Government wants to bring back subprime mortgages.
Discussion
Mmm what could possibly go wrong. Who gives a s
t about the long term consequences so long as it wins you some votes at the next election.
“ Exclusive: Boris Johnson vows to put 'Generation Buy' on the housing ladder”
https://www.telegraph.co.uk/politics/2020/10/02/ex...
Non paywall......
https://www.thesun.co.uk/news/12834396/boris-johns...
“ Mr Johnson’s plans would see the down-payments for long-term fixed-rate mortgages slashed. Banks would no longer be required to quiz applicants in minute detail on their earnings and outgoings.
By removing the “stress tests” banks could churn out 95 per cent loans to young people.”
t about the long term consequences so long as it wins you some votes at the next election.“ Exclusive: Boris Johnson vows to put 'Generation Buy' on the housing ladder”
https://www.telegraph.co.uk/politics/2020/10/02/ex...
Non paywall......
https://www.thesun.co.uk/news/12834396/boris-johns...
“ Mr Johnson’s plans would see the down-payments for long-term fixed-rate mortgages slashed. Banks would no longer be required to quiz applicants in minute detail on their earnings and outgoings.
By removing the “stress tests” banks could churn out 95 per cent loans to young people.”
As long as it is administered, and with a few tweaks to the mortgage concept, it would not be a bad idea.
Part of the problem is that when you are renting, it’s impossible/very hard to save more on top. A lot of rents could easily cover the mortgage payments, and most people just keep paying them month after month with no big problems.
So, reduce the need for a deposit if you can prove income or consistent rent payments.
Force the mortgage industry to make it more flexible, a bit like a portable savings account. So you can buy a house with low barriers to entry, and pay off interest and equity from day one. If you need to move after a few years, then persist the account, which should have a chunk of equity in it.
Part of the problem is that when you are renting, it’s impossible/very hard to save more on top. A lot of rents could easily cover the mortgage payments, and most people just keep paying them month after month with no big problems.
So, reduce the need for a deposit if you can prove income or consistent rent payments.
Force the mortgage industry to make it more flexible, a bit like a portable savings account. So you can buy a house with low barriers to entry, and pay off interest and equity from day one. If you need to move after a few years, then persist the account, which should have a chunk of equity in it.
My first mortgage was 95% at a rate of 6.5%.
That same house is now worth twice as much; however, significantly lower interest rates mean the current monthly and overall cost is the same.
Assuming rates stay low long term a 95% mortgage now seems no different to when I purchased 18 years ago.
That same house is now worth twice as much; however, significantly lower interest rates mean the current monthly and overall cost is the same.
Assuming rates stay low long term a 95% mortgage now seems no different to when I purchased 18 years ago.
barryrs said:
Surprisingly, having just increased my salary in 2002 for inflation (circa 60% increase over 18 years) Barclays would only lend me the same amount as back then!
Yes seems very difficult if you are a FTB now. In Manchester City centre if you are a FTB for a new build flat you also pay a premium for it compared to an investor. That just seems unreasonable. 
Helicopter123 said:
Given that the main barrier to people moving from expensive rentals, into cheaper mortgaged properties, are the rules around mortgages, then the government is correct to look at this.
If you can afford £1k a month in rent, then you can afford £650 or mortgage payments.
A friend of mine is in this position. Just can't get a big enough deposit saved due to bank goalposts moving and house prices increasingIf you can afford £1k a month in rent, then you can afford £650 or mortgage payments.
Glosphil said:
My first mortgage was 100% for £5,750 at 10% interest rate.with Nationwide in March 1972. Moved after 15 months (job change) with another 100% mortgage, this time fot £7,500.
The best percentage I could get in 1970 was 20%. That was from a building society I'd been saving with for some two years. Had I not been a regular customer, I was told it would have been 25%.fesuvious said:
No.
Building more homes, relaxing planning rules andd freein up greenbelt is the start point.
If we engineered the building of 350k homes per year we could slightly exceed demand.
Making homes that increase in value at 5% per year more affordable by inflating an already massive credit bubble is idiotic
Needs both. The market is currently skewed towards investors as the pool of renters grow because of too strict mortgage rules. Building more homes, relaxing planning rules andd freein up greenbelt is the start point.
If we engineered the building of 350k homes per year we could slightly exceed demand.
Making homes that increase in value at 5% per year more affordable by inflating an already massive credit bubble is idiotic
Helicopter123 said:
Given that the main barrier to people moving from expensive rentals, into cheaper mortgaged properties, are the rules around mortgages, then the government is correct to look at this.
If you can afford £1k a month in rent, then you can afford £650 or mortgage payments.
This is totally correct. If you can afford £1k a month in rent, then you can afford £650 or mortgage payments.
And of course the reasons that rents are £1k while mortgages on the same property can be £650 is that the landlord has to pay tax on his income, and likely also has to finance the property, so by renting the tenant is just ensuring a large amount of their income goes to the government. One of the best things the government could do for young people is to separate out income from property and tax it at a lower level than income tax for private landlords. You would see a reduction in rents quite quickly I think.
(I know rents are a function of demand, but if rents fall too far then landlords will simply sell up; the landlord has to make a profit after tax and at least cover some of the mortgage, be that interest only or repayment, for them to bother continuing, so over the long term rents are not just a function of demand but also of supply.)
A lot of their actions stink of someone really wanting to pump the building and selling of houses - just a matter of working out who exactly is driving the policy.
The only people it doesn't help is anyone wanting affordability to improve by prices becoming more sensible as nothing they plan helps that.
Anyway good luck to all those people getting mortgages they can't afford on poorly built new builds.
The only people it doesn't help is anyone wanting affordability to improve by prices becoming more sensible as nothing they plan helps that.
Anyway good luck to all those people getting mortgages they can't afford on poorly built new builds.
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