The return of mortgages with 5% deposits!

clueless_but_curious

demontfort said:

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.

Who is complaining?  Probably nobody because the FTB is able to get on the ladder without waiting for years to save up, and homeowner has a bit more equity

bamgbost

Warrio1010 said:

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?

This is kinda how i see it too right. If you have a low salary, this scheme cant really benefit you right?

MWT

bamgbost said:

Warrio1010 said:

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?

This is kinda how i see it too right. If you have a low salary, this scheme cant really benefit you right?

... but what it can do is take those people who don't need an equity loan out of competition with those who do just because that was the only way to buy with a 5% deposit...

The_Walker

So will this change help people with large deposits but average income? I'd like to buy a property circa £280K using a mortgage, move straight into it, then sell my flat worth £170K afterwards (no mortgage). My income is around £25K net and I have maybe £80K in savings. I'd have to pay a penalty for early pay off no doubt, but doing it this way I could avoid renting anywhere in between wasting money.

It's been frustrating that banks only seem to look at income and not assets when offering mortgages?

MWT

The_Walker said:

It's been frustrating that banks only seem to look at income and not assets when offering mortgages?

Unfortunately assets don't help with the monthly mortgage payment, and the proposed 95% support scheme isn't going to help you based on the numbers you've given.

Most people do manage to sell and buy without having to rent in the middle though, so unless there are particular problems around the selling of your flat (cladding etc.), I wouldn't assume you will have to rent in the middle.

demontfort

clueless_but_curious said:

demontfort said:

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.

Who is complaining?  Probably nobody because the FTB is able to get on the ladder without waiting for years to save up, and homeowner has a bit more equity

But everyone else is subsidising FTB getting on the ladder and the government is indirectly pouring money into the builder's coffers through H2B, Persimmon paid their former CEO a £76m bonus 3 years ago thanks to H2B. Meanwhile the government will have to cutback  services even more in the coming years and raise taxes for you and me. Maybe then you won't feel so generous towards FTBs.

demontfort

clueless_but_curious said:

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 

2 responses from me, aren't you lucky? Nothing to do with being a liberal or politics this is about basic fairness, economics and credit risk.

On the fairness front why should i as a taxpayer subsidise high risk loans to FTBs who aren't yet in a financial position to buy, you really think it's fair that the government gives somebody on a good salary up to £240k interest free loan plus a stamp duty holiday in London whilst parts of the country are living hand to mouth?

On the economic front, all this does is push up house prices and saddle buyers with more debt and leaves the government with huge loan exposures on overpriced new builds. Several respected economists have condemned H2B as a dumb policy.

On the credit risk front, high LTV mortgages to people with below average credit scores caused the last financial crash so people in these situations shouldn't be getting mortgages or should look for cheaper properties rather than overstretching themselves. It's depressing to see that the lessons of the 2008 financial crash have been quickly forgotten and government has mortgaged off our future with this nonsense in its desperation to buy votes and keep it's builder chums rolling in it.

SpiderLegs

demontfort said:

clueless_but_curious said:

demontfort said:

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.

Who is complaining?  Probably nobody because the FTB is able to get on the ladder without waiting for years to save up, and homeowner has a bit more equity

But everyone else is subsidising FTB getting on the ladder and the government is indirectly pouring money into the builder's coffers through H2B, Persimmon paid their former CEO a £76m bonus 3 years ago thanks to H2B. Meanwhile the government will have to cutback  services even more in the coming years and raise taxes for you and me. Maybe then you won't feel so generous towards FTBs.

House sales operate in chains. If there are less FTBers then there are less potential sales overall. This is not really a difficult concept to grasp.

demontfort

SpiderLegs said:

demontfort said:

clueless_but_curious said:

demontfort said:

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.

Who is complaining?  Probably nobody because the FTB is able to get on the ladder without waiting for years to save up, and homeowner has a bit more equity

But everyone else is subsidising FTB getting on the ladder and the government is indirectly pouring money into the builder's coffers through H2B, Persimmon paid their former CEO a £76m bonus 3 years ago thanks to H2B. Meanwhile the government will have to cutback  services even more in the coming years and raise taxes for you and me. Maybe then you won't feel so generous towards FTBs.

House sales operate in chains. If there are less FTBers then there are less potential sales overall. This is not really a difficult concept to grasp.

"there are less potential sales overall" and why is that of any concern?

Thrugelmir

demontfort said:

clueless_but_curious said:

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 

On the fairness front why should i as a taxpayer subsidise high risk loans to FTBs who aren't yet in a financial position to buy, 

That's the danger of holding a fixed viewpoint. The scheme hasn't even been announced yet and assumptions run riot.