5% government mortgage guarantee

chilswelluk

2021BJ said:

I can't see the taxpayer being particularly happy about subbing bank profits, or house buyers, so I can only see the cost being borne by the borrower.

Exactly my view.  This help to buy is the biggest load of rubbish out.  All it will do is inflate prices further.  Why should people have to pay their hard earned taxes to sub bank profits / house buyers? It's perfectly possible to save without this commie help to buy nonsense - people just have to be prepared to make sacrifices.  I have managed to save just under 40k on an average salary, but I live in a shared house, drive a 23 year old car, have a 10 year old phone, spend £25 per week on food and don't spend much going out.  So why should someone like me have to subsidise another person to buy a house? 

Personally, I think there should be a proper free market, where banks are allowed to fail and interest rates are not artificially kept low. The situation for savers is simply dire.  It really pains me how my savings are constantly being eaten by inflation, which has reluctantly pushed me into some high risk alternative investments, just to keep ahead off the curve. 

demontfort

chilswelluk said:

2021BJ said:

I can't see the taxpayer being particularly happy about subbing bank profits, or house buyers, so I can only see the cost being borne by the borrower.

Exactly my view.  This help to buy is the biggest load of rubbish out.  All it will do is inflate prices further.  Why should people have to pay their hard earned taxes to sub bank profits / house buyers? It's perfectly possible to save without this commie help to buy nonsense - people just have to be prepared to make sacrifices.  I have managed to save just under 40k on an average salary, but I live in a shared house, drive a 23 year old car, have a 10 year old phone, spend £25 per week on food and don't spend much going out.  So why should someone like me have to subsidise another person to buy a house? 

Personally, I think there should be a proper free market, where banks are allowed to fail and interest rates are not artificially kept low. The situation for savers is simply dire.  It really pains me how my savings are constantly being eaten by inflation, which has reluctantly pushed me into some high risk alternative investments, just to keep ahead off the curve. 

I don't see H2B as communist but I agree it's complete nonsense which distorts the market and yields fat profits for housing developers. However my fundamental problem is this is grossly unfair why should taxpayers who are renting or own a house have to subsidise relatively well off people buying a house. If they can't afford a house I couldn't care less, it's their problem. 

ukri

chilswelluk said:

2021BJ said:

I can't see the taxpayer being particularly happy about subbing bank profits, or house buyers, so I can only see the cost being borne by the borrower.

Exactly my view.  This help to buy is the biggest load of rubbish out.  All it will do is inflate prices further.  Why should people have to pay their hard earned taxes to sub bank profits / house buyers? It's perfectly possible to save without this commie help to buy nonsense - people just have to be prepared to make sacrifices.  I have managed to save just under 40k on an average salary, but I live in a shared house, drive a 23 year old car, have a 10 year old phone, spend £25 per week on food and don't spend much going out.  So why should someone like me have to subsidise another person to buy a house? 

Personally, I think there should be a proper free market, where banks are allowed to fail and interest rates are not artificially kept low. The situation for savers is simply dire.  It really pains me how my savings are constantly being eaten by inflation, which has reluctantly pushed me into some high risk alternative investments, just to keep ahead off the curve. 

Help to buy a “commie” plot? Lord I’ve heard it all now 😂

Mate, the world doesn’t owe you anything just because you’re a frugal spender. You want to live in a free market utopia? Vote for a party that promises that, stand for election yourself or move to this country called Freemarketistan.

SpiderLegs

chilswelluk said:

2021BJ said:

I can't see the taxpayer being particularly happy about subbing bank profits, or house buyers, so I can only see the cost being borne by the borrower.

Exactly my view.  This help to buy is the biggest load of rubbish out.  All it will do is inflate prices further.  Why should people have to pay their hard earned taxes to sub bank profits / house buyers? It's perfectly possible to save without this commie help to buy nonsense - people just have to be prepared to make sacrifices.  I have managed to save just under 40k on an average salary, but I live in a shared house, drive a 23 year old car, have a 10 year old phone, spend £25 per week on food and don't spend much going out.  So why should someone like me have to subsidise another person to buy a house? 

Personally, I think there should be a proper free market, where banks are allowed to fail and interest rates are not artificially kept low. The situation for savers is simply dire.  It really pains me how my savings are constantly being eaten by inflation, which has reluctantly pushed me into some high risk alternative investments, just to keep ahead off the curve. 

I agree, if people want to save money for a house they really have to make sacrifices in other areas.
But of course the knock on of your situation is that there were less car sales, less technology sales, less food sales and less entertainment sales. All while you left your money sat doing nothing in a bank.
Times that by a hundred thousand or so potential FTBers and the impact on the wider economy isn’t great.

People talk about props in the housing market, but the point is that they are props that support all the rest of the economy. If you shorter the time it takes to get on the property ladder, or reduce the up front finance required, then you free up alternative spending quicker.

Nobody cares about savers any more, a saver’s money takes too long to recycle, what we need is immediacy which you get through spending. 

chilswelluk

ukri said:

Mate, the world doesn’t owe you anything just because you’re a frugal spender. 

I never proclaimed the world owes me anything - quite the opposite. I just don't want my tax dollars used on such schemes.  If a person can't afford a house, I don't care.  My only answer is start saving. I make that statement as a person who does not own a home and lives frugally on an average salary.  

Mickey666

chilswelluk said:

ukri said:

Mate, the world doesn’t owe you anything just because you’re a frugal spender. 

I never proclaimed the world owes me anything - quite the opposite. I just don't want my tax dollars used on such schemes.  If a person can't afford a house, I don't care.  My only answer is start saving. I make that statement as a person who does not own a home and lives frugally on an average salary.  

I get your basic point, but the problem here is not one of affordability in the repayment sense, more about not having a huge lump sum to put down . . . which often means people can't get on the housing ladder until their 30s or 40s.

Ironically, mortgages have never been cheaper than they are today (well past 50 years at least) but the requirement for large deposits is making these relatively cheap mortgages inaccessible for so many people.  

[Deleted User]

Mickey666 said:

I get your basic point, but the problem here is not one of affordability in the repayment sense, more about not having a huge lump sum to put down . . . which often means people can't get on the housing ladder until their 30s or 40s.

Ironically, mortgages have never been cheaper than they are today (well past 50 years at least) but the requirement for large deposits is making these relatively cheap mortgages inaccessible for so many people.  

Technically its not the high deposit requirements that are the problem, its the house prices being so high in comparison to earnings thats the issue.  And also the makeup of the country with most of the 'desirable' areas being concentered in a small part of the country.

I grew up in a seaside town in Scotland. A 3 bed house there would need a 10% deposit of just under £10k.  Its a lot of money obviously but not more than a few years of tightening belts and saving.  
The problem is when that 10% becomes £20k or £30k or even more.   Staring at the prospect of tightening belts and living on nothing for the best part of a decade just to save a deposit is depressing.  

Some people are unwilling to change their life to move and get a house in a cheaper location and thats what a lot of current homeowners have an issue with. The lack of compromise.   When i bought my first place it was in the most rotten part of Glasgow and it was smaller than the place i rented and i had a much longer commute but to me that was fine because I was on the ladder.   
Some are willing to make the compromises,  some aren't.  The ones that aren't willing to compromise then fall in to 2 groups.   A group of people who understand they have sacrificed immediate home ownership in order to stay in a certain place, and then a group of people who expect things to be magically fixed for them and they want their forever home on the first attempt

That second group of people are usually also the ones complaining about how high rates are these days.  As if they are owed a cheaper rate somehow.  Also a lot of crossover with people who complain about not being able to borrow enough but arent willing to do anything about the expensive car on finance. 

I feel I might be turning in to a grumpy old man sometimes

Rich2808

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

SpiderLegs

Rich2808 said:

Mickey666 said:

Why would "the rich" need 95% mortgages?

Because the purpose of the scheme is to prop up and boost house prices - and increase the wealth and profits of existing owners and particularly the big developers.
The entire pyramid scheme relies on young people buying homes at ever high prices to keep prices at the top end rising too!
The only way the first time buyer is being helped is to take on a much higher level of debt and more risk due to their mere 5% deposit. 
The best way to help FTBs might one might suggest to let market forces do their work and allow prices to align more closely to actual wages minus taxpayer props. Then their 5% deposit might become 10% overnight - with a lower mortgage.
Won't be allowed to happen of course - because the purpose of this scheme isn't what is stated on the shiny wrapper!

In order for a 5% deposit to become a 10% deposit, house prices would need to fall by 50%.
One might suggest that that wouldn’t really help anyone, let alone FTBs.

getmore4less

You can control the impact by restricting the initial term and optionally a min fix period.,

If the goal is to get those with decent income but no deposits you can structure the support to create equity to get to "normal lending" in a reasonable time.

using a 3% rate 
if you limit to 25 or 30 years then starting with a 95% LTV you get to 85% in 5years 
y1 92.4% 93.0%
y2 89.7% 91.0%
y3 87.0% 88.9%
y4 84.1% 86.7%
y5 81.2% 84.5%

A Small overpayment £450-£470/£100k  could get that  25y term based  under 80% LTV in 5Y 

Even with 100% LTV you could get to 85.5% with 25y restriction  or even 80.3% with a 20y 

you could even look at shorter targets to release any guarantee sooner,  income OK could look at 15y equivalent term and get to 85% in 2 years from 95%