Rics - worse figures since 1996

boinging_2

http://news.bbc.co.uk/2/hi/business/7289134.stm

This sums it all up really.


The CML figures show that in January the average loan taken by a first-time buyer dropped from £117,921 to £115,000.

The knock-on effect was that the average loan as a percentage of the purchase price fell for the first time since early 2005, from 90% to 88% .
And as a multiple of income, the average first-time mortgage dropped back from 3.38 to 3.32 times income.

A similar picture exists for home movers who are also having to put down bigger deposits.
The average mortgage granted to these customers in January dropped from £137,499 to £134,100.

pickles110564

Conrad wrote: »

Sellers can hold out as long as they like, but if the cash aint there in sufficient quantity......

Your point being?
If sellers hold out for as much as they want because they do not need to sell then buyers cant buy.
So if sellers dont reduce their prices there is no crash.
If buyers cant buy then if they want their own place they will need to rent, to many renters for available stock means upward pressure on rent prices.
No one wins.
What everyone needs is sensible stock at sensible prices so that when FTB's want to buy they can get a decent place at affordable monthly mortgage rates.
The council in our area wants to create 1600 extra homes but none of the private home owners want it built in their own back yard.
No one will get a decent FTB home unless they are built.
Everyone deserves to be able to choose want they want whether it is to buy or rent about time we all got together and came up with a decent plan to achieve it because if it is left to the educated upper classes it will never happen because all they want to do is keep us trodden down.

pickles110564

boinging wrote: »

The CML figures show that in January the average loan taken by a first-time buyer dropped from £117,921 to £115,000.

This is a pathetic drop, you would need it to come down by another £40k to make any worthwhile inroads to what FTB's can afford to buy and still have a decent quality of life.

carolt

pickles110564 wrote: »

Your point being?
If sellers hold out for as much as they want because they do not need to sell then buyers cant buy.
So if sellers dont reduce their prices there is no crash.

But what about all the sellers who have to sell eg those who can no longer afford the mortgage, divorce, inheritance etc etc???

These distressed sellers are the ones who will set the prices.

Therefore prices will fall.... drastically. (ie c***h.)

subjecttocontract

Once the banks liquidity is sorted out......some action took place on that today.....normal service should be resumed.

FTB'ers have to find 10-25% deposits now & BTL's require 25% instead of 10-15% so there isn't much movement at the entry level. Higher LTV's are available but there's an interest rate penalty which most will want to avoid.

There were hardly any FTB'ers anyway before the credit crunch.....it was mainly BTL's.

As soon as mortgages become easier to obtain it'll be business as usual.

Bf109

subjecttocontract wrote: »

Once the banks liquidity is sorted
As soon as mortgages become easier to obtain it'll be business as usual.

By "business as usual" do you mean a return to rampant house price inflation meaning the average home will be worth £26,000,000 in 10 years time while average wages growing at around 3% will be £34,000?

How will people afford mortgages of almost 100 times their salary? Do you really think this is "business as usual"?

Surely you cant be so arithmetically illiterate to see that this just cant happen.

subjecttocontract

Well of course, its not written anywhere that people have a right to own their own homes. In Britain 70% of homes are owner occupied but thats not echoed in Europe where renting is the norm.

By 'business as usual' I mean that property investors will continue to buy. First time buyers were already an extinct breed before all this kicked off.

Property investors have the resources, the will and the experience to continue to buy thru and beyond a recession.

My vote would be on the model used by the Swiss.......property is owned by the rich.....everyone else rents.

carolt

subjecttocontract wrote: »

Once the banks liquidity is sorted out......some action took place on that today.....normal service should be resumed.
...

As soon as mortgages become easier to obtain it'll be business as usual.

As you don't appear to read the papers, maybe I should help by pointing you in the direction of this?

http://business.timesonline.co.uk/tol/business/money/borrowing/article3465450.ece

Hector Sants, chief executive of the Financial Services Authority, the City watchdog, added to the sense of crisis last week when he said the era of cheap credit, which enabled homeowners to borrow up to six times salary, was over.

Over.

What you call 'business as usual' is not remotely usual. This speculative bubble is over, and finally, we will see a return to genuine 'business as usual' - that is, lending multiples of 3 a single income, 2.5 double, and a good deposit upfront.

Increasing credit gave the banks, like Northern Rock, large profits while times were good.

But now the party's over, the chickens are coming home to roost, and many other associated cliches.

Tough on over-indebted property 'investors', I admit. But I doubt I'll shed many tears for them...... :rolleyes:

teabelly

The south is more over valued than the north. Mainly because up here we're much tighter with our money

As the value of money halves every 15 years or so it is much harder to compare the pound in your pocket now compared to one before or one in the future. In 1993 prices were around 70k average (guesstimate from the HPC graph) so in 15 years time they'll be about £630k (average about 210-220k now) Some of that increase is the devaluing of the money itself so the real HPI is much less than it appears to be. If you go with a lower average then 70k -> 190k -> 515K in 2023. Hopefully wages will catch up rather than lagging behind. As the standard of living in china/india et al increases and their wages go up then we should find that ours go up too as we no longer need to compete as a european sweatshop.

Salary multiples are nonsensical anyway. Two people earning the same amount could have totally different outgoings so lending them the same is daft. Plus the 3x income idea was around when interest rates are about 8-10% not 4-6% so again apples aren't being compared with apples. What matters is whether the individual can afford to pay the mortgage in their current circumstances and whether it will continue to be affordable over the long term if circumstances change. What really matters is how much the mortgage and their other outgoings is in proportion to their earnings and that it stays below a pre-defined threshold relating to the risk the lender is prepared to take on.

wibble68_2

Conrad wrote: »

No more 100% let alone 125% funds available.

What happens to people who currently have 100% + LTV mortgages?