Have new MMR 'affordability' checks destroyed by chances?

seriouslyworried

Michaels - Yep, I gave the length of the mortgage a tweak and it upped the amount about £10k.

I think if I really tighten my belt for the next three months, hopefully things will be okay. Still only be able to afford a one bed flat in a crappy location, but it's something.

I understand the need to restrain debt, I really do, but these moves seem to completely ignore the prices of property and the direction they're going to continue in. Also seem plain unfair when there are irresponsible people that got 110% mortgages and thanks to the rises are now laughing, whilst long term savers are now getting punished.

These checks are really not protecting me from anything. Worse that could happen in my situation is I have to sell a house in a London suburb in a rising market, oh the horror. Frankly I'm more at risk being forced to buy a crapper property in a less desirable location which will be harder to sell if necessary.

bigchris33

House prices are a market, and market forces apply. If you're unable to access finance to afford the current market price then the same will apply to countless others.

Is the problem that the bank won't lend "enough" or that the asking price for said house is way too high?

Jennie2827

The problem is that house prices are way too high! However, all of my friends who have bought in the last four years have done it with parental support. That is great if you are fortunate enough to have parents who want to help you, but not everyone has that. We are now moving to Norfolk to escape the madness of the southeast. I am a teacher, which means I am deemed unable to ever buy a home here. Yet as a private tenant, I have no stability for my family. We have moved three times in the last three years because the landlord wants to sell up. I have two small children to which this I has caused great turmoil. We need teachers, police, firefighters and nurses......yet they have no hope of getting a mortgage. How is this a fair society?

CLAPTON

there are several solutions

we could

-build more houses

- forbid anyone not born in London to ever live there

-only allow teachers, firefighters and nurses to live in London

-let people move out of London if it doesn't suit their requirements

mrginge

If you believe that MMR is going to grind the market to a halt then you also believe that it will lead to a reduction in prices.

So whats the problem?

Jennie2827

All the projections for house prices in 2014/2015 is for them to rise. . There is such a shortage of affordable houses and many landlords own many houses that it is unlikely that the MMR will have much effect on house prices.......or will it? .

CreditCrunchie

I feel for you jennie. We have moved 3 times in 3 years for the same reason (plus the last landlord increasing the rent by a ridiculous amount). Private rental tenants are sitting ducks for every tom, !!!!!!, and harry looking to make a quick buck. You are best off getting out of it as soon as you possible can, no matter what area or type of house you end up in!

Wilkins

seriouslyworried wrote: »

I understand the need to restrain debt, I really do, but these moves seem to completely ignore the prices of property and the direction they're going to continue in.

On the contrary, MMR is one half of the solution to rising property prices since it will reduce demand. The other half is to increase supply.

Also seem plain unfair when there are irresponsible people that got 110% mortgages and thanks to the rises are now laughing, whilst long term savers are now getting punished.

Unfortunately, markets are not fair. And, of course, it is hard for those caught in the transition between a silly policy and a sensible one. Undoubtedly, the new rules are going to applied in some instances by bank employees/computers without common sense (nothing new there), but in the long run it will be worth it to get some sanity back into the market. The old rule, 3x + 1 or 2.5x joint, worked reasonably well, macroeconomically, but was restrictive for people who did not take on other forms of credit or lived frugally. MMR is an attempt to be more flexible.

Many people who got 110% mortgages came a cropper and many more will still. The latter may be laughing now over their paper profits but they won't be when rates rise and prices fall. The ones that survive are either shrewd or lucky, but there are always some of those.

The market is always going to be alternately favourable to lenders and borrowers. You can't have both at the same time and government attempts to engineer otherwise usually backfire. Savers have been whingeing for a few years now while borrowers have enjoyed low rates. That situation will reverse and then reverse again . . .