95% mortgages are part of an aspirational society, 80% mortgages a social problem

Thrugelmir

Taxpayers may well make a profit from Help to Buy. As it's developers themselves that are indemnifying against loss with their contributions.

Likewise the new scheme is going to be underwritten in some form. So the Government isn't giving an open ended guarantee.

The mortgage lending market is a much changed place now compared to 2003-07. A fact which commentators have singularly failed to take on board.

MrRee_2

I see that Graham_Devil is at it still ...... trying to pull down the aspirational, slagging off those who are making their way in life, flattening any smidgen of good news. A sadder person I have yet to meet.

When I bought my first house I needed 95% - it was at a rate of 8% too ............ do I wish I had rented instead? Do I hec!!

If I had chosen to rent it would have cost me an absolute fortune ... and, the major point is that I would have no major asset at all, still be paying rent and just buying someone elses house for them!

Nah, I paid off my mortgage years ago - would have to pay £2,000 a month to live in the home I do - and have circa £750,000 if I sold up tomorrow ..... no tax to pay either! Then there is the income from my rentals.

Debt is GOOD - very good in fact. It is for the aspirational and those who want to make something of themselves .... it is to be applauded.

Loughton_Monkey

HAMISH_MCTAVISH wrote: »

In fact, maybe I should apply for a job as his speech writer....

Don't be so modest, Hamish. We all know you are!

Loughton_Monkey

Graham_Devon wrote: »

.....How are FTB's supposed to save a 20% deposit? Not sure.

Luckily, I didn't have to find that. If I did, I'm sure I would have gone about it like this:

1. Research how much I need to borrow to buy a starter home commensurate with my [joint?] salary. Call it £120,000 for example. So £30,000 deposit.

2. Find out the mortgage rate. Hmmm. Only 4%. Add on a bit for safety margin. Let's say 6%.

3. Go to mortgage calculator to see what I might need to pay for the mortgage. At 6% on £120K, that's £1,275 a month. Yoiks! Can I afford that? If not, iterate back to step 1.

4. Start putting £1,275 a month into savings. Recognise that this is nigh on 2 years. That's not a lifetime, I could live with that.

5. Update every month, adjust as necessary.

Of course if I had missed all of this out and simply rented a decent house (let's say £1,000 a month) then I would either have to budget for the life of a pauper for the next 2 years, or compromise by saying I can afford £1,000 rent and only £800 savings, so must wait more like 3 years.....but then again, no sensible person would do this would they? Not if they really wanted to buy a house? They would stay at home, or rent a studio flat to allow room for saving.

But in reality, of course, as we all agree, you only need 10% or a bit less. And you probably don't need as much safety margin for this short time. So you can be moving in within the year, unless you've fallen for the 'rent trap'.

This sort of stuff is not rocket science is it? It's called forward thinking, or planning. Something like that.

vivatifosi

Graham_Devon wrote: »

95% mortgages are not weapons of mass destruction (not sure where he got this line from!), but a regular part of a healthy economy and aspirational society.

Aspirational society?!?!

He went on to state that 80% LTV products are a "market failiure and a social problem".

So not only do 95% mortgages make an aspirational society, 80% mortgages are a social problem, and mortgages certainly aren't weapons of mass destruction.

I don't normally take sides in the great chucky or Hamish vs Graham debate, but I'm definitely on the side of the former in this one.

What he is saying is that 80% products are a market failure if they are the main products available, not that 80% per se is undesirable.

History shows that 95% mortgages are fine. They are a good starting point, providing of course that people then pay them off and move down the LTV ratio, at which point even better deals will be on offer.

In other words, there are plenty of people who will never default on a mortgage who could - with their savings - get a mortgage now, but are being forced to save what are punative amounts. What I believe Hamish refers to as mortgage rationing. This also impacts on them in that they are losing out on the chance to buy a house at a time when the most favourable rates are available. Why shouldn't they be able to buy at historically normal LTVs? At the same time, of course it is easier to start with an 80% LTV, but some people cannot achieve this - that doesn't make them poor candidates!

Also, I too wonder whether Hamish was Osborne's speech writer.

chucky

HAMISH_MCTAVISH wrote: »

What he actually said, in full.....

Why do people feel the need to lie and cherry pick bits of the speech out of context???

HAMISH_MCTAVISH wrote: »

Pretty much exactly points out all the facts many of us have been noting for quite some time.

We've been saying it for a very long time now. They still don't understand it very well though. It's a shame.

chucky

vivatifosi wrote: »

What he is saying is that 80% products are a market failure if they are the main products available, not that 80% per se is undesirable.

History shows that 95% mortgages are fine. They are a good starting point, providing of course that people then pay them off and move down the LTV ratio, at which point even better deals will be on offer.

Well put. However, that's not what Devon tried to infer that he said.

I'm not sure 80% mortgages are a market failure if the only mortgages a lender can offer are 80% due to risk or they don't have sufficient funding. Which market does he refer to? It's worth reading between the lines on this one...

Graham_Devon

Thrugelmir wrote: »

Taxpayers may well make a profit from Help to Buy. As it's developers themselves that are indemnifying against loss with their contributions.

Do the builders make any contributions anymore? I know they did under Newbuy, but not under the new scheme, as far as I am aware? The risk falls totally on the government side.

MFW_ASAP

Graham_Devon wrote: »

Do the builders make any contributions anymore? I know they did under Newbuy, but not under the new scheme, as far as I am aware? The risk falls totally on the government side.

Time to stop digging when even your long standing 'bear comrade' is posting against your points?

CLAPTON

Graham_Devon wrote: »

Do the builders make any contributions anymore? I know they did under Newbuy, but not under the new scheme, as far as I am aware? The risk falls totally on the government side.

One could ask why that's important as it is the government that has caused the mortgage famine in the first place

the risk of new building falls totally on the builders - no sale, no profit


as far as lending risk is concerned
- the equity loan : government may make a profit from any increase in price and make a lose if the price falls; the loan is interest free for 5 years

- for the guarantee scheme : the government charges the lenders a fee for 15% guarantee at a 'commercial ' rate ; so basically almost certainly will make a profit.