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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me " TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions." The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me " Sounds like a continuation of propping up their chums who have money invested in the construction industry. That and ensuring there continues to be high demand for overpriced houses. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront " When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall." Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get" People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. " Banks aren’t directly setting any of that. Last I checked were like 4.5 million houses short and net immigration is 600k a year It’s a supply demand issue before anything else. There just isn’t enough housing, and even less smaller/affordable housing | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. Banks aren’t directly setting any of that. Last I checked were like 4.5 million houses short and net immigration is 600k a year It’s a supply demand issue before anything else. There just isn’t enough housing, and even less smaller/affordable housing " I'll agree there isn't enough affordable housing. I have no objection to supply and demand per se, but when it comes to a very basic need for housing (by the whole population) I draw the line. If I'm paying rent of say £1000/month and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. Banks aren’t directly setting any of that. Last I checked were like 4.5 million houses short and net immigration is 600k a year It’s a supply demand issue before anything else. There just isn’t enough housing, and even less smaller/affordable housing I'll agree there isn't enough affordable housing. I have no objection to supply and demand per se, but when it comes to a very basic need for housing (by the whole population) I draw the line. If I'm paying rent of say £1000/month and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money." Weirdly enough, many people thought exactly that, and then the interest rate increases proved them wrong Banks stress test your mortgage application to something like 7%. They need to trust you can keep paying your mortgage through the length of a mortgage. 35 odd years. We’ve had periods of high inflation and high interest rates over the last 35 years, it’s a considerable amount of time to insure for And these checks aren’t even the banks choice. They were brought in after the 2008 crash to ensure lending was done properly If anything, the big deposit actually limits their profit. A 99% mortgage will make significantly more profit from interest than a 90 or 85% mortgage | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. Banks aren’t directly setting any of that. Last I checked were like 4.5 million houses short and net immigration is 600k a year It’s a supply demand issue before anything else. There just isn’t enough housing, and even less smaller/affordable housing I'll agree there isn't enough affordable housing. I have no objection to supply and demand per se, but when it comes to a very basic need for housing (by the whole population) I draw the line. If I'm paying rent of say £1000/month and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money. Weirdly enough, many people thought exactly that, and then the interest rate increases proved them wrong Banks stress test your mortgage application to something like 7%. They need to trust you can keep paying your mortgage through the length of a mortgage. 35 odd years. We’ve had periods of high inflation and high interest rates over the last 35 years, it’s a considerable amount of time to insure for And these checks aren’t even the banks choice. They were brought in after the 2008 crash to ensure lending was done properly If anything, the big deposit actually limits their profit. A 99% mortgage will make significantly more profit from interest than a 90 or 85% mortgage " You do know when interest rates increase, and mortgages increase, so does rental payments. Landlords don't 'take a hit'. I'm aware that larger % mortgages would make more money for banks in the long term. They can stress test all they like, I'm not arguing against financial checks, I'm arguing that people cannot afford to save (my house for instance) over £100k to put down a 20% deposit. | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me TBH I've never really understood deposits on credit. The lender has the asset. The main problem is underselling repossessions. The deposit is insurance for the bank. A drop in house prices or damage to the property is protected by already having a chunk of their cash upfront When I said I never understood it, I worded that wrong, I understand the idea behind it. I get the damage to the property aspect, although would argue thats a minority. House prices very very rarely fall, and when they do, it's the banks who make them fall. Well on top of the insurance it’s also just a vetting tool. Why would anyone rent if you could easily get a 1% mortgage? That just then opens the door for people to default on a mortgage they didn’t put as much thought into as they should have By making people put big cash upfront, it reduces the amount of defaults you get People can't put big cash upfront because the banks control mortgages, which in turn controls rental prices. Yes, I know there's an argument for other 'luxuries' to be scaled back on but rent is the single biggest factor as to why people can't save. Generally I'm on the side of capitalism but not when it comes to banks. Banks aren’t directly setting any of that. Last I checked were like 4.5 million houses short and net immigration is 600k a year It’s a supply demand issue before anything else. There just isn’t enough housing, and even less smaller/affordable housing I'll agree there isn't enough affordable housing. I have no objection to supply and demand per se, but when it comes to a very basic need for housing (by the whole population) I draw the line. If I'm paying rent of say £1000/month and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money. Weirdly enough, many people thought exactly that, and then the interest rate increases proved them wrong Banks stress test your mortgage application to something like 7%. They need to trust you can keep paying your mortgage through the length of a mortgage. 35 odd years. We’ve had periods of high inflation and high interest rates over the last 35 years, it’s a considerable amount of time to insure for And these checks aren’t even the banks choice. They were brought in after the 2008 crash to ensure lending was done properly If anything, the big deposit actually limits their profit. A 99% mortgage will make significantly more profit from interest than a 90 or 85% mortgage You do know when interest rates increase, and mortgages increase, so does rental payments. Landlords don't 'take a hit'. I'm aware that larger % mortgages would make more money for banks in the long term. They can stress test all they like, I'm not arguing against financial checks, I'm arguing that people cannot afford to save (my house for instance) over £100k to put down a 20% deposit. " Well I don’t think there’s an argument to have there then, it’s very hard to save yes | |||
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"and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money." That's not how banks see it. Their viewpoint is that if you default, they'll have to put the house in an auction, where it will sell for roughly 90% of its market value. They want that 10% deposit to cover their loss. And before you ask, yes they could get more money if they tried, but that takes time, usually months sometimes years, to get all the negotiating and the chain following sorted out. It's much better for the bank to have 90% now, rather than 95% next year, so they use auctions. | |||
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"and have a good track record of doing that, then I can afford to pay a mortgage for the same amount, no need for any 'insurance', the insurance is I don't wanna be homeless for defaulting. The banks more than make their money. That's not how banks see it. Their viewpoint is that if you default, they'll have to put the house in an auction, where it will sell for roughly 90% of its market value. They want that 10% deposit to cover their loss. And before you ask, yes they could get more money if they tried, but that takes time, usually months sometimes years, to get all the negotiating and the chain following sorted out. It's much better for the bank to have 90% now, rather than 95% next year, so they use auctions." I'm aware, hence I said banks 'underselling' property is the problem. Mortgage lenders have a legal duty to the borrower to sell repossessed properties for the best price they can get. I doubt anyone moves in and defaults instantly, my belief is still that there is some 'insurance' in people not wanting to end up homeless. | |||
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"Whilst I understand the argument that everyone would buy if you could get a 99% LTV mortgage, why didn’t everyone buy when you could get a 105% mortgage?" They normally came with higher interest rates and stricter criteria to qualify for one Also anyone with any financial sense could see why borrowing so much could be a risk They were also available at a time when average salary and average house prices were closer, so the need for them wasn’t as high. In short. People could actually afford a house with a decent deposit and get better rates along with it | |||
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"If this plan goes through, anyone looking to invest should buy a property up north / Scotland Anything below around 200k is going to explode in price " Under current regulations, properties in Scotland that have a gas boiler will not be able to be sold from 2025. That means an expensive heating re-fit and insulation upgrade. You'd be better off buying in Wales, where there are plenty of properties under £100,000. | |||
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"If this plan goes through, anyone looking to invest should buy a property up north / Scotland Anything below around 200k is going to explode in price Under current regulations, properties in Scotland that have a gas boiler will not be able to be sold from 2025. That means an expensive heating re-fit and insulation upgrade. You'd be better off buying in Wales, where there are plenty of properties under £100,000. " Is that true and in place? I know there’s a ban on installing gas boilers in new builds And I’ve heard about restrictions based on EPC ratings being brought in. But have they actually passed? | |||
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"Under current regulations, properties in Scotland that have a gas boiler will not be able to be sold from 2025. That means an expensive heating re-fit and insulation upgrade." "Is that true and in place? I know there’s a ban on installing gas boilers in new builds And I’ve heard about restrictions based on EPC ratings being brought in. But have they actually passed? " Ah, no, I mixed up lettings and sales. The law has passed and will come into effect on 1st April for landlords. No new tenancies with a gas boiler. It's not in place for sales yet, but it's proposed to be happening before the end of 2025. | |||
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"Under current regulations, properties in Scotland that have a gas boiler will not be able to be sold from 2025. That means an expensive heating re-fit and insulation upgrade. Is that true and in place? I know there’s a ban on installing gas boilers in new builds And I’ve heard about restrictions based on EPC ratings being brought in. But have they actually passed? Ah, no, I mixed up lettings and sales. The law has passed and will come into effect on 1st April for landlords. No new tenancies with a gas boiler. It's not in place for sales yet, but it's proposed to be happening before the end of 2025." Got a source for that I can read up on? I can’t find anything except the ban on gas boilers in new builds for 2025 | |||
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"https://www.telegraph.co.uk/news/2023/07/23/scotland-homes-sale-ban-swap-gas-boilers-heat-pumps-snp/" “ SNP plans to effectively ban sale of homes with gas boilers” Plans is what I’m struggling with. It’s behind a pay wall. Have we got a source that this has gone beyond just plans? Preferably one not behind a paywall | |||
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"https://www.telegraph.co.uk/news/2023/07/23/scotland-homes-sale-ban-swap-gas-boilers-heat-pumps-snp/ “ SNP plans to effectively ban sale of homes with gas boilers” Plans is what I’m struggling with. It’s behind a pay wall. Have we got a source that this has gone beyond just plans? Preferably one not behind a paywall " The majority of these "headlines" are just click bait and you have to pay to find out it's utter bullshit | |||
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"The solution to the housing market is to build *lots* of social housing and introduce increasingly punitive rates on multiple home ownership. Perhaps limit the number of properties that one individual or company can own. " \Of course it is the best option to build a never ending source of housing for people and have no idea how to continue to maintain it.  | |||
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"“The government is considering a radical scheme to help first-time buyers by guaranteeing mortgages which would require just 1 per cent deposits.” Thoughts? Seems like a terrible idea to me " This only helps a small number of people who can obtain a mortgage to buy a home. With house prices averaging 8-9x earnings, many will not be able to obtain a large enough mortgage. The number of ftb is reported to have fallen 23% last year. Home ownership has been falling since 2001 when 71% were owner occupied, 62% today. The government can indemnify lenders for deposits through a number of schemes but only to those that meet the criteria, too many shut out of ownership when the homes are costing 8-9x earnings, possibly 15x in parts of London. What needs to be done is building affordable homes in quantity for rent and purchase, and staircasing through shared ownership. | |||
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"The solution to the housing market is to build *lots* of social housing and introduce increasingly punitive rates on multiple home ownership. Perhaps limit the number of properties that one individual or company can own. " Until all those affordable new builds are ready there needs to be a temporary solution - which is the private rented sector currently 5 million odd homes (22% current dwelling stock) As those new affordable homes are built, if they are for social rent, there are currently 1.6 million on local authority waiting lists for them The number of affordable homes completed last year (27k), fell by 12% on the previous year, as the council house waiting lists, and homeless numbers increase. https://www.gov.uk/government/news/new-homes-england-2022-23-housebuilding-statistics-revealed--2#:~:text=A%20total%20of%204%2C793%20affordable,Ownership%20and%20Rent%20to%20Buy. | |||
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"The solution to the housing market is to build *lots* of social housing and introduce increasingly punitive rates on multiple home ownership. Perhaps limit the number of properties that one individual or company can own. \Of course it is the best option to build a never ending source of housing for people and have no idea how to continue to maintain it. "Maybe we could employ people to maintain the properties, since we need to shift people away from the gig economy and into more reliable work. What’s your solution for the housing crisis, maestro? | |||
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