender - perhaps this could take the form of the govt taking ownership on default and giving the lender the 90% of purchase price secured on the property and selling the property or using it for social housing. This would allow the banks to lend up to 90% at rates normally only relevant for 75% loans and thus allow ftbs to get in to the market - or be it at the cost of the govt taking on property market risk but the subtly of my arguement is that the govt already carries property market risk because it will house those who are made homeless anyway and it also has a stake in property tax revenue holding up.

shortchanged_2

HAMISH_MCTAVISH wrote: »

That's fascinating.

Can you explain how I'd be "financially shafted" if prices fall, or why I "need" prices to rise?

Well you tell me Hamish.

Why are you so adamant that house prices need to rise?

Why do you see the benefit of HPI to the masses?

HAMISH_MCTAVISH

Generali wrote: »

Most banks won't let you include the FHOG in the 5% minimum deposit. It has to be 'genuine savings'.

If most people could 'genuinely save' 5% and get a mortgage in the UK, then we wouldn't be having this discussion.

And the economy would be recovering a whole lot quicker than it is today.

It is still very helpful when buying your first house as is the lack of requirement to pay stamp duty on your first purchase.

Yes.

It's a significant help.

And a very good scheme overall.

The current shower of incompetents in power here could learn a lot from Australian initiatives such as the FHOG and RBA direct purchases of RMBS.

As to the OP, I think it's a terrible idea.

It's not exactly a great idea, I'll give you that. And it's unlikely to work.

But it's another recognition from government that they know what the problem is, and I think deep down they know what it'll take to fix the economy.

They just seem determined to avoid doing the right thing until the last minute, and until they've exhausted the options of trying all the wrong things first.

I fear it will be too late though, and we'll end up suffering under Labour for another 15 years.

HAMISH_MCTAVISH

shortchanged wrote: »

Well you tell me Hamish.

Why are you so adamant that house prices need to rise?

Why do you see the benefit of HPI to the masses?

If you could try to avoid answering a question with a question, that would be helpful.

Linton

shortchanged wrote: »

Well you tell me Hamish.

Why are you so adamant that house prices need to rise?

Why do you see the benefit of HPI to the masses?

This is very silly. It is completely irrelevant to house prices whether anyone needs them to go up or go down.

Its simple arithmetic: as long as you have an increase in numbers of households higher than the increase in numbers of houses the price must go up such that the excess number of households are forced to share the accommodation available.

shortchanged_2

HAMISH_MCTAVISH wrote: »

If you could try to avoid answering a question with a question, that would be helpful.

Well I have asked you the question Hamish. Why do you feel the need to ramp up property prices?

What are your reasons for seeing HPI as beneficial to the country?

Linton

In my view the OP solution to guarantee a mortgage with ones pension is crazy and potentially disastrous for those who have to take it up.

Presumably one would need a sizable pension to act as a meaningful guarantee. Currently the worst than can happen economically to someone with a reasonable pension pot who buys a house on a mortgage and then runs into financial difficulties is that they go bankrupt and lose their house. Under the proposed regime they could also be guaranteed an old age in poverty.

Also of course, the easier it is to get a mortgage the more people there are wanting to buy houses, the more competition there is for the most desirable houses, and up go the prices.

shortchanged_2

HAMISH_MCTAVISH wrote: »

If you could try to avoid answering a question with a question, that would be helpful.

Because you see property as an investment and therefore need prices to rise. Does that answer your question?

homelessskilledworker

chewmylegoff wrote: »

Sounds ridiculous to me.

The only thing I can see "working" in the current climate is the government just giving FTBs a deposit.

Agree..

I mean what next, will they get grandparents/parents to guarantee the full cost of homes should they become even more expensive, shall we mortgage the lives of the next generation of unborn potential FTB's everytime prices become more expensive.

The problem is quite simple to understand but a nightmare to solve, the problem is like shortchanged said, prices are too expensive, solving it is not as easy as letting prices fall though. If we let prices plummet then we have a problem with all those people who are maxed out(and worse) with debt. You just have to visit this board to realise that there are are a load of scared heavily mortgaged homeowners out there.

I think there was something similar to what you suggest, was it MIRAS?? or

As quick as possible we inflate the problem away, and that is near impossible to do without some pain.