Are house price rampers and investors........

chucky

shortchanged wrote: »

Are house price rampers and investors........
hoping that unemployment in the UK remains high for many years?

Not trying to get in the way of your pointless thread but unemployment and house prices do have a direct correlation.

Increased unemployment = Falling house prices.

Loughton_Monkey

I don't have a job. I don't want a job.

I have a house. I want its value to hold up.

If interest rates go up, as a saver, I'm a happy bunny. But I don't want inflation to go up accordingly.

If unemployment reduces, I'm happy. Less benefits and a healthier economy.

All fairly obvious, really, for someone in my position, but then again, I'm not typical.

That's answered the question, but....

chewmylegoff wrote: »

This is a silly thread. Was someone bored at work?

Don't disagree, but the boredom is somewhat relieved by watching the usual reaction. Hamish makes a perfectly sensible post. The great "Professor of Sophistry at Devon University", instead of contributing to the debate puts 'words into Hamish's mouth' which no-one else would have assumed.

That's entertainment....:wall:

... large gin & tonics all round...

shortchanged_2

Typhoon2000 wrote: »

When the economy was doing great, when we had 'normal' interest rates, we had double digit HPI. So an improving economy is a good thing for house prices.
I hope all those with mortgages take the opportunity to pay off a majority or all of their mortgage in the 10 years of low interest rate we will have.

We also had liar loans, 125% mortgages and a huge increase in the number of IO mortgages.

Once the s**t hit the fan things weren't quite so great and we suddenly saw that many people needed all the government interventions to help them stay afloat.

ukcarper

shortchanged wrote: »

We also had liar loans, 125% mortgages and a huge increase in the number of IO mortgages.

Once the s**t hit the fan things weren't quite so great and we suddenly saw that many people needed all the government interventions to help them stay afloat.

If those things were the cause of boom and I concede they might have been.

As they are not available now and the new loans will be subject to strict affordability criteria how will the boom take places.

Sibley

I certainly do not want the UK in a bad place.
Love to see employment rising.

The low interest rates have been fantastic for me.
My house has to be my pension fund either by way or selling up or renting it out.

Obviously I want the final figure to be as high as possible.
Can't see how you could blame me for that.

Graham_Devon

ukcarper wrote: »

If those things were the cause of boom and I concede they might have been.

As they are not available now and the new loans will be subject to strict affordability criteria how will the boom take places.

In effect, the government are going to give thousands more people the ability to buy a house, by offering up 95% LTV mortgages to everyone who ticks the boxes.

None of this does anything to increase supply, as it will all be based on existing properties.

The banks are not willing to take this risk, which says quite a lot really. Either way, were back to creating ways that people can afford houses.

That was done pre-2007, in a different way, sure. But every scheme runs its course and we then need to create another, bigger, better scheme, which becomes more generous (looking at all the schemes since 2009 each new one has been more and more generous). This in turn pushes prices up as more are able to demand the same houses.

The mortgage guarentee will run it's course too, either hitting it's buffer (£12bn I beleive, which won't take that long), in which case they may wish to extend the buffer, or by pushing houses up meaning that the 5% isn't as easy to save as it was. If they don't increase the buffer, they will maybe create a new ,better scheme allowing people to afford the new increased prices, or they will risk the bottom falling out of the market. I is afterall, holding the market up.

While it's different to 125% mortgages, the only reason we got to 125% mortgages was that the same had happened to 100, 110 and 125% mortgages. Every time the prices rose meanign the mortgage was no longer enough and the next step was 140% (some lenders had plans to offer these I believe in 2007 and then it fell down).

We have the evidence now of what help to buy is doing to the market, especially the newbuild market with prices rising substatially to swallow up the 20% loan. We don't have the evidence from the mortgage guarentee yet, though we can see what happened in the US when then did something very similar.

ukcarper

Graham_Devon wrote: »

In effect, the government are going to give thousands more people the ability to buy a house, by offering up 95% LTV mortgages to everyone who ticks the boxes.

None of this does anything to increase supply, as it will all be based on existing properties.

The banks are not willing to take this risk, which says quite a lot really. Either way, were back to creating ways that people can afford houses.

That was done pre-2007, in a different way, sure. But every scheme runs its course and we then need to create another, bigger, better scheme, which becomes more generous (looking at all the schemes since 2009 each new one has been more and more generous). This in turn pushes prices up as more are able to demand the same houses.

The mortgage guarentee will run it's course too, either hitting it's buffer (£12bn I beleive, which won't take that long), in which case they may wish to extend the buffer, or by pushing houses up meaning that the 5% isn't as easy to save as it was. If they don't increase the buffer, they will maybe create a new ,better scheme allowing people to afford the new increased prices, or they will risk the bottom falling out of the market. I is afterall, holding the market up.

While it's different to 125% mortgages, the only reason we got to 125% mortgages was that the same had happened to 100, 110 and 125% mortgages. Every time the prices rose meanign the mortgage was no longer enough and the next step was 140% (some lenders had plans to offer these I believe in 2007 and then it fell down).

We have the evidence now of what help to buy is doing to the market, especially the newbuild market with prices rising substatially to swallow up the 20% loan. We don't have the evidence from the mortgage guarentee yet, though we can see what happened in the US when then did something very similar.

But if people do not meet affordability criteria they will not be able to borrow or are you now saying that the problem is supply and demand.

Graham_Devon

ukcarper wrote: »

But if people do not meet affordability criteria they will not be able to borrow or are you now saying that the problem is supply and demand.

Exactly.

This is the very point.

The government have stepped in to make sure that it's easier for those currently not able to meet the affordibility criteria to do just that, by offering up the guarentee.

I.e. a swathe of people will suddenly meet the affordibility criteria overnight due to the lower deposit requirement created.

I believe you are looking at whether people can afford the 95% mortgage when that is actually in place. Though maybe missing the issue that a load more people will have been created overnight that suddenly do meet affordability requirement that didn't a week previous to the scheme starting.

Basically you have a load more people that can now afford the same stock come January 2014 that wouldn't have met affordability requirements without the scheme being put into place.

This is nothing to do with supply, and all to do with demand.

ukcarper

Graham_Devon wrote: »

Exactly.

This is the very point.

The government have stepped in to make sure that it's easier for those currently not able to meet the affordibility criteria to do just that, by offering up the guarentee.

I.e. a swathe of people will suddenly meet the affordibility criteria overnight due to the lower deposit requirement created.

That's not the way I see it all they have done is reduce the size of deposit you need.

After reading your edit I take you now accept that it was the lack of deposit that was preventing people buying.

Graham_Devon

ukcarper wrote: »

That's not the way I see it all they have done is reduce the size of deposit you need.

Yes, which means a load more people will be able to meet the affordability criteria overnight come 1st Jan 2014.....

Seems you disagree?

After reading your edit I take you now accept that it was the lack of deposit that was preventing people buying.

Of course it was one of the things preventing people buying. On a very basic level, if you don't have the money you can't buy the goods. It wasn't the only thing stopping people though, the higher prices go and the smaller the deposit, the higher the monthly payments are.