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

HAMISH_MCTAVISH

A moderate amount.... 30%

Percy1983 wrote: »

I agree IF everybody had perfect credit files etc then the flow would be too high and the goal posts would be changed..

Right.

So you agree the current system is designed to ration mortgages, to reduce the number of buyers, and that if everyone met these criteria then they'd have to move the goal posts so as to reject most applicants again.

So basically your "solution" to high house prices, is to make sure that most of the people who want to buy a house at any given time, can't get a mortgage.

Genius.

Percy1983

Mr._Pricklepants wrote: »

That's not necessarily true eh Percy boy?

Its perfectly true, I will admit I didn't apply for a mortgage at the peak of my debts (more than £24k) but I am 100% certain I would have got declinded.

So do you not agree people with debts can't get mortgages? or is this another childish attempt to derail my point with a personal attack as you can't find fault with the point itself?

HAMISH_MCTAVISH wrote: »

Right.

So you agree the current system is designed to ration mortgages, to reduce the number of buyers, and that if everyone met these criteria then they'd have to move the goal posts so as to reject most applicants again.

So basically your "solution" to high house prices, is to make sure that most of the people who want to buy a house at any given time, can't get a mortgage.

Genius.

Yes and no, 'my' (or should we say the banks, as this is what is currently happening) solution does mean that only the better applicants get there.

This doesn't stop anybody but delays many dependant on what they have done in life to date.

As I say its not ideal, but I do see it as the lessor of the 2 evils, with 'my' system everybody as an equal chance and all will have to make adjustments to get there.

Your system does solve an immediate problem, but then causes problems for the next generation, basically just kicks the can down the road for the next lot to sort out.

HAMISH_MCTAVISH

A moderate amount.... 30%

Percy1983 wrote: »

This doesn't stop anybody but delays many dependant on what they have done in life to date..

Year one - 80 people cannot buy, 20 can.

Year two - 80 people cannot buy, 20 can.

Year three - 80 people cannot buy, 20 can.

Year four - 80 people cannot buy, 20 can.

Year five - 80 people cannot buy, 20 can.

Year six - 80 people cannot buy, 20 can.

Year seven - 80 people cannot buy, 20 can.

Year eight - 80 people cannot buy, 20 can.

Year nine - 80 people cannot buy, 20 can.

Year ten - 80 people cannot buy, 20 can.

After a decade of mortgage rationing, 800 people have not been able to buy. 200 people have been able to buy.

It makes no difference if they fix their credit or not, or if they save a bigger deposit or not, most will still not be able to buy so long as mortgage rationing continues.

It stops 80% of them, regardless of whether or not they try to fix their credit or save a deposit.

I do see it as the lessor of the 2 evils, with 'my' system everybody as an equal chance and all will have to make adjustments to get there.

No, no, no.

The exact opposite.

Lets say in year five the 80 people refused from year one have fixed their credit and saved deposits.

They now have to compete with the 20 people from year five that already have deposits and good credit.

But there are still only 20 mortgages available.

So 80 out of the 100 with good credit and saved deposits will have to be rejected.

Your "solution" guarantees most people will never buy. No matter if they have good credit and deposits or not.

It also guarantees the housing shortage will worsen for ever, as builders won't build what they cant sell.

It's the ultimate form of can kicking, passing the problem down to future generations, and making it worse every year.

Percy1983

HAMISH_MCTAVISH wrote: »

Year one - 80 people cannot buy, 20 can.

Year two - 80 people cannot buy, 20 can.

Year three - 80 people cannot buy, 20 can.

Year four - 80 people cannot buy, 20 can.

Year five - 80 people cannot buy, 20 can.

Year six - 80 people cannot buy, 20 can.

Year seven - 80 people cannot buy, 20 can.

Year eight - 80 people cannot buy, 20 can.

Year nine - 80 people cannot buy, 20 can.

Year ten - 80 people cannot buy, 20 can.

After a decade of mortgage rationing, 800 people have not been able to buy. 200 people have been able to buy.

It makes no difference if they fix their credit or not, or if they save a bigger deposit or not, most will still not be able to buy so long as mortgage rationing continues.

It stops 80% of them, regardless of whether or not they try to fix their credit or save a deposit.



No, no, no.

The exact opposite.

Lets say in year five the 80 people refused from year one have fixed their credit and saved deposits.

They now have to compete with the 20 people from year five that already have deposits and good credit.

But there are still only 20 mortgages available.

So 80 out of the 100 with good credit and saved deposits will have to be rejected.

Your "solution" guarantees most people will never buy. No matter if they have good credit and deposits or not.

It also guarantees the housing shortage will worsen for ever, as builders won't build what they cant sell.

It's the ultimate form of can kicking, passing the problem down to future generations, and making it worse every year.

Sorry to steal But I will rework your format, for what I am trying to say.

Year one - 20 people cannot buy, 80 can.

Year two - 30 people cannot buy, 70 can.

People worried about missing the boat, panick sets in, prices rise rapidly

Year three - 70 people priced out, 30 can.

Year four - 80 people priced out, 20 can.

Year five - 90 people priced out, 10 can

Year six - 95 people priced out, 5 can.

Year seven - 95 people priced out, 5 can.

Year eight - 95 people priced out, 5 can.

Year nine - 95 people priced out, 5 can.

Year ten - 100 people priced out, 0 can.

I will say I can't be bother tweaking it to get to the same point you did, but there is a flaw in your summary.

For all those who save longer they will need less money so more would get a mortage form the same pot.

Dare I say the main difference we are talking here is:

You say lets things loose and building will catch up and all will be fine.

I say keep control until there is enough built and all will be fine.

I just can't see anything which involves prices rising at much more than inflation as fair on the future generations.

Dare I say I think we are just going to go in circles, I understand your point and jsut don't agree with it, likewise I think I have made my point and you can see its not going to change your mind.

With that what I think should happen is what is happening, so clearly the people who pull the strings agree with me, if you want to change this its them you need to write too.

One the flip side I see we both agree there needs to be more houses built.

HAMISH_MCTAVISH

A moderate amount.... 30%

Percy1983 wrote: »

You say lets things loose and building will catch up and all will be fine.

I say keep control until there is enough built and all will be fine.

There will never be enough built if mortgage lending doesn't increase.

Builders won't build what they cant sell.

And the housing shortage is already nearing a million homes, and worsening at the rate of 150,000 a year.

I understand your point and jsut don't agree with it,.

It's not 'my point', it's just the facts.

Three times as many FTB-s were able to buy in 2007 as are today, despite prices and rates being far higher.

With that what I think should happen is what is happening, so clearly the people who pull the strings agree with me,

Nonsense, they don't "agree" with you at all.

Which is why the Government, UK Treasury and BOE all admit they need to do far more to get more mortgages being issued, and are trying scheme after scheme to make it happen.

That it hasn't worked yet is more down to their incompetence than any notion less mortgages should be issued so that more people cannot buy, which is what you want to happen.

Percy1983

Here is an interesting point you keep saying they won't build houses they can't sell.

They point is they can sell just with lessor profits, if they want the same profits they should build 3 instead of 2.

I suppose the other hole in your point is why the criteria is set where it is and would the goal posts actually move or would there just be more mortgages granted.

The problem is we are in a culture shift, we had loads of people who would have got a mortgage suddenly unable to do so, but the longer this goes on the more the young will just see this as the way it is and start saving deposits sooner and the bottleneck will be much less.

The bigger point is maybe less people actually want a mortgage, with so much uncertainty with just about anything right now I can see why many would think twice.

If things stay like this the developers will eventually stop chucking the toys out of the pram and get building again.

HAMISH_MCTAVISH

A moderate amount.... 30%

Percy1983 wrote: »

Here is an interesting point you keep saying they won't build houses they can't sell.

They point is they can sell just with lessor profits, if they want the same profits they should build 3 instead of 2.

Percy, stop being so obtuse.

We build 100,000 houses a year.

We need to build 300,000 houses a year.

Builder profit margins are generally in the single digits.

So even a reduction that saw them making no profit at all, would still result in less than 10% more houses being built, if the same funding was spread out among more houses.

There is no way around it.

Lending needs to massively increase in order for builders to build the houses we need.

I suppose the other hole in your point is why the criteria is set where it is and would the goal posts actually move or would there just be more mortgages granted.

They can't lend more no matter how many show up with 20% deposits and perfect credit.

The banks are currently lending 100% of the mortgage funds they have available to lend.

They cannot lend more, no matter how many people suddenly show up with 20% deposits and perfect credit.

the longer this goes on the more the young will just see this as the way it is and start saving deposits sooner and the bottleneck will be much less.

No, just the opposite.

The longer this goes on, the bigger the crowd of people trapped behind the bottleneck.

There's been a million FTB-s prevented from buying just in the last 5 years, and increasing at 200,000 a year.

This time next year, 1.2 million.

This time in 5 years, 2 million.

In ten years, 4 million.

It makes no difference if they all save 20% deposits and have perfect credit.

None of them will get a mortgage until the availability of lending improves.

The bigger point is maybe less people actually want a mortgage, with so much uncertainty with just about anything right now I can see why many would think twice.

Except that's nonsense. Banks are rejecting up to 90% of higher LTV applications. Because they don't have the money to lend.

If things stay like this the developers will eventually stop chucking the toys out of the pram and get building again.

Now you're sounding desperate.

They won't and they can't.

Not until the banks start lending again.

Percy1983

Surely you can see how the system is working with limited funds.

Sombody wanting 60% wants to borrow less than somebody wanting to to borrow 90% (assuming the same property of course).

Add to that somebody borrowing 90% is more likely to fall in NE is is more of a risk.

So of course they want less people on 90%, they do this using 2 methods, less attractive rates and tighter criteria.

It does seem you are focusing so much on 90%, how many loans are 85%, 80% etc?

Have you looked at the rates on 90% mortgages, how many people are just passing them by and going for higher deposits?

I really do find it hard to believe a developer can't make a profit at current prices, what do you have to back this up as I am geniunely interested in what they have to say for themselves.

HAMISH_MCTAVISH

A moderate amount.... 30%

Percy1983 wrote: »

Surely you can see how the system is working with limited funds.

Yes.

It develops criteria so as to ensure most people can't get a mortgage.

That's how "the system" rations those limited funds.

And people changing their circumstances won't suddenly result in more funding being available to lend.

Sombody wanting 60% wants to borrow less than somebody wanting to to borrow 90% (assuming the same property of course).

Add to that somebody borrowing 90% is more likely to fall in NE is is more of a risk.

So of course they want less people on 90%, they do this using 2 methods, less attractive rates and tighter criteria.

It does seem you are focusing so much on 90%, how many loans are 85%, 80% etc?

Have you looked at the rates on 90% mortgages, how many people are just passing them by and going for higher deposits?

I really do find it hard to believe a developer can't make a profit at current prices, what do you have to back this up as I am geniunely interested in what they have to say for themselves.

Percy, just no.

None of that is relevant.

The banks are lending 100% of the funds they have available to lend at all LTV brackets.

It doesn't change the fact that there's been a million FTB-s prevented from buying just in the last 5 years, and it's increasing at 200,000 a year.

This time next year, 1.2 million.

This time in 5 years, 2 million.

In ten years, 4 million.

It makes no difference if they all save 20% deposits and have perfect credit. It makes no difference if they want to borrow at 95% LTV or 80% LTV. It makes no difference if developers drop their prices by a few percent and make no money.

There will still be millions of mortgage-excluded people being forced to enrich their landlords until the availability of lending improves.

Percy1983

But if all 100% of the funding is going surely that means people will be getting told no because there is no money left this week/month/year?

Aren't the banks claiming there isn't enough demand for the money they got on the cheap, hence why they haven't used it all?

You keep putting it forward that people will be forced to enrich there landlords, but if we let hpi take over again it will just get to the same point, just that landlords will have assets worth 3x more and the only ones who can afford houses are those with equity to cash in, ie landlords.

As said however you cut it many aren't going to be able to buy, just one keeps prices down for the most viable while the other lets prices rockets so its on a first come first served basis.

Anyway, do you have any further information on how developers can't make a profit at current prices, I am not saying this isn't true I just can't figure it out how its possible.