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

Graham_Devon

IveSeenTheLight wrote: »

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

LOL, you having a giraffe?

HAMISH_MCTAVISH

A moderate amount.... 30%

Graham_Devon wrote: »

LOL, you having a giraffe?

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

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

Derivative

Virtually none... less than 2.5%

I really can't see that deposits are a problem from the point of view of a buyer.

For one, they're essentially irrelevant unless you're an FTB (or equivalently, have no equity).

Let's look at what a 20% deposit would entail.

On a 60k home in Hull, 20% would be £12,000.
That's not even outside of the remit of benefits.
On NMW, as a single person, it'd mean saving 20% of your salary for 6 years - which is essentially the worst case scenario in which anyone could ever hope to get a mortgage, anyway.

On a 150k home in the South East, 20% would be £30,000.
Again, well within the reach of a well paid single worker, chicken feed for a couple if both are in work.

It seems reasonable to say that people have an issue with instability in employment, and low salaries to actually afford the repayments.

The salary multiples required to afford a starter home are very high.

HAMISH_MCTAVISH

A moderate amount.... 30%

And unsurprisingly, Graham seems to have disappeared....

IveSeenTheLight

Most.... 75%

Graham_Devon wrote: »

LOL, you having a giraffe?

No.
Prices on average are 10.989% below nominal peak.
That is, if you bought at the peak time.

If you bought before / after the peak, the percentage will be lower (on average)

On a property bought at peak in Nov 2007 at the average peak of £182,000, after 5 years on a repayment mortgage (let's use 5% even though the average mortgage product has been lower in the last 5 years) even with a 100% mortgage (maximum negative equity potential) the repayment would mean the property is now outstanding £161,215.

This incidently is lower than the current average.

So we can therefore state that the average property bought at peak time with a 100% mortgage if paid back the last 5 years on a repayment mortgage, would not still be in negative equity.

http://www.calculator.net/mortgage-calculator-uk.html

Now lets conceive that the mortgages are interest only, the valuation is still only 10.989% below the average peak (if bought at peak time).

Is it inconceivable that property prices would not return to the purchase price in the remaining time of the mortgage product?

See if you put a little bit of thought into it Graham, there was no need to attempt to mock by asking if I was having a giraffe

Graham_Devon

IveSeenTheLight wrote: »

See if you put a little bit of thought into it Graham, there was no need to attempt to mock by asking if I was having a giraffe

The giraffe bit was regarding the assumption that anyone with negative equity will never sell and finish paying off their mortgage product 19 years later.

I mean, come on.

You don't have come up with some weird calculations. The average household moves every 7 years.

HAMISH_MCTAVISH

A moderate amount.... 30%

So Graham...

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

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

IveSeenTheLight

Most.... 75%

Graham_Devon wrote: »

The giraffe bit was regarding the assumption that anyone with negative equity will never sell and finish paying off their mortgage product 19 years later.

I mean, come on.

You don't have come up with some weird calculations. The average household moves every 7 years.

No weird calculations, simple mathematics and simple understanding of outstanding mortgages in relation to the topic which was negative equity.

I made no reference to selling off the properties, I merely posed the question whether they thought that the property would still be in negative equity during the time of the standard mortgage product.

For many in Negative Equity, they often have little choice but to live through it and my point is that if they can, they will often turn the corner and ride through the storm.

Your one liner quip did however give me the opportunity to demonstrate that the average peak property would not be in negative equity, even if bought without a deposit as a 100% mortgage, if a repayment mortgage had been maintained

IveSeenTheLight

Most.... 75%

HAMISH_MCTAVISH wrote: »

So Graham...

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

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

Be prepared for a muddle statement

Graham_Devon

IveSeenTheLight wrote: »

No weird calculations, simple mathematics and simple understanding of outstanding mortgages in relation to the topic which was negative equity.

I made no reference to selling off the properties, I merely posed the question whether they thought that the property would still be in negative equity during the time of the standard mortgage product.

For many in Negative Equity, they often have little choice but to live through it and my point is that if they can, they will often turn the corner and ride through the storm.

Your one liner quip did however give me the opportunity to demonstrate that the average peak property would not be in negative equity, even if bought without a deposit as a 100% mortgage, if a repayment mortgage had been maintained

Great.

I live in the real world though, and these examples don't. I'll continue with the real world stuff