Help to bubble

Graham_Devon

Thrugelmir wrote: »

No criteria at all as to who qualifies? As unlikely to provide the solution to the problem.

I'm sure there is some criteria. Being over 55 is one of them (which will be hard to fall foul of considering they are coming up to the end of a 25/30 year loan) But it's hardly going to be onerous. They are trying to avoid people loosing their home.

Banks turn to equity release providers to bail out problem interest-only customers

nterest-only mortgage holders with no way of paying off their loan could be handed a lifeline, as major banks look to get these troublesome customers off their books.

Virgin Money has signed a deal with one of the biggest equity release providers, insurer Legal & General. It offers customers the opportunity to switch from an existing interest-only loan to a lifetime mortgage with the insurer.

Interest-only mortgages were commonplace before the financial crisis but these customers have since provided a major headache for banks.

Borrowers were required to pay off only the interest on their loan each month, rather than paying down the capital. While this was an easy way to lower monthly payments, many borrowers are now reaching the end of their term with no way of paying back the original debt.

The FCA has called for more to be done to help these people, hence the deal as above. More to come I would expect.

The interest only "time bomb" certainly won't come about anyway.

BikingBud

AFF8879 wrote: »

Of course, if Bitcoin is a bubble that he/she has bought into then of course they will do nothing but hype it up Of course, people do that with property too, but at least that has some intrinsic value.

If all the world’s assets became worthless, what would you rather have - a roof over your head or a randomly generated computer code?

My health, the love of my nearest and dearest and the ability to work and earn. I would wager that some sitting in very over priced houses cannot lay claim to at least 2 of those.

BikingBud

Graham_Devon wrote: »

I'm sure there is some criteria. Being over 55 is one of them (which will be hard to fall foul of considering they are coming up to the end of a 25/30 year loan) But it's hardly going to be onerous. They are trying to avoid people loosing their home.



The FCA has called for more to be done to help these people, hence the deal as above. More to come I would expect.

The interest only "time bomb" certainly won't come about anyway.

Really?

It's just been kicked down the road again:

http://https://www.stepchange.org/how-we-help/interest-only-lifetime-mortgage.aspx

Will I still be able to leave an inheritance?
The amount of inheritance available will be the difference between the proceeds from the sale of the house and the amount outstanding on the plan when it’s redeemed.

If your plan has a lifetime fixed interest rate, you’ll have the certainty of knowing exactly what your future liability will be.

We can’t predict the future value of your property when it's eventually sold so we can't predict what inheritance will be available.

Some providers offer an inheritance protection facility on their plans which allow clients to protect a specific percentage of the property’s future value. Your advisor will discuss this option if protecting an inheritance is one of your priorities.

PasturesNew

I had new builds go up next to me... speaking to the estate agent they were "all sold through Help to Buy" ... except two which appeared to be sold to new BTL investors at the last minute.

So I had a whole bunch of people who could buy those new builds under H2B, but probably couldn't buy my (bigger) house next door (5 years old or so) as it wasn't new and there was no "loan" conveniently showered upon them to do so.

So now where are we.... well, they are probably a bit stuck as they're tied into a 5 year deal and require enough other "qualifiers" to sell their houses to in order to even try to break even....

I, on the other hand, can "sell to anybody", except FTBs will be looking for H2B new houses and not mine. So I can sell at any price ... but only to older people.

It's all a bit ... strange.

FTBs are being corralled into buying new builds .... then tied in for 5 years, at a time when their lives are probably quite uncertain in the next 5 years (jobs/loss/change, pregnancy/1-3x, relationship breakdowns)..... and they'll all be "trapped in the dream that was mis-sold to them".

I bet most haven't thought "OK, I have 5 years to change/improve my situation and getting this house was just a resting point close to the bottom of the mountain" ... they'll mostly just relax "Ha, got a house" and not give it another thought for 4 years 9 months...

I'm going to sell my house soon ... no idea who to ... FTBs are being siphoned off to new builds...

Grezz24

PasturesNew wrote: »

I had new builds go up next to me... speaking to the estate agent they were "all sold through Help to Buy" ... except two which appeared to be sold to new BTL investors at the last minute.

So I had a whole bunch of people who could buy those new builds under H2B, but probably couldn't buy my (bigger) house next door (5 years old or so) as it wasn't new and there was no "loan" conveniently showered upon them to do so.

So now where are we.... well, they are probably a bit stuck as they're tied into a 5 year deal and require enough other "qualifiers" to sell their houses to in order to even try to break even....

I, on the other hand, can "sell to anybody", except FTBs will be looking for H2B new houses and not mine. So I can sell at any price ... but only to older people.

It's all a bit ... strange.

FTBs are being corralled into buying new builds .... then tied in for 5 years, at a time when their lives are probably quite uncertain in the next 5 years (jobs/loss/change, pregnancy/1-3x, relationship breakdowns)..... and they'll all be "trapped in the dream that was mis-sold to them".

I bet most haven't thought "OK, I have 5 years to change/improve my situation and getting this house was just a resting point close to the bottom of the mountain" ... they'll mostly just relax "Ha, got a house" and not give it another thought for 4 years 9 months...

I'm going to sell my house soon ... no idea who to ... FTBs are being siphoned off to new builds...

I have to disagree, I am a FTB with my wife and 2 year old son. We went into the process knowing exactly what we were getting into and have a plan in place to save the required money to buy the HTB % back. This is with a monthly saving plan that best case gets us 100% ownership, or worst case gets us close enough to only have to pay interest for a year while we carry on saving. (this is factoring in any potential rising house price (development will be finished by then)

However we bought knowing this was going to be a home for at least 10-15 years for school etc so even should house price values drop it still a home we want to keep for multiple reasons.

Anyone going into the process without doing the research is a fool imo.

Graham_Devon

Another negative story regarding HTB - this time from the telegraph - usually a supporter of tory policy.

A report released by the Home Builders Federation has called the Government's Help to Buy scheme an unmitigated success.

That's certainly true if you are in the business of building homes. As Steve Morgan, the founder of Redrow, said this week: the scheme has been a "Godsend".

No wonder. Redrow has just reported record profits and revenues, helping it pay out a bumper dividend, including £22m to Morgan.

The reality is that Help to Buy has been a dismal failure, inflating the prices faced by the vast majority of prospective homeowners - the exact opposite of what needs to happen if more people are ever to stand a chance of owning a property.

The scheme has also handed massive profits to the large developers, again not exactly what was intended. Yet the most damning legacy of Help to Buy is that it has been helping wealthy homeowners upgrade their property - one in five, according to research published in The Sunday Telegraph. That fact alone is reason for it to be scrapped.

https://www.telegraph.co.uk/business/2018/09/06/help-buy-really-help-house-builders/

Graham_Devon

And even the boss of Bovis Homes has come out today saying HTB needs massive changed unless we just want to continue inflating chief executive pay.

Help to Buy offers buyers up to 20% in state loans on homes worth up to £600,000, although public support for purchases of that value “doesn’t seem morally right to me”, Fitzgerald said.

“If it was a five-year extension they could start bringing it back slightly, tapering it down over a five-year period. [The government will say] ‘If you want, Mr Housebuilder to partake in Help to Buy there are also some rules to stop you !!!!!!! chief executives earning all this money from government subsidies’, just thinking about the Persimmon example... I’m sure every housebuilder would be forced into signing that bit of paper.”

https://www.standard.co.uk/business/bovis-boss-calls-for-help-to-buy-changes-to-curb-fatcats-pay-a3929341.html

Computer_Beginner

I don't know much about H2B, but if it's encouraging new build development, that should increase the supply of houses.
Will be interesting to see the prices of these houses and who is living in them in 20 years time...

Graham_Devon

Barratt Homes are now on the case also. They claim that HTB is a massive success and it would be crazy for the government not to extend it, esepcailly if the government wishes to meet housing targets (which haven't been met regardless of HTB, so don't see why extending it will suddenly mean we can meet housing targets).

However, they also put a statement out to investors warning that should the government pull HTB, house prices would likely fall, damaging the companies balance sheet.

So you have the press release claiming HTB is a huge success, and the warning to investors stating their balance sheet would be effected if HTB is pulled and prices of their homes would fall.

If their warning to investors isn't an outright admission that HTB simply allows builders to inflate new build prices - I don't know what is.

http://www.thisismoney.co.uk/money/markets/article-6135675/Builder-Barratt-Development-banks-95k-hour-cashes-Help-Buy.html