Wednesday, Mar 18, 2009
Deposit size triples, prices fall to 1/3 (?)
Times: Buyers face 15% deposits in mortgage shake-up
Buyers face 15% deposits in mortgage shake-up as the FSA clamps down on supersized offers, chairman announces proposals to mark end of reckless lending.
Posted by refusetobuy @ 04:14 PM (1638 views) Add Comment
21 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. paul said...
The 'property experts' are wailing that the end is nigh. That's probably a good sign that the FSA is onto something.
2. japanese uncle said...
What's this fuss about? Min 20% depost has always been the 'protocol' of any mortgage arrangement. 15% is still too small and must be rectified. What's going on?
3. Nomad said...
This is good! Widespread coverage and, in the main, a positive response by posters reacting to the articles. It all adds up to a firm "Writing on the wall" message to sellers.
4. Agentimmo said...
Average house price currently about £150K.
15% deposit required = £22.5K
If a FTB is looking to buy a property at even £100K, then they'll have to fork out £15K.
Add in fees etc, and that's a year's earnings for most FTBers.
It's a good start on the road back to sanity in the housing market.................
5. wdbeast said...
So I can get a mortgage for a property by putting down 15% deposit on an asset that is widely forecast to go down in value by at least 15% over the next year.
So few people are going to do this anyway, hence the lack of any sales currently.
There is no housing market at the moment.
I am afraid the market is going to do "death by a thousand cuts"
No quick fix here.
People have spent 20 years building up the collateral in their houses, they will not accept that it has gone until they become forced sellers and that is some way off still in my opinion.
6. bystander said...
Thing I don't understand about this whole thing is with regards to the 'joint/ part own/ part rent schemes the government through its various agencies has been pushing on FTB's for the past few years and even those schemes run purely by developers. My question is do both parties take the hit when prices fall or is it only the FTB who got together their mortgage and deposit who gets hit and the developer/ housing association are in the clear??? Anyone got any answers to this???
7. need-a-crash said...
Quite a few comments under this article are saying that restricting LTV is harmful to FTB and won't lower house prices. Guess this proves that The Times being BTL friendly is only because a lot of their readership are VI's.
8. refusetobuy said...
BTW, in the headline I was assuming that all bubble mortgages were made on a 5% margin, esp BTL mortgages. If 20% is the norm and 5% is the bubble, then prices would fall 75%.
Just finished reading The Great Crash 1929 by John Kenneth Galbraith. He lays the blame at being able to trade on low margin. BTL people have been able to speculate massively on little to no margin.
9. alan said...
I really liked the bit about banks building up the buffers in good times... Are you listening Gordo?
By the way, the Leeds Permanent (remember them?) expected a 15% deposit when I bought my house many years ago.
10. Maddison said...
95% and 100% mortgages were possible in the early to mid nineties but believe it or not it wasnt easy to save £2500 in London on £10k a year and rent of £3-400 per month.
11. little professor said...
FSA report apparently had this interesting graph:
12. quiet guy said...
After the initial surpise wore off, I have come to the conclusion that this doesn't really matter all that much. If the housing market recovers, the bankers will find some loophole to start lending more again. Instead of trying to legislate away human greed and stupidity, I'd ike to see something like the Glass-Steagall act imposed on the banks.
Banks have been failing for centuries and they'll do it again.
13. justwatching said...
To people saying this will bring house prices down: I have a property bought for 190,000 with a 170,000 mortgage, now worth about £160,000. I can sell now, owe £10,000, lose £20,000 and have nowehere to live. I will not sell nor will people like me. Less supply = higher prices. Don't celebrate yet.
Steve Dyer, Ely, UK
Sound economics Steve.
14. justwatching said...
3 x salary and 15% deposit sounds all well and good-if you were starting from scratch but we are not! What will happen to the hundreds of thousands of people who are mortgaged above that ammount already? Surely this will only stunt the housing markert once more-just as its showing signs of recovery.
Paul, Gloucester, england
Yep, pauls hit the nail on the head. Cheeker feekers at the FSA, stunting those recovery signs.
15. Jborg said...
bystander @ 4 - i looked into the key worker thing (im a nurse) in 07 (before i got very very wise!!) and its a huge rip off. The buyer is the loser from what i gathered at the time (may have changed in view of market). Huge con though as the rent you pay on the bit you don't own is quite a lot and you may as well have paid a full mortgage. If the government hadn't tried to make a packet off these schemes and actually made them affordable a lot more people would have gone into it. Most of them were 2 bed flats priced at 250K-300K (C London)....great i'll own just the doorstep! Although i did go and view a few and competition to reserve was fierce at first (ppl believing the 'got to get on the ladder' BS), but i think people realised it was a con after a while and loads were left empty.
Did me a huge favor though as poised ready for next year with a nice big deposit saved...lovely.
16. Neil B said...
More fantastic news - watch: The average house price will tumble to £85k
All these people who are complaining had better start preparing for huge amounts of negative equity.
17. it_is_going_with_a_bang said...
There will be no over all plan that suits all. However it is right that regulations are put in place to prevent further price increases and speculation.
I think Steve Dyer will find that means he is stuffed. However, statistically he and others like him own a tiny minority of the housing stock in this country. Not significant enough to hold back the market for ever. Just until it reaches affordable levels. Then people will buy and sell as they always have - except those in negative equity won't be part of it.
18. growler said...
We're looking at one side of this. The terms at which a mortgage will be given. The other side of this also limits the amount banks have to give in the first place. The rest of the report talks about increased RAR requirements and more frequent and stringent inspections. I think the UK cannot risk another failed FSA story and am pretty sure they will get it 90% or so right. There will be banks from overseas that might flout the rules, but they'll be out on a limb since the legislative will not support a lender proven to be acting outside of rules.
I am not an apocalypse HPC-er, but I see this as a realistic shot at getting back to 1998 prices and re-writing the house price curves from then. All those people that bought after then will I'm afraid have to live with their legacy - sadly, this does include family members and friends. But even they (if they're honest) see the reality issues. It just means people will be moving less, a lot less
19. Tenyearstogetmymoneyback said...
Justwatching at 10
Been there. Done that (look at the username).
A short term mistake was getting out of the property market in 1999 when I finally could get my money back.
A possibly even bigger mistake was not selling in 1995 at a £17000 (27%) loss when I actually had an offer
and could have bought the house of my dreams for £92000 :-(
There will always be some people who have to sell, and as indicated above some people who have the nerve to sell.
:- Duncan
Bought 1986 £24000 Sold 1989 £52000 Bought 1989 £65000 Sold 1999 £70500
And they say history doesn't repeat itself.
20. Sybil13 said...
I almost can't be bothered to reply to be honest I am so depressed by what the government have done this week, released that the FSA will cap mortgages and what it would mean, then say " well maybe in September" and imply "first time buyers will no longer be able to get on the ladder if we do this." SAYING VERY LOUDLY YOU HAD ALL BETTER GET OUT THERE AND GET A MORTGAGE NOW AND KEEP PRICES UP SO THAT WE LOOK GOOD BECAUSE YOU MIGHT NOT BE ABLE TO AFFORD IT BY THE END OF THE YEAR!
Of course regulation is GOOD for first time buyers, 3 x's income will bring prices down 50%, HOW CAN THAT NOT BE GOOD FOR FIRST TIME BUYERS?: Implying first time buyers will never afford houses is surely HUGELY irresponsible JUST MORE SPIN MORE SPIN MORE SPIN MORE SPIN
21. Priest said...
To Steve Dyer,
posting the same comments on every website won't prevent the value of your pooperty to collapse nor will it convince me to buy overpriced house in the future. The million pound house for FTB exists only in your year 2024 dreams;
Does anyone knows if the building society stroud and swindon that made that stupid forecast is still alive?