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

chucky

Graham_Devon wrote: »

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.

Thanks for agreeing with me Devon. Well done.

HAMISH_MCTAVISH

A moderate amount.... 30%

Graham_Devon wrote: »

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".

Presumably there is a point above which you would not be happy?

Or are you saying that unlimited 10% deposit mortgages would be fine?

zagfles

HAMISH_MCTAVISH wrote: »

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.

Yes. But HB is much easier to get and has far fewer restrictions than SMI. You can get HB forever if you're on JSA, you can only get SMI for 2 years, and you have to wait 3 months. It will only pay the interest on the loan, not the capital repayment, not the maintenance & buildings insurance costs etc.

Incorrect sequence of events.

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

Rubbish, the US house price crash happened first, prices started going down in early 2006, the financial crisis started over a year later and was caused by all the CDOs based on "rock solid" (according to the rating agencies) mortgage assets, which relied on US house prices.

HAMISH_MCTAVISH

A moderate amount.... 30%

zagfles wrote: »

the US house price crash happened first, prices started going down in early 2006, the financial crisis started over a year later and was caused by all the CDOs based on "rock solid" (according to the rating agencies) mortgage assets, which relied on US house prices.

Ah, yes, you're right.

It was the UK where the financial crisis happened first, which brought down house prices and the wider economy.

The US had falling house prices first, which exposed the US sub-prime mess, which caused the global financial crisis.

zagfles

IveSeenTheLight wrote: »

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.

The risk is a downturn in the economy which results in unemployment going up at the same time as house prices go down. Lots of people losing their jobs and ending up in negative equity, lots of bad debt.

We've already had to bail the banks out once, they've learnt their lesson.

zagfles

HAMISH_MCTAVISH wrote: »

Ah, yes, you're right.

It was the UK where the financial crisis happened first, which brought down house prices and the wider economy.

The US had falling house prices first, which exposed the US sub-prime mess, which caused the global financial crisis.

Indeed. We should learn from the mistakes of the Americans. Don't rely too much on house prices as security for debts.

Graham_Devon

zagfles wrote: »

Yes. But HB is much easier to get and has far fewer restrictions than SMI. You can get HB forever if you're on JSA, you can only get SMI for 2 years, and you have to wait 3 months. It will only pay the interest on the loan, not the capital repayment, not the maintenance & buildings insurance costs etc.

The majority on SMI are on it for unlimited periods. The 2 year limit only applies to those on unemployment benefits. If on income support or over 65, SMI is unlimited.

Generali

I have no idea what the right answer is to the poll question. I'd be happy with any number as long as they have MIG.

It works well here. If you borrow 80%+ you have to indemnify the bank in case you can't repay, either with MIG or via a guarantor. You can borrow up to 95% from most lenders and some credit unions for very low risk borrowers will lend up to 98%.

Generali

Graham_Devon wrote: »

The majority on SMI are on it for unlimited periods. The 2 year limit only applies to those on unemployment benefits. If on income support or over 65, SMI is unlimited.

SMI should be time limited. Taxpayers shouldn't be paying people to hold an asset indefinitely that could and should be sold to support them. After all if the asset was shares or cash they would have to be used, a house isn't unique as an asset.

IveSeenTheLight

Most.... 75%

zagfles wrote: »

The risk is a downturn in the economy which results in unemployment going up at the same time as house prices go down. Lots of people losing their jobs and ending up in negative equity, lots of bad debt.

We've already had to bail the banks out once, they've learnt their lesson.

In the previous 6 years, how many properties was repossessed?

How many are in negative equity?

Of those in negative equity, what is the projection for nominal valuation in a further 19 years?