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MSE News: Help to Buy 95% mortgages launch today: What are the deals like?

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  • John1993_2
    John1993_2 Posts: 1,090 Forumite
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    regbrown wrote: »
    Ironically, this scheme is pushing up prices so contributing to the increased debt these people will take on board..

    Strangely we have some people suggesting that it won't do this at all. It's really hard to see how bringing additional buying power to any market at all (from soap to skiing to houses to escorts) can fail to increase the price at which the product clears. Yes, it may encourage additional housebuilding, but only because they can now sell them more expensively than was previously the case.

    Given people's preferences (i.e. how much more they think it is "faiir" to pay for the next rung up relative to a starter home, and then how much again for the next step up, and so on), it will necessarily also increase the price of houses all the way up in price.

    This may be a cost worth bearing overall, but to pretend it;s nonexistent is really strange.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    regbrown wrote: »
    Ironically, this scheme is pushing up prices so contributing to the increased debt these people will take on board.

    I suspect not. The scheme merely allocates funding away from lower LTV mortgages. There's a huge amount of general public misconception.

    Property will fall in price when the love affair ends, and the herd chases the next bubble.
  • witchy1066
    witchy1066 Posts: 640 Forumite
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    house values will still have to be within the buyers budget
    and at 95% I suspect the property could well be down valued , this having 3 effects

    1 , preventing buyers form negative equity from the start
    2, preventing sellers and EA over pricing
    3, making sure the lenders have a good investment
  • jd87
    jd87 Posts: 2,345 Forumite
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    I just don't understand this scheme. The housing market is a market like any other. It's Economics 101. When the price of a product is too high, you either need to increase supply, or reduce demand. This scheme increases demand and so pushes up the price of houses which are too expensive. I just don't get it.
  • witchy1066
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    jd87, what makes you think it will push up prices,

    if a property is valued at 100k its unlikely to be valued higher just because of some government scheme, ( may be hard to convince some sellers of this though)

    if house prices start to rocket out of control, I think surveyors will start to undervalue , or become very picky in their reports,

    price offered/accepted and price actually paid will not be the same

    this is only my simple opinion, only time will tell what actually happens
  • kingstreet
    kingstreet Posts: 38,857 Forumite
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    The BoE has control of the scheme and can withdraw the guarantee from 95% if the market appears to be overheating.

    TBH I can't see this making a great difference in most of the country and London is always on the verge of overheat, so you can't plan a national scheme because of that, IMHO.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • surburn
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    just had an appointment with Natwest. Was refused, bank would not give the mortgage with 5%, they say come back with 10% so where is the help?
  • Gordon_Hose
    Gordon_Hose Posts: 6,259 Forumite
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    Did you make it clear you applying for a Help to Buy mortgage?
  • kingstreet
    kingstreet Posts: 38,857 Forumite
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    On one of the broker forums, there are a lot of complaints about Halifax declining HTB - MG applications at 95% but being willing to lend at 90%.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • jacobtheamish
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    surburn wrote: »
    just had an appointment with Natwest. Was refused, bank would not give the mortgage with 5%, they say come back with 10% so where is the help?

    As someone else has said before on MSE, this second phase of Help To Buy should really be called Help to Lend. There really isn't any 'help' as such, just a carrot on a stick for a few state owned banks.

    Its a scheme for people who have higher than average earnings, with excellent credit history but little deposit as mummy and daddy aren't loaded.
    It is not to help people who could not normally afford due to average to low income or people who have been able to save a large deposit or gifted from wealthy family.

    A little bit black and white in summing up, but can't think of a better way to put it
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