Budget 2013 live....

wotsthat

IveSeenTheLight wrote: »

Sorry, have I missed something. Why will LL's be offloading BTL's?

The 'reluctant' landlords.

dryhat

The scheme in pictures ...

http://www.hm-treasury.gov.uk/d/budget2013_help_to_buy_infographic.pdf

IveSeenTheLight

wotsthat wrote: »

The 'reluctant' landlords.

Oh ok, but I'm guess that tenancy agreements would mean this is filtered as the tenancy becomes available.

Do the owners then force tenants out or do they see the benefits of rising rents and potentially rising equity to hold on to.

It'll be interesting.

moneyinmypocket

The boom is coming, homeowners are on the streets ( not how the chain gang wanted us though) cheering and clapping.

moneyinmypocket

Buy while u can renters secure your future build up a NEST egg

Graham_Devon

IveSeenTheLight wrote: »

Graham, this will have been a small sample of the population.
There will always be people who cannot afford to buy.

Thanks for letting me know :undecided

The point was more this...

Interest only gave a huge lending hand to push prices up towards the peak in 2007.

What this scheme does is offers a mortgage guarentee. This will in turn allow people to take higher LTV products.

The problem with higher LTV products is they by their very nature, require higher monthly payments too, as the loan you take is larger.

One of the reasons Interest Only was so popular when we have high LTV lending pre-2007 is that people could only afford that high LTV lending if they cut the cost of the monthly payments....interest only did this.

Under this scheme, people will be asked to pay the full amount.

So sure, someone buying a £140k house may now be able to get a 95% mortgage much easier. However, that requires an £826 montly payment at 5.5%.

The difference here is that pre-2007, that same 95% interest only loan would have cost £609. Thats more than a 25% lower monthly payment compared to whats offered now.

In effect, they could have had a 125% interest only loan pre-2007 for less than the monthly costs of what this scheme provides.

This is why, after listening to a wide range of views (which you are keen to tell me don't cover everyone, thanks), I've come to the conclusion that this won't be enough to push prices up by any meaningful amount. We may get a percentage or two, but thats about it, and every percentage point increases the problem laid out above.

Worth remembering that we are still hovering around peak prices. Interest only loans such as the above helped achieve this. To push prices up from here above that you'd need something which made it even cheaper each month than it was pre-peak.

It's been related to America, but the key difference is, America started this sort of thing from a much lower price level, as they had had the big falls.

PaulF81

Here is that sugar rush I predicted about 6 months back. Just in time to filter through before the next election....

grizzly1911

Graham_Devon wrote: »

This is why, after listening to a wide range of views (which you are keen to tell me don't cover everyone, thanks), I've come to the conclusion that this won't be enough to push prices up by any meaningful amount. We may get a percentage or two, but thats about it, and every percentage point increases the problem laid out above.

What we don't yet know is the premium in rates, fees and escape clauses that there will be.

Just because funds are more readily available doesn't mean they are going to come cheap.

grizzly1911

PaulF81 wrote: »

Here is that sugar rush I predicted about 6 months back. Just in time to filter through before the next election....

To a small part of the electorate.

Graham_Devon

grizzly1911 wrote: »

What we don't yet know is the premium in rates, fees and escape clauses that there will be.

Just because funds are more readily available doesn't mean they are going to come cheap.

Well earlier on 5live, I think it was the CML, could have been mortgage advisors, were saying more had to be done with funding for lending. Someone else stated this wasn't something the budget would cover, as this was from the BOE.

What they were basically stating is that while this scheme will help, morgage costs still need to be lower, and more should be done on the funding for lending side of things in partnership with these guarantees. In other words, they still believe the mortgage costs are too high and we need to look at that too.

Note that house prices were not too high.... !

There were suggestions in the budget that more could possibly be done by the BOE, especially with Mark Carney coming on board. So we could maybe see some further injections there, aimed at bringing mortgage costs down again. Though we quickly reach a point where they simply can't get any lower and this point was bought up too. They are, compared to the last few decades low anyway.