Cheap mortgages for all?
Discussion
Nail/head, as usual, Bedford..
Hope they do this, I really do. Maybe its a cunning plan to get back the housing stock they have been selling off twenty to the dozen. Last recession, I remember the shared equity lot being handed back at approx five times the rate of the proper ownership houses. Less investment = less commitment.
I remember one repo that had a 911 engine in the garage. Have always regretted not going down and keeping that safe for myself.
Hope they do this, I really do. Maybe its a cunning plan to get back the housing stock they have been selling off twenty to the dozen. Last recession, I remember the shared equity lot being handed back at approx five times the rate of the proper ownership houses. Less investment = less commitment.
I remember one repo that had a 911 engine in the garage. Have always regretted not going down and keeping that safe for myself.
randlemarcus said:
Hope they do this, I really do.
Why?
Leave it to market forces. The sooner people realise that houses are overpriced and the idea of getting on the housing ladder at any cost is over rated in this country the better.
Exactly who benefits from expensive houses apart from banks and estate agents? I certainly don't.
But the only way you can actually get money out of a house is to sell it. Ok, you can borrow against the increased value but this is effectively just swapping mortgage debt with other debt while increasing overall debt...
So you sell up to realise the assest. What do you do then. Buy another house of course!
And that house would be more affordable for you if:
a) it was cheaper in the first place
b) you hadn't shoveled your money down a mortgage black hole for umpteen years
So you sell up to realise the assest. What do you do then. Buy another house of course!
And that house would be more affordable for you if:
a) it was cheaper in the first place
b) you hadn't shoveled your money down a mortgage black hole for umpteen years
Gordon Brown on the BBC said:
Buyers would have to raise as little as half the cost of homes sold on the open market, he said.
Gordon Brown on the BBC said:
"The idea is that building societies, mortgage lenders, the government and the prospective owner share the cost of the mortgage, with perhaps 75% held by the prospective owner."
Since when has 75% been half the cost of something. And he's the bloody Chancellor of the Exchequer??????????????
i fully agree with Jaglover. it is competely pie in the sky, head in the clouds, finger up....., thinking. now per say why?
it is not called a property ladder for nothing. these people would be the ones who would traditionally have moved into council housing as their first step after leaving home, uni, forces etc. nothing wrong with that, i've lived in council accom.
what i feel this will do is allow people to buy a share(40,50,60 or 75%) of a house/flat. ok thats fine, good they get a start. but remember it is a ladder, the normal first buy, a flat or small house will then become a second or third rung on the ladder, and the price for these rungs will rise again due to the pressure from underneath.
hence the other steps on the ladder flat/small house (first /second buy), semi & detached (third/fourth buy) and cottage/country house (fifth/sixth buy) (not all exact but a progression) will all jump a rung or two in price bands, making the housing market even more over priced and inflated than before from internal pressure, resulting in greater differentials between rungs.
i am not an ecconomist buy it just seems common sense to me, the fundamantal problem is not enough low priced accomodation to rent across the country. when council houses were sold off and gave people a "stake", a policy of mrs T's (so all you tory bashers can keep quiet), there should have been a continued programme of rebuilding for council renting, but there wasn't.
so we now have further inflationary pressures on the housing stock. good attempt mr brown, but this type of subsidy doesn't work in addressing the core problem...not enough low priced accom. if you want to address the problem. councils get building and keep them in council ownership, ie rented for the next twenty years (not developer sell offs) to reduce the inflationary pressure from below.
it is not called a property ladder for nothing. these people would be the ones who would traditionally have moved into council housing as their first step after leaving home, uni, forces etc. nothing wrong with that, i've lived in council accom.
what i feel this will do is allow people to buy a share(40,50,60 or 75%) of a house/flat. ok thats fine, good they get a start. but remember it is a ladder, the normal first buy, a flat or small house will then become a second or third rung on the ladder, and the price for these rungs will rise again due to the pressure from underneath.
hence the other steps on the ladder flat/small house (first /second buy), semi & detached (third/fourth buy) and cottage/country house (fifth/sixth buy) (not all exact but a progression) will all jump a rung or two in price bands, making the housing market even more over priced and inflated than before from internal pressure, resulting in greater differentials between rungs.
i am not an ecconomist buy it just seems common sense to me, the fundamantal problem is not enough low priced accomodation to rent across the country. when council houses were sold off and gave people a "stake", a policy of mrs T's (so all you tory bashers can keep quiet), there should have been a continued programme of rebuilding for council renting, but there wasn't.
so we now have further inflationary pressures on the housing stock. good attempt mr brown, but this type of subsidy doesn't work in addressing the core problem...not enough low priced accom. if you want to address the problem. councils get building and keep them in council ownership, ie rented for the next twenty years (not developer sell offs) to reduce the inflationary pressure from below.
ian d said:
i fully agree with Jaglover. it is competely pie in the sky, head in the clouds, finger up....., thinking. now per say why?
it is not called a property ladder for nothing. these people would be the ones who would traditionally have moved into council housing as their first step after leaving home, uni, forces etc. nothing wrong with that, i've lived in council accom.
what i feel this will do is allow people to buy a share(40,50,60 or 75%) of a house/flat. ok thats fine, good they get a start. but remember it is a ladder, the normal first buy, a flat or small house will then become a second or third rung on the ladder, and the price for these rungs will rise again due to the pressure from underneath.
hence the other steps on the ladder flat/small house (first /second buy), semi & detached (third/fourth buy) and cottage/country house (fifth/sixth buy) (not all exact but a progression) will all jump a rung or two in price bands, making the housing market even more over priced and inflated than before from internal pressure, resulting in greater differentials between rungs.
i am not an ecconomist buy it just seems common sense to me, the fundamantal problem is not enough low priced accomodation to rent across the country. when council houses were sold off and gave people a "stake", a policy of mrs T's (so all you tory bashers can keep quiet), there should have been a continued programme of rebuilding for council renting, but there wasn't.
so we now have further inflationary pressures on the housing stock. good attempt mr brown, but this type of subsidy doesn't work in addressing the core problem...not enough low priced accom. if you want to address the problem. councils get building and keep them in council ownership, ie rented for the next twenty years (not developer sell offs) to reduce the inflationary pressure from below.
You may have misidentified/overstated the reasons. Selling off council houses made not a jot of difference to the total housing stock, and council house building didnt stop during the Thatcher years (although it did slow down).
The reasons for a shortage now are basically lots of single people, including single parents, coupled to a huge influx in the past five years of immigrants/asylum seekers (legal or not).
Basically something like a million people came to Britain during NuLabs time (nothing neccessarily wrong with that)and that means a big demand for low end housing.
I predict that if the influx drops then the housing market will become very soft.
I'm a bit confused here, is the nice Mr Brwon saying that if I, as a first time buyer, want to buy a flat for £100k then I can get a mortage for £50k but only own half the house?
What happens when I go to sell? Assuming the price stayed at £100k, would I get £50k to spend on my next house and not have to pay the other half off, or would I have to put an extra £50k on my new mortage to pay back the government?
Could someone with experience in these matters please explain it me, assuming I completely clueless when it comes to mortages and buying houses.
What happens when I go to sell? Assuming the price stayed at £100k, would I get £50k to spend on my next house and not have to pay the other half off, or would I have to put an extra £50k on my new mortage to pay back the government?
Could someone with experience in these matters please explain it me, assuming I completely clueless when it comes to mortages and buying houses.
I'm not a home owner yet, I'm graduating soon, but one thing did strike me as annoying:
-I am single and don't have kids
-I will not be going into work in the public sector
-Neither will I be able to afford a decent property for some years to come
-I will have a student debt
So I'll still get screwed over, simply because my wages aren't paid through tax, I haven't found the right woman yet and my loins aren't in overload.
Cheers Gordon, you really make my entry into the world of work feel welcome
-I am single and don't have kids
-I will not be going into work in the public sector
-Neither will I be able to afford a decent property for some years to come
-I will have a student debt
So I'll still get screwed over, simply because my wages aren't paid through tax, I haven't found the right woman yet and my loins aren't in overload.
Cheers Gordon, you really make my entry into the world of work feel welcome
FunkyNige said:
I'm a bit confused here, is the nice Mr Brwon saying that if I, as a first time buyer, want to buy a flat for £100k then I can get a mortage for £50k but only own half the house?
What happens when I go to sell? Assuming the price stayed at £100k, would I get £50k to spend on my next house and not have to pay the other half off, or would I have to put an extra £50k on my new mortage to pay back the government?
Could someone with experience in these matters please explain it me, assuming I completely clueless when it comes to mortages and buying houses.
what is worrying is the bit of the equity you dont own.
you buy your share of the house £100k for £50k, in ten years time you decide to buy the outstanding £50k of the house.
but surely, that £50k is now worth £150k cause the housing market has increased in price. so actually - you are no better off and still dont own the property you live in.
all this cashing in equity has gone disasterously wrong already, eg old people cash in £20k 5 years, that £20k equity buy back is now £60k - they cant afford that and have technically lost full ownership of the house.
this system is the above discredited system in reverse surely?
>> Edited by tinman0 on Sunday 22 May 15:15
tinman0 said:
I'm a bit confused here, is the nice Mr Brwon saying that if I, as a first time buyer, want to buy a flat for £100k then I can get a mortage for £50k but only own half the house?
What happens when I go to sell? Assuming the price stayed at £100k, would I get £50k to spend on my next house and not have to pay the other half off, or would I have to put an extra £50k on my new mortage to pay back the government?
Could someone with experience in these matters please explain it me, assuming I completely clueless when it comes to mortages and buying houses.
what is worrying is the bit of the equity you dont own.
you buy your share of the house £100k for £50k, in ten years time you decide to buy the outstanding £50k of the house.
but surely, that £50k is now worth £150k cause the housing market has increased in price. so actually - you are no better off and still dont own the property you live in.
all this cashing in equity has gone disasterously wrong already, eg old people cash in £20k 5 years, that £20k equity buy back is now £60k - they cant afford that and have technically lost full ownership of the house.
this system is the above discredited system in reverse surely?
I was thinking this. It's just putting off the inevitable, if I understand the "offer". Plus an expensive way of buying votes?
This scheme appears to be utter madness. Being a good socialist I imagine Brown genuinely wants to help people on a low income get a leg up. Fine; nothing wrong with that per se, but this is no way to do it. Surely the most basic theory of economics is that prices are determined by the opposing pressures of supply and demand? If you increase demand without increasing supply, prices will rise until demand is reduced back to its original level. Giving people more money to spend without increasing the amount of property available in the UK just jacks up prices. If this scheme is implemented, all that will happen is that the prices of the cheaper properties will get pushed up into a higher and narrower price range where they are still just as unaffordable to first time buyers as they are now.
If you want something to be more afforedable, its price relative to spending power has to fall. If you want somethings price to fall you can either reduce demand or you can increase its supply.
Brown does not want to reduce demand; he is trying to satisfy people's existing aspiration to buy. Fine. Then the _only_ solution is to increase supply. Nothing else can possibly work. In efficient markets, suppliers will naturally start making more of a commodity that is in high demand. But the housing market is not efficient; there is an artificial constraint in the supply side. And that constraint is Planning Permission. An acre of farm land is worth a few thousand pounds. But grant planning permission on that land in the South East and it is suddenly worth millions.
If Brown is not prepared to try to reduce demand for housing, then he needs to relax planning permission and wait for several years while new developments are planned and built. Nothing else can satisfy existing demand. But is that what we really want, particularly in the South East?
Surely a Chancellor with any vision would see that we need a broad policy of encouraging people and business to spread out of the South East. Yes, insist that local authorities grant more planning permission, but sweeten that with central government policies aimed at encouraging business to move into those localities too.
Also, surely the Chancellor can see that the UK housing market needs to devalued across the board? Yes, this will be painful, but there has been a huge bubble in the market and eventually it is inevitable that the market must correct. As with the man dangling on the rope under the ballon, hanging on as it rises seems like the best bet in the short term, but you'll fall eventually and the longer you hang on the further you will have to fall in the end.
If you want something to be more afforedable, its price relative to spending power has to fall. If you want somethings price to fall you can either reduce demand or you can increase its supply.
Brown does not want to reduce demand; he is trying to satisfy people's existing aspiration to buy. Fine. Then the _only_ solution is to increase supply. Nothing else can possibly work. In efficient markets, suppliers will naturally start making more of a commodity that is in high demand. But the housing market is not efficient; there is an artificial constraint in the supply side. And that constraint is Planning Permission. An acre of farm land is worth a few thousand pounds. But grant planning permission on that land in the South East and it is suddenly worth millions.
If Brown is not prepared to try to reduce demand for housing, then he needs to relax planning permission and wait for several years while new developments are planned and built. Nothing else can satisfy existing demand. But is that what we really want, particularly in the South East?
Surely a Chancellor with any vision would see that we need a broad policy of encouraging people and business to spread out of the South East. Yes, insist that local authorities grant more planning permission, but sweeten that with central government policies aimed at encouraging business to move into those localities too.
Also, surely the Chancellor can see that the UK housing market needs to devalued across the board? Yes, this will be painful, but there has been a huge bubble in the market and eventually it is inevitable that the market must correct. As with the man dangling on the rope under the ballon, hanging on as it rises seems like the best bet in the short term, but you'll fall eventually and the longer you hang on the further you will have to fall in the end.
Twincam16 said:
I'm not a home owner yet, I'm graduating soon, but one thing did strike me as annoying:
-I am single and don't have kids
-I will not be going into work in the public sector
-Neither will I be able to afford a decent property for some years to come
-I will have a student debt
So I'll still get screwed over, simply because my wages aren't paid through tax, I haven't found the right woman yet and my loins aren't in overload.
Cheers Gordon, you really make my entry into the world of work feel welcome
You have a point but if you are on a lowish income in your first job you have 2 perfectly reasonable choices
1. Rent until you can afford somewhere
2. Look to buy somewhere cheaper
imo there is a culture of unrealistic expectations (I was in this situation when I left Uni) which says that everyone has to buy a place asap. I rented for a bit until I had paid off most of my non-SLC student debt & had enough salary to get a mortgage. I had to move somewhere crappy to get a flat but was willing.
The shared ownership schemes are not all that. I know 2 people who had the option (teacher & policeman) but in the end went the traditional route into housebuying as the scheme was quite limiting.
Also many, many public sector employees don't get the opportunity for many of the schemes available.
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