Boomers' House Price Bonanza Barrels Onwards. Young Excluded and Forgotten

OffGridLiving

dktreesea wrote: »

The thing is with buying a place, human nature will be to want to get the best interest rate possible. I know this because a few of my friends have got children currently wanting to get on the mortgage ladder and all wanting to borrow money from their parents (I say "borrow" but the impression I get more is that they want an advance on their inheritances!) so they can have a high enough deposit to get the lowest interest rate.

As one of those 20 something year olds said to me, (he's got around £15k, he said), if it was just a matter of saving £1,000 a month for the next 12 months he would just buckle down and get on with it, but a 30% deposit on the new build he has his eye on (a yuppie apartment I personally wouldn't touch with a barge pole and I told his parents the same) is £48k.

His point is he earns enough for the bank not to consider him any risk at all but because he only has a small deposit he is being penalised, something he can avoid if his parents "come to the party".

He doesn't want to pay £770 a month for a property. He was thinking more like £400 a month, entirely possible if only he can get the deposit together. And he doesn't want to wait. He, like me, thinks property prices are going up again.

Yes, sorry but your issue is still not clear. Are you saying that there should be no form of risk profiling for loans and that everyone should receive the same interest rates, despite some people having CCJs and defaults or historical bankruptcies and others having clean histories? Similarly, should everyone be offered the same amount of loan, regardless of their income?

Mortgage lending is no different from any other form of lending. The amount you receive and the rates is dependant on your risk profile. Some one with 40% equity is a better risk than someone with 5% equity, who in turn is a better risk than someone with 0% equity, who is a better risk than someone with no job. That's just logical surely?

Sorry, but what's the issue that you're complaining about? I'm lost.

dktreesea

OffGridLiving wrote: »

Yes, sorry but your issue is still not clear. Are you saying that there should be no form of risk profiling for loans and that everyone should receive the same interest rates, despite some people having CCJs and defaults or historical bankruptcies and others having clean histories? Similarly, should everyone be offered the same amount of loan, regardless of their income?

Mortgage lending is no different from any other form of lending. The amount you receive and the rates is dependant on your risk profile. Some one with 40% equity is a better risk than someone with 5% equity, who in turn is a better risk than someone with 0% equity, who is a better risk than someone with no job. That's just logical surely?

Sorry, but what's the issue that you're complaining about? I'm lost.

It used to be that banks were at least as interested in income as in equity, and didn't penalise high income earners with small deposits , relatively speaking, as much as they do now.

Going back a few years, when interest rates were 3-4% for people with good deposits, those who had high incomes and , say, a 5% deposit, usually only paid 30 to 50% more interest than those with a 40% deposit.

Cut to 2013 and those with a 40% deposit are getting fixed rates as low as 1.49% while those with good incomes, a relatively secure job but only a 5-10% deposit are being offered interest rates 3 times higher, 4.89%. Some rates are even over 5%.

These are potentially good customers. The bank should be chasing them, not putting them in positions of having to pressure Mum and Dad to contribute funds or equity just so they can gert half decent interest rates. They are not poor risk customers. The banks are attempting to screw them for no good reason.

Someone with 40% equity but a relatively insecure job isn't as good a risk, I would say, as someone with 5% equity and a better paying, more secure job. Yet the banks offer the first guy a much better deal than the second one. It makes no sense, and keeps people without well heeled parents out of the property market needlessly. Not because they can't afford the higher interest rate, but because they see no reason to condemn themselves to an extra £300 a month mortgage repayments, over what is quite a long period of time.

If all the local people are put in this position, having to delay getting on the property ladder because of needing a better deposit, even though they have excellent incomes and secure jobs, sooner or later the immigrants who move here will catch on to what most locals know (everywhere else in Britain is a better place to live in than London), moving into and buying up places like Hull, Leeds, Newcastle and Edinburgh (no point chasing rain on the other side of Britain ) as opposed to London. And in no time at all the locals, just like in London, will be a minority in their own city.