MSE News: Risky mortgages to face new crackdown, George Osborne says

CLAPTON

J_i_m wrote: »

In fairness, in some areas they are building more. Over the last decade or so there have been plenty of new housing estates popping up around my area. There are even plans for more.

Unfortunately for me, new builds tend to be embarrassingly small whilst actually really quite expensive.

yes that's true: this is mainly because of the high cost of land due to government planning rules and the levies and costs that the government piles on new builds that aren't paid when buying existing stock.

Graham_Devon

J_i_m wrote: »

If the Bank of England really ultilised the power to cap all mortgages at x3.5 salary and the prices market remained largely the same then I'd have to add £30-40k on to my target deposit, which would take me an extra 6-8 years to save under my present circumstances. This would take me onto the cusp of my forties and quite frankly I do not wish to wait that long to buy my first property.

If the government capped mortgage lending at 3.5x salary, house prices WOULD fall. I don't think many would deny that. Not that I think the government will do it.

It would effect you initially, meaning you require a larger deposit. But as time goes on, the deposit you require falls in line with house prices.

Secondly, the amount you pay over the length of the mortgage falls, as does your monthly payment. You appear to want to pay MORE for the same thing?

mobfant

AndyGuil wrote: »

They won't drive down prices. That is not a good situation. They will just reduce the extremes of growth if they were do anything at all.

They won't want to drive down prices. But it's not all in their control. And it would be a fantastic situation if it did happen.

AndyGuil

mobfant wrote: »

They won't want to drive down prices. But it's not all in their control. And it would be a fantastic situation if it did happen.

Prices won't go down. Too much demand and if they did fall it will be for reasons meaning that very very few people will be able to buy, so not good.

mobfant

AndyGuil wrote: »

Prices won't go down. Too much demand and if they did fall it will be for reasons meaning that very very few people will be able to buy, so not good.

If they do fall, it may be for reasons that mean many more people will be able to buy, so good.

And there's a difference between saying that demand is greater than supply and so prices must rise, and the explanation for prices having risen at the rate that they have. So prices could fall significantly despite the high level of demand.

CLAPTON

J_i_m wrote: »

Why are lower prices not a good situation?

If the amount of what people can borrow is to be restricted then surely it makes sense of prices to be low enough for those people to be able to buy?

Or are we thinking that only wealthy people should be allowed to buy?

unless there are sufficient houses then some-one has to be disappointed : at the moment you are basically saying that that person shouldn't be you but some-else

whilst very understandable from your personal point of view, the other person may be less pleased

the only solution to a housing shortage is to build more or remove demand

J_i_m

Graham_Devon wrote: »

If the government capped mortgage lending at 3.5x salary, house prices WOULD fall. I don't think many would deny that. Not that I think the government will do it.

It would effect you initially, meaning you require a larger deposit. But as time goes on, the deposit you require falls in line with house prices.

Secondly, the amount you pay over the length of the mortgage falls, as does your monthly payment. You appear to want to pay MORE for the same thing?

Not at all.

Above all else I want to be able to buy. I'm not convinced prices will fall, they might remain static but I doubt they'll fall, at least not significantly.

If prices remained static, and lending was restricted further then I would be priced out of the market for the several years it would take me to save up the rest of the deposit.

I don't know about you, but I'm not getting younger. Each year spent waiting to buy is a year later paying off a mortgage regardless of it's more or less money.

Under the current lending controls, there is a chance I will be able to buy next year, ok up-to 35% of my take home pay would be paying the monthly repayment but to me that's affordable. But If no bank would lend more more x3.5, then lower payments or not my chance of buying would be gone because my overall budget would then not buy me anything.

Quite frankly, given the choice between paying 'MORE' and being excluded from buying, I'd choose paying more.

I want to buy my home, and life is not always about paying the lowest possible sum.

HAMISH_MCTAVISH

CLAPTON wrote: »

the only solution to a housing shortage is to build more [STRIKE]or remove demand[/STRIKE]

Fixed that for you.

Preventing a million or more people from buying through artificial controls on lending is quite obviously not a solution to a housing shortage.

It will only worsen the housing shortage, as we have proved from the last 7 years.

wotsthat

Graham_Devon wrote: »

If the government capped mortgage lending at 3.5x salary, house prices WOULD fall. I don't think many would deny that. Not that I think the government will do it.

It would effect you initially, meaning you require a larger deposit. But as time goes on, the deposit you require falls in line with house prices.

Secondly, the amount you pay over the length of the mortgage falls, as does your monthly payment. You appear to want to pay MORE for the same thing?

It depends whether house prices are mainly a function of mortgage multiple or not.

Limiting multiples to 3.5x would be a gift for the rich. Removes demand from owner occupiers for buying houses whilst increasing demand from the rental market.

Not sure how a transfer of wealth from the poorer to richer helps reduces prices caused by a shortage of housing.

CLAPTON

HAMISH_MCTAVISH wrote: »

Fixed that for you.

why bother to post nonsense