The return of mortgages with 5% deposits!

MWT

demontfort said:

As a FTB who bought at 38 with no use of these government freebies and who paid a big whack of stamp duty, I'm just curious to know from both first time buyers and government:
1) Why I should care less whether or not first time buyers struggle to save for a deposit and can afford to pay stamp duty?
2) Why myself and other taxpayers (homeowners or renters) should subsidise people buying a house though the stamp duty holiday and help to buy stupidity?
3) Why the government is putting the taxpayer om the hook by guaranteeing high risk borrowing just as we're in the middle of global recession?

Not every Government scheme will apply to everyone, doesn't mean they shouldn't have a scheme or provide support to one group of people just because it doesn't apply to you...

Be happy for those it helps and they in turn will be happy when something comes along that helps you not them...

Thrugelmir

demontfort said:

As a FTB who bought at 38 with no use of these government freebies and who paid a big whack of stamp duty, I'm just curious to know from both first time buyers and government:
1) Why I should care less whether or not first time buyers struggle to save for a deposit and can afford to pay stamp duty?
2) Why myself and other taxpayers (homeowners or renters) should subsidise people buying a house though the stamp duty holiday and help to buy stupidity?
3) Why the government is putting the taxpayer om the hook by guaranteeing high risk borrowing just as we're in the middle of global recession?

This is all about the broader activity in the economy. Activity retains/generates jobs and ultimately tax revenues of different kinds. The key to exiting the downturn is confidence. People will spend money. Money circulation oils the wheels of the economy.  Keeping people on furlough is akin to putting future years holidays on your credit card now.  Trouble is the interest charges will mount. 

aldino2015

Is this likely to trickle down to Shared Ownership mortgages too? I know for SO 95% mortgage is already 'the norm' and available, but will this mean there will be more lenders to choose from, and hence hopefully better rates?

zemarcopolo

demontfort said:

As a FTB who bought at 38 with no use of these government freebies and who paid a big whack of stamp duty, I'm just curious to know from both first time buyers and government:
1) Why I should care less whether or not first time buyers struggle to save for a deposit and can afford to pay stamp duty?
2) Why myself and other taxpayers (homeowners or renters) should subsidise people buying a house though the stamp duty holiday and help to buy stupidity?
3) Why the government is putting the taxpayer om the hook by guaranteeing high risk borrowing just as we're in the middle of global recession?

The main aim is to make sure that the market continues to be active in these difficult times. That will stimulate the economy, therefore it will benefit everyone in one way or another. 

The way out of the recession is to encourage spending. This scheme is one of the ways to encourage spending. 

getmore4less

If the idea is to help those with small deposits then you want to limit the full term so they pay off more capital to get the LTV to something decent in say 5 years and limit the guarantee period.

25years full term would get them to ~85% in 5 years.

What you don't want is low deposits and stretched income needing longer terms as they are just closer to interest only.

Warrio1010

So from reading through this thread, it seems this scheme is going to help people who are on a decent salary (can borrow a lot) but don't have a large deposit, rather than people who are on a low salary but have managed to save a large deposit?

MattMattMattUK

MWT said:

Paired with the end of the SDLT holiday I'd hope it simply softens the impact of that rather than drives prices higher over-all.

It would make far more sense to abolish SDLT, it is a bad tax on all levels. 

demontfort

I don't buy the line about this helping the economy, the housing markets ticks along very nicely by itself, people will always but and sell houses and all these schemes do is push up prices further saddling first time buyers with more mortgage debt. The town where I live has allowed builders to churn up acres of productive farmland to build 6000 overpriced cramped houses (subsidised by H2B) putting more traffic on the roads, more people at the station and more people using the hospital yet  the town centre continue to rot away and you have homeless people sleeping in doorways.

The stamp duty cuts and Help to Buy favour the better off, I'd much rather my taxpayer dollars were spent on foreign aid, helping homeless people or rehousing families stuck in rundown B&Bs. The government is here to provide public services and to help the needy not to provide bungs to buyers and prop up the housing market. So if a first time buyer is struggling to afford a house then I don't care and the government should not get involved.

demontfort

MattMattMattUK said:

MWT said:

Paired with the end of the SDLT holiday I'd hope it simply softens the impact of that rather than drives prices higher over-all.

It would make far more sense to abolish SDLT, it is a bad tax on all levels. 

That's a simplistic view parroted by the economically illiterate Daily Telegraph. It's a valuable source of government revenue and acts as a brake on house prices both of which we can all agree are desperately needed. Every time you cut stamp duty or extend this daft holiday all you do is push up house prices. As an example I bought my 2 bed flat for £240k in 2013 just before they abolished the SDLT slab system, back then no sellers dared to price 2  beds in the area above £250k as above this point buyers would pay 3% on the full purchase price. But when the then chancellor Genius George scrapped the slab, suddenly  2 beds in my area all started repricing at £270k, £280k or above. So the lucky buyers saved a few thousand on the stamp but shelled out 30k to 50k extra on a flat.....nice one George.

clueless_but_curious

demontfort said:

I don't buy the line about this helping the economy, the housing markets ticks along very nicely by itself, people will always but and sell houses and all these schemes do is push up prices further saddling first time buyers with more mortgage debt. The town where I live has allowed builders to churn up acres of productive farmland to build 6000 overpriced cramped houses (subsidised by H2B) putting more traffic on the roads, more people at the station and more people using the hospital yet  the town centre continue to rot away and you have homeless people sleeping in doorways.

The stamp duty cuts and Help to Buy favour the better off, I'd much rather my taxpayer dollars were spent on foreign aid, helping homeless people or rehousing families stuck in rundown B&Bs. The government is here to provide public services and to help the needy not to provide bungs to buyers and prop up the housing market. So if a first time buyer is struggling to afford a house then I don't care and the government should not get involved.

The point is that banks are lending at higher rates for high LTVs (which is predominantly FTB's), and those rates are so high that affordability becomes an issue.  Others have articulated that high credit scoring is also a requirement.  If there are less buyers in the market, house prices will go down.  Simple simply vs demand economics.  This is to prevent prices dipping.  
Stamp duty cuts benefit anyone buying land and buildings
I don't know how you can support HTB being specifically for 'the better off'
You seem to be a gloomy liberal