Over 50's will bit hit by new mortgage regulations

Eellogofusciouhipoppokunu

jimibaboza wrote: »

What if the generation before you had hoovered up all of the properties so they could rent them all out making you unable to afford that one bed terrace? Can't move up the ladder when you are paying all that rent.

In what world has that happened? Some imaginary one in your head where everyone is against you and nothing is ever your fault or under your control?

I believe this is the world that Graham and his chums reside, so you're not alone.

ukcarper

GeorgeHowell wrote: »

Lenders have to take calculated risks because that's what they're in business to do. Nothing is 100% certain.

I'm afraid the old 'make sacrifices and save up' adage is no longer valid regarding first time house deposits. I am the first one to criticise people who squander their money on wasteful, short-termist hedonism. But saving up a deposit from scratch in a reasonable time scale without help nowadays is a bridge too far for most people. the baby boomers frequently argue that saving for a deposit was pretty tough for them too, and they didn't have it as easy as many of today's young like to make out. That it certainly true. But I estimate that on average it is twice as difficult now to save an average deposit on an average house, given average income and typical lending terms.

I think that depends on when you first bought when I first bought in the early 70s the house price to earnings ratio was about the same as it is now. I only needed a 10% deposit so if you now need 20% then it would be twice as hard if 10% is enough its about the same.

I think the biggest problem is not house prices but the availablity of good jobs.

GeorgeHowell

jimibaboza wrote: »

What if the generation before you had hoovered up all of the properties so they could rent them all out making you unable to afford that one bed terrace? Can't move up the ladder when you are paying all that rent.

Well if that were true it would be somewhat sad. But here's some realities to ponder :-

Not all rented properties are owned by baby boomer buy to let small time landlords. By no means all baby boomers own rented out properties.

One of the reasons that some people have gone for buy to let is because savings interest rates are so low and the stock market is flat. These low interest rates make mortgages more affordable for those buying or trying to buy their own place.

Many of those who have gone into buy to let have done so in order to try to protect their assets from inflation for the benefit of the next generation to inherit.

Letting out property is no longer an attractive proposition for many small landlords. As soon as interest rates rise I suspect that many of those who can do so without great loss will get out of it.

It's a convenient fashion at the moment to blame the parents' generation for the housing crisis, as if they deliberately engineered it and are taking great satisfaction out of seeing their childrens' generation disadvantaged. The real blame lies with overpopulation versus available land, greedy and self-serving banks, incompetent governments, and changing social trends which create many more individual households.

GeorgeHowell

ukcarper wrote: »

I think that depends on when you first bought when I first bought in the early 70s the house price to earnings ratio was about the same as it is now. I only needed a 10% deposit so if you now need 20% then it would be twice as hard if 10% is enough its about the same.

I think the biggest problem is not house prices but the availablity of good jobs.

Yes I'm looking at house prices versus incomes and also the level of deposit typically required. On average I reckon it's about x2 compared with the 1970s, but obviously examples and time-scales can be found where it would be more or less than that.

Squeezed incomes, as the underdeveloped world takes a progressively bigger slice of the global cake, is obviously a significant factor.

Mr._Pricklepants

jimibaboza wrote: »

What if the generation before you had hoovered up all of the properties so they could rent them all out making you unable to afford that one bed terrace? Can't move up the ladder when you are paying all that rent.

There's plenty of properties on the market.
Each and every month, many FTB's enter the market. How is that possible if they're all hoovered up??

Eellogofusciouhipoppokunu

Mr._Pricklepants wrote: »

There's plenty of properties on the market.
Each and every month, many FTB's enter the market. How is that possible if they're all hoovered up??

The previous generation are propping up the house market in order to stop mi'laddo from buying a house at the low price that he personally thinks houses are worth.

Do try and keep up.

Thrugelmir

GeorgeHowell wrote: »

No it isn't. If sensible deposit requirements exist -- in the 10%-20% range, proper income verification is operated, and loan to income ratios are reflective of present very low interest rates then restrictions like this age limit nonsense are unnecessary and punitive. It's belt and braces and a gross overreaction.

To regulate the banks.

Once in place. The property market will adjust to the new rules of the game.

The old rules failed and we're all going to pay the cost.

cotleigh

lemontart wrote: »

read something about 25 yr morts will be difficult to get if over 50 - why on earth would you go for a 25 yr one, I have to remortgage due to endowment and took in to account that presently I will retire at 67 so only going for 15 max with aim to pay off sooner................defo do not want stress of mort after retirement.

This used to be the case years ago anyway.

I remember around early 1990s when I was about 24, being told by a guy I knew who was then early 40s and who had spent his younger years in a band, and doing all sorts of casual jobs, but who had then got a "proper" permanent job, that most banks wouldn't give him a 25 year standard mortgage because the term would go beyond the usual retirement age of 65.

Mind, this was also back when banks would only lend people 3.25 times their annual pay. And when they used to contact your employer to check that you really worked where you said you did, and earned what you claimed.

The current "tightening up" on lending is really only a return to where we were before the crazy "boom" when everyone could bullsh1t that they earned megabucks and get given a loan of 8x their pay with few questions asked.

Loughton_Monkey

Thrugelmir wrote: »

To regulate the banks.

Once in place. The property market will adjust to the new rules of the game.

The old rules failed and we're all going to pay the cost.

Well not quite all of us...

The new rules are certainly there to make banks pass the 'stress tests'. But behind this is a desire to go back to the 'old' rules, which are:

1. House owning is strictly the domain of the comfortable middle earners and good savers. Those who have money and know how to use it....

2....Leaving everyone else to fight it out in the rental market where they will languish forever until such time as they learn that they are paying the landlord's mortgage plus a bit. If only they learned how to save money instead of spend it, then they could pay their own mortgage instead....

3....Provided they don't get gazumped by richer BTL merchants who will re-vitalise the market and help keep the prices up, thereby reinforcing the point 1. above...

The rental gravy train will become a bit of a bubble and will eventually be burst somehow. Possibly via a left wing government introducing rent controls. By which time banks will get looser again, and have a ripple-down effect allowing the top slice of the great unwashed to enter into the ownership market again.

Thrugelmir

Loughton_Monkey wrote: »

Well not quite all of us...

The new rules are certainly there to make banks pass the 'stress tests'. But behind this is a desire to go back to the 'old' rules, which are:

Then you'll remember when building societies "rationed" mortgages. When holding a savings account for 2 years was often a prerequisite of obtaining a mortgage.

It was only the deregulation of the banks back in the 80's. That made mortgage lending attractive to them. As they could raise cheap capital. Mortgage lending became a low margin high volume business.

So we're heading back to somewhere in between the mortgage markets of 70's and 2007. The crux of the matter is available capital to lend.