Help to Buy Part 2 - OPENING WITHIN DAYS

kingstreet

witchy1066 wrote: »

do you think the banks involved will be picking and choosing who they lend to even more than they do now

Absolutely. They are going to have to pay for the guarantee. Will they do that if they think there is an increased risk of default?

No lender wants to repossess a property. Removing as much risk of that as possible is always the priority.

kingstreet

SG27 wrote: »

And RBS and Natwest.

Aye. On Friday, last time I was looking, only LBG was on-board. No surprise the other part-tax payer owned lender is next in line.

HAMISH_MCTAVISH

This is the BOE and Govt doing their job to restore at least partial functionality to a mortgage market that has been completely dysfunctional since the global credit crunch hit, and not before time.

In my opinion the current artificial repressing of house prices through mortgage rationing is starting to end, and the lowest house building in a century is about to meet the biggest generational bulge of FTB age people in history.

Soaring population and the existing million house shortage will certainly mean prices continue to rise, a situation worsened dramatically by the last 5 years of mortgage rationing causing house building to fall to the lowest levels in a century, and the next boom will likely be the biggest ever as a result.

Leading to the likeliest outcome by far being a near doubling in house prices in real terms over the next cycle, as the mortgage market and wider economy recover, and millions of ftb age people run into the worst housing shortage in history....



Of course, other opinions may vary.....

But they've mostly been wrong so far

This is however, a very good thing......

Rising house prices are good for......

-The millions of people who are in or approaching retirement, and who either plan to, or may unexpectedly need to, downsize.

-The millions more people who are in their final property now, but will find themselves in the position above at some point.

-The couple of million people who bought within the last 7 years, who may be in or close to negative equity.

-The owners of the 2 million investment properties.

-The millions of people who may need to re-mortgage as and when rates climb, and want the best possible LTV ratio to get the best rates.

-House builders, construction industry, suppliers, investors, pension funds holding mortgage securities, banks, and all housing related industries, all of their shareholders and employees, whether they own a house or not.

-The family members of anyone who will leave an inheritance, or release equity to help their kids onto the ladder when downsizing, etc.


Rising house prices are bad for......

-A few hundred thousand potential FTB's at any given time...... But only until they get on the ladder, and become one of the groups above.

And as for upsizers......

It used to be commonly believed that falling prices were better for them.

However this crash has proved that to be wrong, in most cases, because the price of their FTB property has fallen by far more than the price of the 2TB properties.

So the gap between rungs on the ladder has widened, not narrowed, with falling prices.

In summary....

Rising prices are better by far for the vast majority of society, and falling prices only benefit a few, and then only temporarily.

jamie11

kingstreet wrote: »

- The lender has to pay the Government for the guarantee. Which will, of course, be paid eventually, by the buyer

Good post, but I think it needs that bit I added in red.

kingstreet

I just wanted to add, from September next year, the Bank of England will have control over the fees lenders pay for the Government guarantee.

This will enable the BoE to cool a market (if needed) by increasing the fees on the highest LTV band and reducing it on others.

For example, if it wants to reduce or even shut off 90% to 95% lending it can increase the fee for that, while reducing the fee for 85% to 90% to encourage that part of the market.

Dan-Dan

kingstreet wrote: »

So, there won't be many cases then?

The purchaser will have to earn over £120k after credit commitments, dependents etc they will be "allowed" to have a 95% mortgage, for which they will pay the going rate.

I don't see the difference between topping this out at £400k?, £500k?, £600k?

There is no equity loan. The Government is lending or giving these people nothing. If you want to argue the toss about Help To Buy - Equity Loan for a £600k purchase, fair enough.

I was disputing your statment that there are many 600k houses that are the equivalent to 150/200k houses , unless as i mentioned they were in the obvious areas (London)

kingstreet

I didn't say many, I said some.

There may be very few, so surely you give it a higher limit, just in case there's one person who can benefit.

Let's face it, if they don't default and get repossessed, their lender's contribution to the pot is going to be bigger than anyone else's and that fee may save the Government money on other repossession payouts.

When this facility was known as mortgage indemnity guarantee insurance and operated by the insurance industry, it was profitable. It may well be again.

Not particularly aimed at you, but the impact of this scheme appears to be being blown out of all proportion. Today, there are 17 lenders offering 95% mortgages. Adding more via HTB- MG will provide greater choice, but the borrower may find some of the HTB features unpalatable when the available products are compared.

Tancred

Turnbull2000 wrote: »

Very big news. David Cameron has announced that Help to Buy for all properties up to £600,000 is to be brought forward immediately, to 'help hard-working, aspiring young families get onto the property ladder.'

Peculiar timing. Can only guess that this is purely politically driven. Still, should go down very well with voters - especially the younger ones.

Of course it's politically motivated. I suspect that, as the market is getting quieter at this time of year, it won't have much of an effect on prices immediately.

Tancred

Slightly_Squiffy wrote: »

I think a lot of people are still forgetting that the government aren't just giving the money away, it's all repayable. It is going to flood the market with people who can now afford to buy but still don't have the income to be able to afford repayments on a decent sized mortgage (I'm talking in London terms as that is where I am currently looking to buy). I don't think the lending is going to be as prolific as I first assumed.

Either way, we are still hoping to find a place to complete on before Christmas as we have our nice deposit all saved, just to get ahead.

Either way, this scheme is not going to help the masses. I (and most of my friends...we are all in our late 20ies/early 30ies) are against this scheme. The government really should have learnt 5 years ago that giving people access to high credit is irresponsible. If someone isn't responsible enough to be able to save a 10% deposit for a flat/house, I don't feel they would necessarily be financially responsible enough to maintain a mortgage and all the associated costs. I think we're going to see a steep increase in the number of foreclosures over the next couple of years.

The problem is that 10% of the value of a house can be a huge sum these days. Not a big issue in place like the north, Scotland etc but in the south-east 10% can be £30k even for a modest house. This isn't small change.

Tancred

One other thing to bear in mind that there are already subsidised 'part ownership' schemes funded by local councils to generate more affordable housing. What the government is proposing is, in effect, a similar approach.