The Government's new home ownership scheme.
Discussion
paps said:
MorrisCRX said:
As a potential First time buyer, I wouldn't consider it.
There is no way I'm going to purchase a poorly built s
t tip that these new builds tend to be.
They throw these houses up with out proper consideration of the infrastructure required to support them. New builds behind my parents place in Warrington are shocking. I wouldn't touch one if I was offered 100% mortgage.
Agreed. I'm also renting with half an eye on buying (nowhere near enough cash for a deposit) but new builds are often shockingly poorly built. Having said that, I can't stand the fact that I'm putting £775 pcm in to my land lords mortgage each month. Particularly as its a relatively small 1 bed flat!There is no way I'm going to purchase a poorly built s
t tip that these new builds tend to be. They throw these houses up with out proper consideration of the infrastructure required to support them. New builds behind my parents place in Warrington are shocking. I wouldn't touch one if I was offered 100% mortgage.
I'm stuck, with few options!
The scheme doesn't offer some kind of discount to alleviate the over-valued house prices and bring them down to a more realistic and affordable level for first time buyers, it merely tries to make getting into the current inflated market easier and more attractive. I'll have no part of it, and i'll stay renting, knowing that if interest rates do rise i can still afford it.
That's what really grates me with the current situation - reckless borrowing beyond ones means and speculation are rewarded, responsible borrowing and saving is penalised.
Derek Chevalier said:
The market has been sticky because the Government have done all they can to interfere. If you really wanted to fix this, you would let the market unwind and find its natural level. I can't why one would want to encourage FTBs into the current market.
Ari said:
Doesn't matter, the money is still being sucked out of the economy and into the banks for years and years.
How else do I expect people to be able to fund a home? Simple, by virtue of property prices dropping back to a level whereby people can actually afford them!
I don't understand why that's such a hard concept to grasp. It's happened before, many times. In the early nineties I bought my first house, a three bedroom terraced, for less than friends of mine had paid for tiny one bed flats only a few years before at the height of the eighties property price boom.
And I can remember, when friends with more income were diving to get onto the "one way" property ladder thinking "that's it, I'm priced out forever", just as so many are thinking now.
The trouble is that whilst the government are desperate to prop up house prices by whatever means necessary (stupidly low interest rates being the obvious one, schemes like this being another), everything stagnates and nothing happens.
Once interest rates normalise, then we'll see what houses are really worth, and anyone dragged in to purchase at close to peak price via schemes like this will suffer as they go straight into negative equity.
^^^ How else do I expect people to be able to fund a home? Simple, by virtue of property prices dropping back to a level whereby people can actually afford them!
I don't understand why that's such a hard concept to grasp. It's happened before, many times. In the early nineties I bought my first house, a three bedroom terraced, for less than friends of mine had paid for tiny one bed flats only a few years before at the height of the eighties property price boom.
And I can remember, when friends with more income were diving to get onto the "one way" property ladder thinking "that's it, I'm priced out forever", just as so many are thinking now.
The trouble is that whilst the government are desperate to prop up house prices by whatever means necessary (stupidly low interest rates being the obvious one, schemes like this being another), everything stagnates and nothing happens.
Once interest rates normalise, then we'll see what houses are really worth, and anyone dragged in to purchase at close to peak price via schemes like this will suffer as they go straight into negative equity.
Derek Chevalier said:
What is the definition of unreasonable? Surely if the buyer is planning on paying off the mortgage, they should only take a few years to save the 10-15% deposit required?
I suppose that's part of the problem these days. No one wants to wait a few years for anything anymore.Ari said:
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).
Realisticly that will never happen, so next best thing is 95% mortgages. I know what your going to say next, but if people can afford their rent then they can afford mortgage repayments . I think where most homeowners went wrong was the sudden avaibility of credit once they become a homeowner. It's easy to pay the mortgage but not all those loans secured on their houses IMO and that the biggest problem ( me included ) Edited by frosted on Tuesday 13th March 13:24
Ari said:
frosted said:
Because the most people want to move but are stuck , 5% deposit on all properties would get things moving again
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).If a property sells now for £200k, then that is what the market has set as the price. No-one has forced the price to that level.
Indeed in most parts of the country, prices are 15%-20% below the nominal prices back in 2007. So given wages have grown perhaps 8%-10% in that time means prices are around a quarter less than they were. With interest rates so low, if people can't buy now then I suggest they have financial issues bigger than merely the price of houses.
frosted said:
Ari said:
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).
Realisticly that will never happen, so next best thing is 95% mortgages. I know what your going to say next, but if people can afford their rent then they can afford mortgage repayments . I think where most homeowners went wrong was the sudden avaibility of credit once they become a homeowner. It's easy to pay the mortgage but not all those loans secured on their houses IMO and that the biggest problem ( me included ) And the lower they get, the less the deposit becomes at a set percentage.
Ari said:
I guess it's the trying to save for a deposit whilst paying rent for somewhere to live.
Once they're in the house and paying the mortgage that is the only expense involved in putting the roof overhead (plenty of expense on utilities etc either way I appreciate).
The rent equates to the I/O part of the mortgage, so they should be able to put away the repayment elementOnce they're in the house and paying the mortgage that is the only expense involved in putting the roof overhead (plenty of expense on utilities etc either way I appreciate).
oyster said:
Ari said:
frosted said:
Because the most people want to move but are stuck , 5% deposit on all properties would get things moving again
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).If a property sells now for £200k, then that is what the market has set as the price. No-one has forced the price to that level.
Indeed in most parts of the country, prices are 15%-20% below the nominal prices back in 2007. So given wages have grown perhaps 8%-10% in that time means prices are around a quarter less than they were. With interest rates so low, if people can't buy now then I suggest they have financial issues bigger than merely the price of houses.
Trying to compare with 2007 prices is a fallacy. We've lost 100% mortgages, interest only mortgages, self certification mortgages, sub prime mortgages, and all the other things that banks wheeled out to create more and more debt and force house prices higher and higher. Remember, lend everyone twice and much money and they don't all end up with twice as much house, they end up in the same houses at twice the price instead!
But more than that we've lost the mindset that house prices are a one way bet, and that if you don't mortgage yourself to the hilt and cling on to the property ladder RIGHT NOW then it'll disappear from your grasp forever, or that if you get yourself a load of debt and a load of Buy To Lets you just can't lose.
All the old mantras of the people with selective memory that could only look backwards at where property prices had gone, not forwards at what might be coming next, are gone. You know "they're not building any more land" and "property prices double every seven years you know, that's a fact".
It was a giant ponzi scheme for years, prices driven up by the fact that prices only ever go up, people feeling forced to buy at stupid prices because, hey, it'll only cost more next week.
The mindset has gone and the money has gone. We're into a new stratagem now, and the government are all out of ideas (well, they only ever had one, drop interest rates and house prices go up. It worked too, until they couldn't drop any lower...)
Derek Chevalier said:
Ari said:
I guess it's the trying to save for a deposit whilst paying rent for somewhere to live.
Once they're in the house and paying the mortgage that is the only expense involved in putting the roof overhead (plenty of expense on utilities etc either way I appreciate).
The rent equates to the I/O part of the mortgage, so they should be able to put away the repayment elementOnce they're in the house and paying the mortgage that is the only expense involved in putting the roof overhead (plenty of expense on utilities etc either way I appreciate).
Ari said:
oyster said:
Ari said:
frosted said:
Because the most people want to move but are stuck , 5% deposit on all properties would get things moving again
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).If a property sells now for £200k, then that is what the market has set as the price. No-one has forced the price to that level.
Indeed in most parts of the country, prices are 15%-20% below the nominal prices back in 2007. So given wages have grown perhaps 8%-10% in that time means prices are around a quarter less than they were. With interest rates so low, if people can't buy now then I suggest they have financial issues bigger than merely the price of houses.
Trying to compare with 2007 prices is a fallacy. We've lost 100% mortgages, interest only mortgages, self certification mortgages, sub prime mortgages, and all the other things that banks wheeled out to create more and more debt and force house prices higher and higher. Remember, lend everyone twice and much money and they don't all end up with twice as much house, they end up in the same houses at twice the price instead!
But more than that we've lost the mindset that house prices are a one way bet, and that if you don't mortgage yourself to the hilt and cling on to the property ladder RIGHT NOW then it'll disappear from your grasp forever, or that if you get yourself a load of debt and a load of Buy To Lets you just can't lose.
All the old mantras of the people with selective memory that could only look backwards at where property prices had gone, not forwards at what might be coming next, are gone. You know "they're not building any more land" and "property prices double every seven years you know, that's a fact".
It was a giant ponzi scheme for years, prices driven up by the fact that prices only ever go up, people feeling forced to buy at stupid prices because, hey, it'll only cost more next week.
The mindset has gone and the money has gone. We're into a new stratagem now, and the government are all out of ideas (well, they only ever had one, drop interest rates and house prices go up. It worked too, until they couldn't drop any lower...)
Derek Chevalier said:
cerbfan said:
Another way to get the construction industry busy again would be to reduce the VAT payable on extensions, having to pay 20% on the cost of an extension is a killer and makes it far more attractive to just do nothing instead.
Why are the construction industry so speshul?crankedup said:
Derek Chevalier said:
cerbfan said:
Another way to get the construction industry busy again would be to reduce the VAT payable on extensions, having to pay 20% on the cost of an extension is a killer and makes it far more attractive to just do nothing instead.
Why are the construction industry so speshul?crankedup said:
Ari said:
oyster said:
Ari said:
frosted said:
Because the most people want to move but are stuck , 5% deposit on all properties would get things moving again
No, realistic property prices would get things moving again, and would have the happy knock on effect of reducing deposits (20% of £100K is a hell of a lot less than 20% of £200K).If a property sells now for £200k, then that is what the market has set as the price. No-one has forced the price to that level.
Indeed in most parts of the country, prices are 15%-20% below the nominal prices back in 2007. So given wages have grown perhaps 8%-10% in that time means prices are around a quarter less than they were. With interest rates so low, if people can't buy now then I suggest they have financial issues bigger than merely the price of houses.
Trying to compare with 2007 prices is a fallacy. We've lost 100% mortgages, interest only mortgages, self certification mortgages, sub prime mortgages, and all the other things that banks wheeled out to create more and more debt and force house prices higher and higher. Remember, lend everyone twice and much money and they don't all end up with twice as much house, they end up in the same houses at twice the price instead!
But more than that we've lost the mindset that house prices are a one way bet, and that if you don't mortgage yourself to the hilt and cling on to the property ladder RIGHT NOW then it'll disappear from your grasp forever, or that if you get yourself a load of debt and a load of Buy To Lets you just can't lose.
All the old mantras of the people with selective memory that could only look backwards at where property prices had gone, not forwards at what might be coming next, are gone. You know "they're not building any more land" and "property prices double every seven years you know, that's a fact".
It was a giant ponzi scheme for years, prices driven up by the fact that prices only ever go up, people feeling forced to buy at stupid prices because, hey, it'll only cost more next week.
The mindset has gone and the money has gone. We're into a new stratagem now, and the government are all out of ideas (well, they only ever had one, drop interest rates and house prices go up. It worked too, until they couldn't drop any lower...)
Oh, and do you really believe that the BOE sets interest rates entirely independently of the government..?
There has been a sea change in the mortgage market. Arguably with good reason.
Banks are now very risk averse: average deposits on recent sales are in the order of 20%.
Poor credit borrowers cannot get into the market without very significant deposits and significantly more expensive interest rates.
I am not criticising this change,
But I do think the housing is the best investment ever bubble has burst and will not return for some years, if in fact it ever does.
I think every mortgagor, potential mortgagor and owner of property has to recognise the consequences of the sea change. It could be argued that the old lending of 100% plus and indeed 120% was never really sensible lending.
But the consequences must surely be a continuance of the current weak housing demand and therefore poor housing market.
The Construction industry beginning to grow is one of the best ways of building up growth in general in the economy. Hence the attempts to kick start the market.
I think the attempt will not succeed, because the dampening effect of big deposits, risk averse lenders and the general lack of confidence will outweigh these efforts. But I understand the aspirations of the scheme.
Unless there is an immediate recovery in the UK economy the consequences of the Euro crisis, and our own overborrowing will produce a very serious double dip recession.
That is what Cameroon and Co are trying to avoid: I applaud their efforts.
Unfortunately I do not think it will tip the balance in the way they hope.
Banks are now very risk averse: average deposits on recent sales are in the order of 20%.
Poor credit borrowers cannot get into the market without very significant deposits and significantly more expensive interest rates.
I am not criticising this change,
But I do think the housing is the best investment ever bubble has burst and will not return for some years, if in fact it ever does.
I think every mortgagor, potential mortgagor and owner of property has to recognise the consequences of the sea change. It could be argued that the old lending of 100% plus and indeed 120% was never really sensible lending.
But the consequences must surely be a continuance of the current weak housing demand and therefore poor housing market.
The Construction industry beginning to grow is one of the best ways of building up growth in general in the economy. Hence the attempts to kick start the market.
I think the attempt will not succeed, because the dampening effect of big deposits, risk averse lenders and the general lack of confidence will outweigh these efforts. But I understand the aspirations of the scheme.
Unless there is an immediate recovery in the UK economy the consequences of the Euro crisis, and our own overborrowing will produce a very serious double dip recession.
That is what Cameroon and Co are trying to avoid: I applaud their efforts.
Unfortunately I do not think it will tip the balance in the way they hope.
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