Pensions to be used for mortgage guarantees?

shortchanged_2

Loughton_Monkey wrote: »

So please try to understand that the only 'problem' today is that the demographic group that includes wannaby FTB's have never saved. They are struggling to find their £50K deposit. Although mortgages are tighter to get, if you have 25% deposit you will get one.

Reducing house prices would have virtually no effect.

So you think that's it's right that the majority of FTB's need to find say at least £100K to make their first purchase these days instead of say £40K pre boom prices (random prices I've used as an example 200 -300% increases)?

Who do you think has really benefitted from this?

Because I can tell you something, it's certainly not FTB's.

HAMISH_MCTAVISH

shortchanged wrote: »

So you think that's it's right that the majority of FTB's need to find say at least £100K to make their first purchase these days instead of say £40K pre boom prices (random prices I've used as an example 200 -300% increases)?

Who do you think has really benefitted from this?

Because I can tell you something, it's certainly not FTB's.

According to Halifax, prices today are 4.3 times male, mean full times income versus the historical average of 4.0.

The average FTB house price is around 120K.

A historically normal, prudent and sensible FTB deposit would be 5% to 10%. So £6,000 to £12,000.

If prices were at the historical long term average, then the average FTB house would be around 10K cheaper.

So the average FTB of today would only need £500 to £1000 less for a deposit if prices were at the long term average than they would today, if deposits were at normal levels.

Of course, that's not the case because banks have raised the deposit percentages to ludicrous highs. And that's the main problem.

It's mortgage rationing that is forcing FTB-s to find £30,000 deposits instead of £6,000 deposits.

Not house prices.

chewmylegoff

homelessskilledworker wrote: »

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.

MIRAS stands for mortgage interest relief at source. It made mortgage interest (up to a cap) a tax deductible item for anyone with taxable income, so in substance it made mortgage payments cheaper.

Since mortgage rates are quite low at the moment, being able to afford the payments isn't the limiting factor for a lot of people, so a MIRAS type scheme wouldnt help people trying to get onto the ladder.


Giving people free cash to use as a deposit would possibly allow more people to buy. Alternatively the govt could pay house builders an incentive for each house sold to a FTB but that probably wouldn't be as effective as it doesn't tackle the issue that banks need more capital to lend to people with smaller deposits.

chewmylegoff

HAMISH_MCTAVISH wrote: »

According to Halifax, prices today are 4.3 times male, mean full times income versus the historical average of 4.0.

The average FTB house price is around 120K.

A historically normal, prudent and sensible FTB deposit would be 5% to 10%. So £6,000 to £12,000.

If prices were at the historical long term average, then the average FTB house would be around 10K cheaper.

So the average FTB of today would only need to find an extra £500 to £1000 for a deposit versus the long term average if the banks hadn't raised the deposit percentages to ludicrous highs.

It's mortgage rationing that is forcing FTB-s to find £30,000 deposits instead of £6,000 deposits. Not house prices.

What is the multiple according to your favoured index, acadametrics?

homelessskilledworker

shortchanged wrote: »

So you think that's it's right that the majority of FTB's need to find say at least £100K to make their first purchase these days instead of say £40K pre boom prices (random prices I've used as an example 200 -300% increases)?

Who do you think has really benefitted from this?

Because I can tell you something, it's certainly not FTB's.

Banks/lenders today are now doing what they should have done "2003/2005 ish, they are just using basic commonsense and saying "no way are we giving you that amount Pal for that!!"

I have always been anti borrowing(even though I have had a mortgage for 20 of the last 25 years. I hate O/D or personal loans. I remember a decade ago now where I was after a Fireblade but just did not have the dosh at the time, and no way was I going to borrow. Not until that is a bike came my way that had a few slight scratch marks and cracked mudguard but was only just over £2000 and only a few years old with 9000 miles, then the maths made sense.

Maybe Banks right now will not lend 10% on a £160k average property, but maybe they will on a £100k average property.

HAMISH_MCTAVISH

chewmylegoff wrote: »

Giving people free cash to use as a deposit would possibly allow more people to buy. .

Implementing a MIG that replaces the need for higher capital reserves for higher LTV lending would do the same thing. At lower cost.

chewmylegoff

homelessskilledworker wrote: »

Banks/lenders today are now doing what they should have done "2003/2005 ish, they are just using basic commonsense and saying "no way are we giving you that amount Pal for that!!"

I have always been anti borrowing(even though I have had a mortgage for 20 of the last 25 years. I hate O/D or personal loans. I remember a decade ago now where I was after a Fireblade but just did not have the dosh at the time, and no way was I going to borrow. Not until that is a bike came my way that had a few slight scratch marks and cracked mudguard but was only just over £2000 and only a few years old with 9000 miles, then the maths made sense.

Maybe Banks right now will not lend 10% on a £160k average property, but maybe they will on a £100k average property.

If average prices fall from £160k to £100k, banks won't be lending to anyone at all, as they will all be insolvent.

chewmylegoff

HAMISH_MCTAVISH wrote: »

Implementing a MIG that replaces the need for higher capital reserves for higher LTV lending would do the same thing. At lower cost.

Hasn't the govt already tried that for new builds though, with no obvious impact.

HAMISH_MCTAVISH

chewmylegoff wrote: »

Hasn't the govt already tried that for new builds though, with no obvious impact.

In order for such a scheme to work, it has to achieve three things:

1. Banks have to be able to apply the same capital withholding criteria to a 95% mortgage that they do to a 75% mortgage.

2. Banks have to then offer the same rates for a 95% mortgage that they do for a 75% mortgage.

3. Banks have to have access to enough capital to cope with the overwhelming demand that would ensue.

Take a wild guess and let me know which of those three things didn't happen with the current new build scheme.....

Loughton_Monkey

shortchanged wrote: »

So you think that's it's right that the majority of FTB's need to find say at least £100K to make their first purchase these days instead of say £40K pre boom prices (random prices I've used as an example 200 -300% increases)?

Who do you think has really benefitted from this?

Because I can tell you something, it's certainly not FTB's.

Agree with Hamish ^^^

Plus the mortgage rate today is much lower than it was when a FTB could buy for £40K.

I am not advocating that FTB's are "benefitting" from anything. In fact I am admitting that the poor b~ggers have to find a large wad of cash! Something that doesn't come easy to today's younger generation.

But house prices, per se, are not an issue. They have already 'adjusted'. There is a huge shortage in housing, and land to build on. Almost anyone on median income can buy a house if they want. Provided they (a) save for the deposit, and (b) accept that a 1st house is not usually one in which you want to spend the rest of your life.