Budget 2013 live....

Graham_Devon

grizzly1911 wrote: »

I have made this point a couple of times since the news broke yesterday.

This finance will come at a premium. The house builders are already increasing prices according to the ARICS. Government will see Stamp Duty inflows and potentially a nice earner from year 5 onwards too.

MIGs or their substitutes are always expensive for the punter just depends how desperate they are.

You really have get to question who this is being done for the benefit of.

Theres only been a couple questioning why the builder stocks rose too.

Initially the reaction was because investors see more houses being built.

However, one quick glance are share boards, and it seems shareholders are rather more hoping profit per sale will increase as easy access to funding pumps prices up and allows builders to see at higher prices to a bigger audience (as this has now allowed the audience of the second steppers).

This is also now coming through to the media, with commentators suggesting that the rise is mainly because investors see increased profits. More building doesn't really bother them.

ukcarper

chewmylegoff wrote: »

The interest rate is a great deal but the sting in the tail is that they get to keep 20% of any HPI. It is therefore very expensive finance unless house prices remain fairly stagnant. I would only draw it down if it was the only way I could afford to buy and then I would be looking to pay it back pronto. Certainty this is not the sort of finance you would ever want to hold for a long time. If you held it for 25 years the implicit interest rate would be astronomical by the end because the share of HPI would ensure that the financing charge isn't inflated away.

Well as you never owned that 20% the fee is what it costs and compared to rent that might be quite low. But as you say you want to be looking at paying it back quickly and as Graham says many won't. Like you I think that you should only take it on if the only alternative is long term renting. Mind you how many people will stay in house for full term.

It might be worth waiting for other scheme and buying an older house and avoiding new build premium.

By thr way I think your link is to old system but I suspect new one will be very similar

Graham_Devon

ukcarper wrote: »

It might be worth waiting for other scheme and buying an older house and avoiding new build premium.

It might well be.

The only problem with each new scheme is that with each reincarnation, they appear to get worse.

Regarding the help to buy scheme, those of us worried about it's impact only need to look at the dismal turnover newbuy created. And it's worth remembering that newbuy was in response to firstbuy which also failed.

Dunno why they even call them new names really. All they are doing is expanding the schemes and making them more expensive and constrictive as they go.

With firstbuy the principle was the same, but you could get your mortgage from anywhere (therefore reduced costs).

With newbuy, mortgages were restricted, but you could get the full house, at a mortgage premium rate.

With help to buy were back to firstbuy, but open to the entire market at a much higher price ceiling, but with the equity part of firstbuy and the restriction part of newbuy.

This is all within 3 years may I add, and it's done (so far) not much good, hence the constant renewal of schemes.

ukcarper

Graham_Devon wrote: »

It might well be.

The only problem with each new scheme is that with each reincarnation, they appear to get worse.

Regarding the help to buy scheme, those of us worried about it's impact only need to look at the dismal turnover newbuy created. And it's worth remembering that newbuy was in response to firstbuy which also failed.

Dunno why they even call them new names really. All they are doing is expanding the schemes and making them more expensive and constrictive as they go.

With firstbuy the principle was the same, but you could get your mortgage from anywhere (therefore reduced costs).

With newbuy, mortgages were restricted, but you could get the full house, at a mortgage premium rate.

With help to buy were back to firstbuy, but open to the entire market at a much higher price ceiling, but with the equity part of firstbuy and the restriction part of newbuy.

From what I understand only a small % of new houses were made available and the number of mortgages was limited.
I think on the old system 10% was provided by builder and 10% by the government if the government are now putting up the whole 20% the builders might release more houses.

I still think it's a good deal if you are stuck renting and can't save a deposit but I'm not sure it will be that easy to get onto scheme.

grizzly1911

Graham_Devon wrote: »

It might well be.

The only problem with each new scheme is that with each reincarnation, they appear to get worse.

Regarding the help to buy scheme, those of us worried about it's impact only need to look at the dismal turnover newbuy created. And it's worth remembering that newbuy was in response to firstbuy which also failed.

Dunno why they even call them new names really. All they are doing is expanding the schemes and making them more expensive and constrictive as they go.

With firstbuy the principle was the same, but you could get your mortgage from anywhere (therefore reduced costs).

With newbuy, mortgages were restricted, but you could get the full house, at a mortgage premium rate.

With help to buy were back to firstbuy, but open to the entire market at a much higher price ceiling, but with the equity part of firstbuy and the restriction part of newbuy.

This is all within 3 years may I add, and it's done (so far) not much good, hence the constant renewal of schemes.

Government backed schemes are usually expensive, restrictive and poorly taken up.

I remember the Small Firms Loan Guarantee Schemes from the 80s they were next to useless, rarely used and relatively expensive too boot. MIGS in the 90s were similarly expensive.

You and I have made the point any many occasions disposable income is going down for many these schemes just won't be affordable to the average punter. Those being paid stupid money in our capitals may be happy to pay the cost.

grizzly1911

ukcarper wrote: »

From what I understand only a small % of new houses were made available and the number of mortgages was limited.
I think on the old system 10% was provided by builder and 10% by the government if the government are now putting up the whole 20% the builders might release more houses.

I still think it's a good deal if you are stuck renting and can't save a deposit but I'm not sure it will be that easy to get onto scheme.

The builders more likely priced the property to reflect the "contribution".

Like you I think it will be a way to ownership if the cost/benefit stacks up. Perhaps the SE will be the biggest beneficiary.

ukcarper

grizzly1911 wrote: »

Government backed schemes are usually expensive, restrictive and poorly taken up.

I remember the Small Firms Loan Guarantee Schemes from the 80s they were next to useless, rarely used and relatively expensive too boot. MIGS in the 90s were similarly expensive.

You and I have made the point any many occasions disposable income is going down for many these schemes just won't be affordable to the average punter. Those being paid stupid money in our capitals may be happy to pay the cost.

I tend to agree with you that if they can find that much money it would be better used building council houses but then again they might not expect take up to be that high and they won't have to find money.

wotsthat

Graham_Devon wrote: »

And on the budget in general....

Little hidden gem that the IFS has now calculated.

There will be 18%....yes, thats eighteen percent spending cuts in 2017 to pay for the lack of cuts so far. This budget has increased the cuts required in 2017, and that's not even including the liabilities.

No there won't.

In 2013 there'll be predictions of a balanced budget in 2017.
In 2014 it'll be 2018.
In 2015 it'll be 2019.

Labour blamed the global financial crisis; the conservatives blame labour and the Eurozone crisis - what's wrong with all of them - they're spending too much!

I suppose we'll have a good laugh about it when we're in the queue wondering if the banks will open.

I can balance the budget in an afternoon. It won't be pretty and The White Horse won't be happy but 3 years in they're too close to an election to make a difference so the next 2 years will be wasted too.

wymondham

Newbuy, homebuy, help to buy etc etc.... didn't someone once say the sign of an idiot is someone who does the same thing over and over, expecting a different outcome?

wotsthat

Graham_Devon wrote: »

However, one quick glance are share boards, and it seems shareholders are rather more hoping profit per sale will increase as easy access to funding pumps prices up and allows builders to see at higher prices to a bigger audience (as this has now allowed the audience of the second steppers).

This is also now coming through to the media, with commentators suggesting that the rise is mainly because investors see increased profits. More building doesn't really bother them.

I've owned shares in Taylor Wimpey for a while. I think these measures will lead to more profitability per unit, higher volumes and favourable conditions for them to reduce (their large) debt. Profit per unit isn't the main or only consideration - expectations of a 100% margin on a volume of 3 houses isn't much good to me.

The 'commentators' can say what they like. Most investors are looking for long term growth in share price and income generation. The share price has been growing for a while (there seems to be a tentative recovery in the housing market anyway) but a spike whilst Osborne was still talking isn't rational. We should know by know that Osborne thinks the budget is really a forum to 'run ideas up the flagpole and see who salutes'.