Treasury seeks to boost 95% mortgages

HAMISH_MCTAVISH

Graham_Devon wrote: »

My question was more what do you think will happen.

You say "only a matter of time". But until what? HOW are they going to make these things widely available? Simply be ignoring any capital requirements....which kinda defeats the whole point of having any banking requirements?

I think the article answered both those points Graham.

TPTB are clearly concerned about the shortage of higher LTV mortgages.

“, the Treasury’s agenda is how do we improve lending at 95 per cent mortgages as there is unmet demand there and something needs to be done about it."

And it is widely recognised that the problem with issuance is the new capital requirements.

“ if the Treasury plans to launch a MIG-type scheme, then to get some uptake lenders will have to be given relief on capital requirements..”

So those will have to be waived, if for example, a MIG is in place to protect the lender.

Which would allow for vastly more lending at higher LTV-s.

Carney and the RBC have a similar scheme running in Canada. It has been highly effective at ensuring widespread higher LTV lending remains available throughout the financial crisis.

Harry_Boyle

shortchanged wrote: »

God help us if they haven't (and that from an atheist!)

There is absolutely no need for 100% mortgages. They are just an indication that someone is not ready for the housing market.

Not necessarily, someone could be living in London and paying rent that is far greater than a 100% mortgage would be. They could be paying so much in rent that they can't afford to get a deposit together in a reasonable time frame, especially given the sort of deposit levels required for even a studio flat in London.

The main problem with 100% mortgages is that if house prices fall, they leave the owner in negative equity, but this has not been the case in London and the SE and given the choice most people would probably prefer being stuck in negative equity in their own home (with lower monthly costs) than stuck in high cost rental property. At least with negative equity you can do something about it to improve your circumstances (i.e. make overpayments), with high rents there isn't much you can do except maybe move to a cheaper area, but then you may incur higher travel costs and higher insurance payments (and also hate where you live).

I think you need to bare in mind that not everyone lives in Hull.

HAMISH_MCTAVISH

Harry_Boyle wrote: »

not everyone lives in Hull.

And even if they did, the vast majority would be better off buying with a 100% mortgage, dipping into negative equity if prices fall, then back out again when prices go back up.

Rather than being forced to rent and enrich their landlords.

Harry_Boyle

HAMISH_MCTAVISH wrote: »

And even if they did, the vast majority would be better off buying with a 100% mortgage, dipping into negative equity if prices fall, then back out again when prices go back up.

Rather than being forced to rent and enrich their landlords.

Yep, and with the removal of interest only mortgages it would be only a matter of time before anyone who is in negative equity got back out of it, regardless of whether they opt to make additional overpayments. Negative equity is not for life, whereas renting could be if all the restrictions that some on here are demanding are put into practice.

It's almost as though the likes of shortchanged have a house and don't want others to buy one. They seem in favour of a huge array of restrictions that prevent ordinary working class people from owning their own home.

Either shortchanged (et al) is a BTL landlord who wants a housing crash to allow him to build a larger property portfolio, or he is a toff who doesn't like the lower classes having the freedom to become property owners.

Turnbull2000

I've been predicting this was coming.

5 X duel income at 4% or less would go a long way in allowing first-time buyer to compete for the dwindling number of available properties. This year could be your last opporunity outside of London and SE* to buy below 2008 peak prices. We could see some real upward momentum in 2014.

The only relief for stubborn bears from this developement will be slighly lower rent rises. But chronic undersupply will soon take care of that again. Investors will just have to contend with higher capital gains for a couple of years.

*London and SE are pretty much beyond peak already

mrginge

The only option the govt has left is to try to create economic growth through inflationary policies, so it wouldn't surprise me in the least to see them try to do things like this.

However, anyone making out that this would be a good thing for the LONG term economy is a nut case.
A cynic might suggest that we will soon see a number of can-kicking policies come to light that are aimed more at boosting the conservatives poll rating than what's actually good for the country.

Conrad

shortchanged wrote: »

There is absolutely no need for 100% mortgages. They are just an indication that someone is not ready for the housing market.

Natwest, Nationwide and others sold shed loads of these long before N Rock expanded, and the vast majority (c99%) sustained thier mortgage and home in the long term.

Far too much knee jerk urban myth around this subject.

I agree things got too heated in the mid naughties.

Percy1983

To be honest I don't see 95% mortgages as the problem, I got one of the impossible to get 90% mortgages, but at 5% I had already proven an ability to budget and save.

100% would be madness, 95% with what I would guess will be higher interest rates isn't really a problem.

On reflection even 100% mortgages with very strict criteria wouldn't be a problem, as long as we don't go back to the days of just walking in a bank and saying 'I want a house' was all you needed.

grizzly1911

HAMISH_MCTAVISH wrote: »

http://www.mortgagestrategy.co.uk/latest-news/treasurys-new-bid-to-boost-95-ltv-mortgages/1065819.article

Only a matter of time now....;)

On the basis that we own RBS the government could turn the taps on tomorrow if they wished. They could underwrite 100% mortgages if they so wished.

On the basis they won't and will "hide" behind "negotiations" it is useful politics - appearing to be doing something.

MIGS are wonderful products for the lender, premium income, protected debt. Less so for Jo(e) Punter who has to pay heavily for the privilege and will still get hung out to dry if the they default.

shortchanged_2

Harry_Boyle wrote: »

Yep, and with the removal of interest only mortgages it would be only a matter of time before anyone who is in negative equity got back out of it, regardless of whether they opt to make additional overpayments. Negative equity is not for life, whereas renting could be if all the restrictions that some on here are demanding are put into practice.

It's almost as though the likes of shortchanged have a house and don't want others to buy one. They seem in favour of a huge array of restrictions that prevent ordinary working class people from owning their own home.

Either shortchanged (et al) is a BTL landlord who wants a housing crash to allow him to build a larger property portfolio, or he is a toff who doesn't like the lower classes having the freedom to become property owners.

Is this your latest attempt at a smear campaign renoman?