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

Graham_Devon

I understand all that Hamish. But there isn't a limit. Not in numerical terms, which I guess is why you keep avoiding the question.

Bank lending changes all the time, based on the variables at the time.

Theres limits on stuff like interest only at the moment, but not 90% mortgages. Theres far more to it, as keeps being said, such as people shying away from higher LTV products with higher ongoing costs.

You can make as many 90% loans available as you want. Doesn't mean you can force people to take them. The same is happening with business at the moment, with the business's banks want to lend to, not wanting to take on loans, no matter how "cheap" they are. A loan is never cheap if you can do without it in the first place.

HAMISH_MCTAVISH

A moderate amount.... 30%

Graham_Devon wrote: »

I understand all that Hamish. But there isn't a limit. Not in numerical terms, which I guess is why you keep avoiding the question.

Bank lending changes all the time, based on the variables at the time.

There is a limit, based on those variables.

And banks are currently lending to that limit.

Which is why they are rejecting up to 90% of borrowers at those LTV-s.

In the future, that limit may increase, it's what funding for lending is designed to do, and what the recent proposal to relax BASLE 3 rules is designed to do.

And of course, the recent Treasury announcement that they are looking to increase 95% lending will probably result in new developments, to find a way to bypass these limits..

Graham_Devon

HAMISH_MCTAVISH wrote: »

There is a limit, based on those variables.

And banks are currently lending to that limit.

Hasn't that always been the case?

Unless you implement unlimited loans with unlimited risk, probably with unlimited QE or similar, what's the alternative?

The issue here is you are describing it as a limit, rather than what it is, and that's a reluctance to lend to high risks and a reluctance to borrow from lower risks.

Of course, there are high risks who will borrow the maximum they can. The problem is you can't force banks to lend to them. The low risks don't want to borrow all they can, that's what makes them low risk, and you can't force them to borrow.

DervProf

Most.... 75%

HAMISH_MCTAVISH wrote: »

Why?

Lending at historically normal, prudent and sensible 5% to 10% deposits is low risk.

So limiting it only prevents millions of people from buying, causes new house building to fall to the lowest levels in a century, and forces rents up to record highs instead.

As we have seen.

The brakes have been applied Hamish. Maybe a little too much, but far too late. Releasing the brakes and accelerating gently is the way to go.

Yes, rents have been rising (too much). Would they fall if lending were to be loosened ? If so, would they fall much ?

You know full well that increasing the availability of 95%LTV mortgages will proably mean double-digit HPI within a year or two. More house may start to be built, but will it be enough ?

A little more joined up thinking is required, instead of bullish dreams of high HPI and bearish wishes for a crash.

HAMISH_MCTAVISH

A moderate amount.... 30%

Graham_Devon wrote: »

Theres limits on stuff like interest only at the moment, but not 90% mortgages.

Oh there is a limit, and banks are lending right up to it.

Which is why they're refusing thousands of people a month.

You can make as many 90% loans available as you want. Doesn't mean you can force people to take them.

But we're not making "as many available as you want".

We're making very few available, and demand far outstrips supply.

As the UK Treasury recently admitted.

Graham_Devon

OK, I feel I'm in some never ending circle. I gotta get out!

HAMISH_MCTAVISH

A moderate amount.... 30%

Graham_Devon wrote: »

Hasn't that always been the case?

Unless you implement unlimited loans with unlimited risk, probably with unlimited QE or similar, what's the alternative?

The alternative is to make an adequate supply of lending available to meet demand from the several million people who want to buy but can't.

At the historically normal, prudent, sensible, and low risk level of a 5% to 10% deposit.

I don't know what the "right" number is. But I do know it's an order of magnitude more than the current 900 loans a month.

The issue here is you are describing it as a limit, rather than what it is, and that's a reluctance to lend to high risks and a reluctance to borrow from lower risks.

Of course, there are high risks who will borrow the maximum they can. The problem is you can't force banks to lend to them. The low risks don't want to borrow all they can, that's what makes them low risk, and you can't force them to borrow.

That's just utter nonsense though really.

"Higher risk" is the 125% mortgages, sub-prime, I/O self-cert, brigade.

And as it turns out, even they were not particularly high risk, as the immensely profitable NRAM "bad bank" book proves perfectly well.

Low risk is the historically normal, prudent, sensible, 5% to 10% mortgage.

And there's probably upwards of a million people who would snap one up tomorrow if they were widely available.

DervProf

Most.... 75%

HAMISH_MCTAVISH wrote: »

But we're not making "as many available as you want".

We're making very few available, and demand far outstrips supply.

As the UK Treasury recently admitted.

According to what you have said before, demand for property outstrips supply. If this is true, then limiting the demand for the borrowed money to buy the limited amount of property seems to be a way of preventing higher demand (due to speculation) and higher demand for more lending (due to increased prices, caused by increased supply of funds).

Thrugelmir

Graham_Devon wrote: »

OK, I feel I'm in some never ending circle. I gotta get out!

Whatever the views on here. Bears no connection to how lenders operate their businesses as banks and how executive boards set risk policy on a daily basis.

Nikkster

Most.... 75%

Confession: I didn't read the question properly

I was voting on how many mortgages should have at least a 10% deposit (answer = all of them). Oops.

I don't think you can say that x% of mortgages should be available at 10%. For a start, not everyone needs a 90% loan. And on the flip side, not everyone can afford the repayments on 90%.

If banks have £y to lend on mortgages, then why shouldn't they want to offer better rates/ more mortgages at a lower ltv? Why should borrowing more be the answer rather than paying less (or more likely a combination of the two)?