What percentage of mortgages issued should require only a 10% deposit?

HAMISH_MCTAVISH

Poll as per title....

chucky

HAMISH_MCTAVISH wrote: »

Poll as per title....

It's a little bit irrelevant Hamish, you can't say what percentage of mortgages should be 90%. It all depends on each individual case and if they can afford repayments and if you look at the bigger picture how much funding is available to supply those mortgages and the other factors that drive supply and demand on all the different layers.

sabretoothtigger

Most.... 75%

100% and if they go broke lending that way tough luck, end of story. The question is flawed, it shouldnt even be set by anyone but those who risk their money and good luck to them

HAMISH_MCTAVISH

A moderate amount.... 30%

chucky wrote: »

It all depends on each individual case and if they can afford repayments

Yes obviously.

But given the majority of renters are paying more in rent than they would on a mortgage, that is clearly the case.

Most of our posters claim to think that 10% deposits are reasonable, so I'm just wondering very roughly what percentage of the market they think it would be reasonable for those products to comprise.

Or actually, would they really prefer that they remain virtually unavailable, a tiny, tiny percentage of lending, as they are today.

IveSeenTheLight

Most.... 75%

chucky wrote: »

It's a little bit irrelevant Hamish, you can't say what percentage of mortgages should be 90%. It all depends on each individual case and if they can afford repayments and if you look at the bigger picture how much funding is available to supply those mortgages and the other factors that drive supply and demand on all the different layers.

True, but I can;t think of an argument against 90% mortgages, thus if a borrower meets the affordability criteria, then I see no reason why the funds should not be made available.

The loan is generally on a 25 year plan and really, what is the risk to the lender on the valuation being lower than 90%, 25 years later?

those in the business of lending credit, essentially want to make the most return possible.
It's the competative market and effective demand that restrains the amount of profit (interest rate linked) that can be made on new lending.

chucky

IveSeenTheLight wrote: »

True, but I can;t think of an argument against 90% mortgages, thus if a borrower meets the affordability criteria, then I see no reason why the funds should not be made available.

The loan is generally on a 25 year plan and really, what is the risk to the lender on the valuation being lower than 90%, 25 years later?

those in the business of lending credit, essentially want to make the most return possible.
It's the competative market and effective demand that restrains the amount of profit (interest rate linked) that can be made on new lending.

I agree, I also don't see any issue with 100% mortgages as long as thy can be repaid. From what I see on here it's usually the bitter ones or the ones that don't understand the basics that are against them.

HAMISH_MCTAVISH

A moderate amount.... 30%

chucky wrote: »

I also don't see any issue with 100% mortgages as long as thy can be repaid. From what I see on here it's usually the bitter ones or the ones that don't understand the basics that are against them.

Absolutely correct.

But I'm genuinely curious to see if those who claim to be OK with 10% deposits would be happy for the percentage of buyers helped by them to exceed the tiny 2% or so it is currently.

zagfles

Yes, so any borrower who has a guaranteed job for the next 25 years should be able to get a 100% mortgage. What percentage is that then?

If their job isn't guaranteed, what happens if they lose their job and if house prices go down. Oh, er, pretty much what happened in the US 8-10 years ago, and started off the financial crisis.

HAMISH_MCTAVISH

A moderate amount.... 30%

zagfles wrote: »

Yes, so any borrower who has a guaranteed job for the next 25 years should be able to get a 100% mortgage. What percentage is that then?

If their job isn't guaranteed, what happens if they lose their job and if house prices go down.

If you have zero income through a job loss, it makes little difference if your mortgage was for 100% or 90%. Both are equally unaffordable on JSA.

Likewise, rent of more than a mortgage payment is equally unaffordable on JSA.

For some people, other benefits may be available, such as SMI for buyers and housing benefit for renters.

Oh, er, pretty much what happened in the US 8-10 years ago, and started off the financial crisis.

Incorrect sequence of events.

Their financial crisis took down the housing market, which took down the wider economy, which then caused the job losses.

Graham_Devon

For the umpteenth time. You can't set arbitary figures and you can't force people to borrow.

Everything depends on so many factors there is no "right" percentage or magic number. It's like asking the question "how many lottery winners should there be this week".

IveSeenTheLight

Most.... 75%

zagfles wrote: »

Yes, so any borrower who has a guaranteed job for the next 25 years should be able to get a 100% mortgage. What percentage is that then?

If their job isn't guaranteed, what happens if they lose their job and if house prices go down. Oh, er, pretty much what happened in the US 8-10 years ago, and started off the financial crisis.

No job is 100% guaranteed (flashback), however most factor in the risk and proportionally put in measures to counter, be it critical illness, death in service, unemployment cover etc.

Turning round your point, Of homeowners, what is the household percentage time spent unemployed where the incme did not cover the mortgage payments (or insurance covered)?

This will help understand the risk to the lenders.