Is there an exit strategy?

GhIFA

No, I said it will take 100% of their income. Therefore, on dual incomes, the other income stream would have to pay for everything else. That's hardly "discarding the second income" now is it. I've even quoted it right above.

So it doesn't take 100% of their income then does it. In fact, to get that level of borrowing, the partner would have to around around the same income again, probably slightly more so it's actually around 50% or below. So things are tight for first time buyers - nothing new there, that was the case when I first bought.

You've dont your absolute best to muddle this whole thread.

Oh the irony

No one stated that someone one 14k would get a mortgage. My whole point was to suggest that 1 income would be completely swalloowed by the mortgage payment and council tax alone, leaving everything else to the other income.

To increase lending you HAVE to start lending ot these sorts of people, as you have to increase the pool of people you can lend to. You can't just magic up new borrowers without increasing your risks and lending to everyday people such as I
laid out.

And to repeat, I never said that these people were unable to borrow. And you can't just magic up scenarios to try and make a spurious point.

You've muddled enough on this one now. I raised it because it was a completely fictitious scenario. You can prove anything by making it up.

shortchanged_2

[QUOTE=OffGridLiving;61945179 If they stay on IO mortgages that were arranged pre-credit crunch then we're back to my position that these mortgage holders were already used to higher payments.
[/QUOTE]

Yes maybe they were but I wonder how many of them took out an IO mortgage at this stage without any form of repayment strategy.
Therefore these mortgages were never really affordable in the first place, were they.

HAMISH_MCTAVISH

Graham_Devon wrote: »

Argh!! But to INCREASE lending, you have to make it looser! HENCE you will HAVE to start lending to these people again! (not neccesarily a person on 14k before you whinge)...but people who cannot pass the afforability tests now.

You can't increase lending, without increasing the people you will lend to.

You cannot create people, therefore you have to lend to higher risk people who could be pushed to the edge.

How do you increase the amount of people you lend to otherwise!?

What the?

Just.....

No, no, no Graham.

The pool of good, low risk, people who would pass affordability and credit checks far exceeds the pool of available funding.

That is why banks are rationing funds with high deposit requirements.

You are creating a false dichotomy there, by claiming that if you extend lending you'll "have to lend to higher risk people who could be pushed to the edge".

Which is absolute blithering nonsense.

You could lend to millions more low risk people who pass the same affordability tests as today, if you eliminated mortgage rationing and brought back in sensible and prudent 5% to 10% deposits.

HAMISH_MCTAVISH

GhIFA wrote: »

You've muddled enough on this one now..

A proper muddling genius, that lad.

Sophistry at it's finest.

OffGridLiving

shortchanged wrote: »

Yes maybe they were but I wonder how many of them took out an IO mortgage at this stage without any form of repayment strategy.
Therefore these mortgages were never really affordable in the first place, were they.

I guess it depends on what you are classing as affordable. For the purposes of this discuss about interest rate rises, the fact that they are IO is not really relevant. It's whether the rate rises would prevent a significant number of people from meeting their monthly repayments.

Given the reasons I've mentioned, I just don't see an avalanche of repossessions when rates rise, other than that proportion of people who are always in financial difficulties, no matter what the underlying economy is like. Certainly I don't see it being a significant enough number of people to impact the wider housing market.

When rates rise, most people will be disappointed but will shrug and say "it was good while it lasted, but we all knew such low rates couldn't go on forever. Still, we made the most of it".

the_flying_pig

HAMISH_MCTAVISH wrote: »

A proper muddling genius, that lad.

Sophistry at it's finest.

i'd never normally pick up on typos or spelling mistakes on a web forum [i myself rarely use proper punctuation or even sentences, & often use slang], but will say that big fancy words like "sophistry" & "dichotomy" grate horribly when used in the same paragraph as greengrocer's apostrophes. the two are more or less completely incompatible.

Mr._Pricklepants

the_flying_pig wrote: »

i'd never normally pick up on typos or spelling mistakes on a web forum [i myself rarely use proper punctuation or even sentences, & often use slang], but will say that big fancy words like "sophistry" & "dichotomy" grate horribly when used in the same paragraph as greengrocer's apostrophes. the two are more or less completely incompatible.

We'll need to enroll Hamish in Graham's Apostrophe Class.
I heard his fee's are reasonable.

the_flying_pig

back on topic - an obvious theory [which may or may not be true] would be that this is a policy aimed squarely at election 2015.

election 2020 [i.e. the sort of timeframe when an "exit strategy" would matter] is a heck of a long time away. it'd be very strange if the current government was thinking all that hard about 2020.

lucky, i suppose, that we introduced central bank independence in order to prevent governments stoking up consumption and inflation just before an election & worrying about the consequences later :T

wotsthat

Seems like a lot of fuss about nothing. Government are facilitating 95% mortgages and taking on some risk. I had a 95% mortgage so did all my peer group - no-one died.

The exit strategy is simple - come 2017 the scheme stops.

Sampong

wotsthat wrote: »

The exit strategy is simple - come 2017 the scheme stops.

Well thanks for that revelation. I think that was kind of the point of the whole thread.