London increased by 12.4% in 2015

mwpt

wotsthat wrote: »

I was think more of the requirement people be able to afford a mortgage at 7% interest. At 80% LTV a first time buyer can fix for 10 years with Nationwide at 3.5%.

MMR was implemented as lenders started becoming looser with lending again. Since we aren't privy to the details we can only speculate but my guess is they were worried about the upward pressure on prices that low interest rates cause. Credit checking at 7% on a percentage of the borrowers is one way to address this upward pressure.

But 7% checking doesn't only accomplish that, it provides a buffer should the borrowers circumstances change.

But hey, look, we may have found some common ground. I agree that borrowers who offer the right deposit and are willing to fix for 10 years should probably not be constrained by the tighter MMR regulations, and I think it might be the case that they are not.

IIRC, fixes at 5 years or longer are not subject to MMR. Could be wrong but I seem to remember reading that.

mwpt

buglawton wrote: »

Ah but does anyone remember 1969-1990 you used to get INCOME TAX RELIEF (Miras) on your own mortgage in those days. Now there would be a policy to help FTBs today.

They keep talking about scrapping this in Australia but no government can do it. I'd be very surprised if any government in the UK, already strapped for cash, would consider this.

wotsthat

mwpt wrote: »

MMR was implemented as lenders started becoming looser with lending again. Since we aren't privy to the details we can only speculate but my guess is they were worried about the upward pressure on prices that low interest rates cause. Credit checking at 7% on a percentage of the borrowers is one way to address this upward pressure.

But 7% checking doesn't only accomplish that, it provides a buffer should the borrowers circumstances change.

But hey, look, we may have found some common ground. I agree that borrowers who offer the right deposit and are willing to fix for 10 years should probably not be constrained by the tighter MMR regulations, and I think it might be the case that they are not.

IIRC, fixes at 5 years or longer are not subject to MMR. Could be wrong but I seem to remember reading that.

I think 7% probably arises from the regulator deciding mortgage lending needs to be safer and plucking a number from the ether. The biggest risk to my ability to pay the mortgage is the same today as it was 20 years ago - loss of income - not a reduction in income. Economies can be found to cover priorities but arbitrary %'s don't help if I lose my job.

Yes, you're right I think about longer term mortgages not being subject to the same MMR requirement. 10 year fixes are fairly commonplace now - maybe partially a response by lenders to prevent the regulator from forcing them to reject people who are deemed decent risks by their own internal systems. If we're feeling paranoid we could say lenders are looking for loopholes to enable them to lend to poor risks.

What's the 'right' deposit? I think I've done 5% (builder paid it), 5% which I borrowed short term and repaid with 5% cashback from the lender and for a second home I paid 25% from (get ready to be surprised) savings. That's probably a bit racy but I'd have paid thousands more and been significantly worse off if I'd been rejected on this basis and tried to save up more whilst renting.

westernpromise

buglawton wrote: »

Ah but does anyone remember 1969-1990 you used to get INCOME TAX RELIEF (Miras) on your own mortgage in those days. Now there would be a policy to help FTBs today.

But only up to £30k per property at the basic rate. Taxes were also higher then. In 1988 the personal allowance was £3k and the basic rate was 25%. Limited to first 30k, that didn't go far.

cells

wotsthat wrote: »

I think 7% probably arises from the regulator deciding mortgage lending needs to be safer and plucking a number from the ether. The biggest risk to my ability to pay the mortgage is the same today as it was 20 years ago - loss of income - not a reduction in income. Economies can be found to cover priorities but arbitrary %'s don't help if I lose my job.

Yes, you're right I think about longer term mortgages not being subject to the same MMR requirement. 10 year fixes are fairly commonplace now - maybe partially a response by lenders to prevent the regulator from forcing them to reject people who are deemed decent risks by their own internal systems. If we're feeling paranoid we could say lenders are looking for loopholes to enable them to lend to poor risks.

What's the 'right' deposit? I think I've done 5% (builder paid it), 5% which I borrowed short term and repaid with 5% cashback from the lender and for a second home I paid 25% from (get ready to be surprised) savings. That's probably a bit racy but I'd have paid thousands more and been significantly worse off if I'd been rejected on this basis and tried to save up more whilst renting.

maybe mmr should be overridden to pay rate if you buy income protection insurance?

ukcarper

carslet wrote: »

My Grandparents bought a flat in Stockwell in about 1960 for £3000. wonder what it would cost today, I remember them telling me it was about 2.5 his earnings.

Average earnings in 1960 were about £750 a year.

ukcarper

Quite usefull when I first bought cover whole mortgage and tax was 33%