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

N1AK

Thrugelmir wrote: »

What's the big deal with 95% mortgages?

How are FTB's expected to raise a 20% deposit?

The deal with 95% mortgages isn't the mortgage but that house prices have reached a point where it is beyond the ability of too many to even save 10% of it.

Higher LTVs solves the housing issue in the same way that obesity is 'solved' by making it easier to get hold of indigestion tablets and liposuction; we should be dealing with the underlying cause if we want a long term solution.

ukcarper

N1AK wrote: »

The deal with 95% mortgages isn't the mortgage but that house prices have reached a point where it is beyond the ability of too many to even save 10% of it.

Higher LTVs solves the housing issue in the same way that obesity is 'solved' by making it easier to get hold of indigestion tablets and liposuction; we should be dealing with the underlying cause if we want a long term solution.

I really don't follow that argument If lending criteria remains the same someone using a 5% deposit can not buy a house someone using a 10 or 20% can.

N1AK

ukcarper wrote: »

I really don't follow that argument If lending criteria remains the same someone using a 5% deposit can not buy a house someone using a 10 or 20% can.

At this exact point in time that is true. It would also be true that even at 95% LTV someone with 0% deposit couldn't buy. At 100% LTV people with poor credit won't be able to get a mortgage, nor will people with insufficient incomes. There will always be some people who can't buy a house at this very moment.

The issue with constantly decreasing deposit ratios is that it doesn't solve the problem it hides a symptom. It makes it easier for house prices to rise rapidly now, meaning that in future we'll have even more heavily indebted FTBs and then when 5% deposits seem too big we'll be proposing that 2% deposits will help...

ukcarper

N1AK wrote: »

At this exact point in time that is true. It would also be true that even at 95% LTV someone with 0% deposit couldn't buy. At 100% LTV people with poor credit won't be able to get a mortgage, nor will people with insufficient incomes. There will always be some people who can't buy a house at this very moment.

The issue with constantly decreasing deposit ratios is that it doesn't solve the problem it hides a symptom. It makes it easier for house prices to rise rapidly now, meaning that in future we'll have even more heavily indebted FTBs and then when 5% deposits seem too big we'll be proposing that 2% deposits will help...

I agree it will increase demand but so long as affordability criteria is not relaxed it does mean that people who can afford repayments can buy of course what is really needed is more houses.

Percy1983

Well I am not against 95% mortgages as long as the lending criteria is sufficiently tight.

Likewise there is 90% mortgages out there and the criteria is tighter than than 80% as it should be.

As proven, keep you credit file and expectations in check and you will get a 90% mortgage no problem.

CLAPTON

ukcarper wrote: »

I agree it will increase demand but so long as affordability criteria is not relaxed it does mean that people who can afford repayments can buy of course what is really needed is more houses.

yes, we need more building
whilst the HTB new build equity scheme may well encourage more building, it is doubtful whether the guarantee scheme will do anything other than increase house prices

chucky

N1AK wrote: »

The deal with 95% mortgages isn't the mortgage but that house prices have reached a point where it is beyond the ability of too many to even save 10% of it.

It's quite simple really, that tells you that they are looking at the wrong type of property or the wrong area.

MFW_ASAP

chucky wrote: »

It's quite simple really, that tells you that they are looking at the wrong type of property or the wrong area.

Or that people's incomes need to match their property aspirations.

Thrugelmir

N1AK wrote: »

At 100% LTV people with poor credit won't be able to get a mortgage,

There's been a seismic shift in policy since the peak. People with poor credit history require hefty deposits to be considered for a mortgage, 35% is not uncommon.

The market will play itself out over time. As pent up demand diminishes.

CLAPTON

Thrugelmir wrote: »

There's been a seismic shift in policy since the peak. People with poor credit history require hefty deposits to be considered for a mortgage, 35% is not uncommon.

The market will play itself out over time. As pent up demand diminishes.

difficult to see how pent up demand diminishes without more houses being built