Really depressed by the news about Help to Buy...

harrys_dad

Yawn yet again.

Tancred

Something_Witty wrote: »

Tancred, if we could start looking now we would. Unfortunately we won't have 20% deposit saved until end of 2014, so I'm resigning myself to the fact that we are pretty much screwed.

You don't need 20% deposit to get a mortgage - why do you need to wait?

Something_Witty

Tancred wrote: »

You don't need 20% deposit to get a mortgage - why do you need to wait?

1) Affordability - a 95% debt when interest rates are undoubtedly going to rise sharply cannot be a good idea. Additionally interest rates will be much higher at that LTV.

2) Practicalities - we are tied into a tenancy agreement until July 2014

3) Circumstance - we want to clear debt and polish our credit files to give us the best chance of a decent interest rate.

harrys_dad

So, the Governor of the Bank of England is not enough to worry @HamishMcTavish about affordability (not prices note), then how about that well known free market think tank The Adam Smith Institute

http://www.adamsmith.org/blog/economics/help-to-what-moving-forward-from-conference-season

franklee

kingstreet wrote: »

The nearest comparable scheme to HTB - MG is NewBuy, where a typical 95% mortgage is in the 4% to 4.5% range. This has a similar guarantee underpinning it.

I expect NewBuy to disappear in January, when builders see no sense in paying 3% of the value of the property away when there's an alternative.

FLS has had limited impact on rates at high loans to value, as lenders have concentrated on cutting margin at lower rate, better "quality" business. They may decide to offer lower rates on higher LTVs as they approach the day of reckoning in April, where they have to show an increase in their net lending or pay penalties to the Treasury, but that is by no means certain.

Given the implications of the MMR introduction, also in April next year, I don't see any great change in rates, nor underwriting/criteria as a result of HTB - MG. Those who cannot currently get a 95% mortgage from one of the 17 lenders offering them, will, in my opinion, still be unable to do so even with the Government guarantee.

Thank you for your excellent and informative posts on these schemes. I think I've got the hang of all the acronyms but haven't much clue what the impact of MMR (Mortgage Market Review) will be. Beyond having read it's due on 26 April 2014, what will it entail?

kingstreet

Mortgages will not be sold without advice.

Lenders will spend more time establishing affordability before granting a mortgage.

Once made, an offer will not be "withdrawable", by the lender.

Plenty of other stuff too. It's on the FCA site if you need some bedtime reading;-

http://www.fca.org.uk/firms/firm-types/mortgage-brokers-and-home-finance-lenders/mortgage-market-review

Sinked_boat

HTB confuses me. You get a really bad rate for 5% eh? Surely just bad savers will use this? If you can afford a high repayment every month surely you can afford to save for a deposit? Also don't you have to pay for the government loan?

As you can see financial stuff is not my area of expertise.

BurnleyBob

smamst wrote: »

Don't even think about buying in todays markets anyone reading this thread, house prices are already 50% overpriced, this is just another scheme to keep prices where they are by vested interests.

Once the interest rates go up from what they are now to a realistic level of 5-6% everyone who has taken on a massive debt will default.

Jokers like Hamish just want you lot to cover their BTL investment.

Be Scared, Be Very Scared.

And who are the vested interests?

It's our old friends the bankers... who own the political class.

The higher home prices are, the more they make in interest on, wait for it, the money they don't have to lend.

For anyone baffled by how the scam works, google Fractional Reserve Banking.

"Banking was conceived in iniquity and was born in sin. The Bankers own the Earth. Take it away from them, but leave them the power to create deposits, and with the flick of a pen they will create enough deposits to buy it back again. However, take it away from them, and all the fortunes like mine will disappear, and they ought to disappear, for this world would be a happier and better world to live in. But if you wish to remain slaves of the Bankers and pay for the cost of your own slavery, let them continue to create deposits." Sir Josiah Stamp, President of the Bank of England in the 1920s, the second richest man in Britain.

HAMISH_MCTAVISH

harrys_dad wrote: »

@hamishmctavish about affordability

an mpc member has just announced rates won't be shooting up even when the boe does rase base.

How much more of a clue do you need?

HAMISH_MCTAVISH

seradjernie wrote: »

As you can see financial stuff is not my area of expertise.

No worries.

It confuses a lot of people, especially those who don't like the scheme thanks to the hysterical and inaccurate media reporting.

The average rent is 5.5% of the value of a property per year.

The average house has appreciated by 6.2% in the last year. (Halifax)

So the average renter looking to buy has lost 11.7% of the price of the average house (minus the pittance on interest they received on their deposit) by waiting and renting instead of buying for the last year.

This is likely to get much worse and very quickly, with HPI accelerating and millions of pent-up buyers ready to stampede the market now that historically normal, sensible and prudent 95% mortgages are available again.

In short, if you can scrape together 5% and take advantage of the scheme before prices rise further, this will probably be the best financial decision of your life.