Thursday, Jul 09, 2009
Mixed signals from CML
Mortgages rise on parents' help for first-timers: The Times
A record number of young first-time buyers are getting help from their parents to enter the housing market, according to the Council of Mortgage Lenders (CML), sending the number of home loans granted in May up by 4 per cent.
The CML said today that around 80 per cent of first-time buyers under the age of 30 appear to be receiving help from their parents after failing to save the necessary deposits to climb on the housing ladder.
Over the past two years, banks have reversed their policy of easy credit and dramatically clamped down on offering mortgages to customers without large cash deposits. First-time buyers are been particularly hard-hit by the squeeze.
The CML, which represents most banks and building societies, said while first-time buyers have had to rely increasingly on help ...
22 Comments
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1. 51ck-6-51x said...
LOL @ Myself - switched source title & source name.
2. 51ck-6-51x said...
Same story on Sky News, better headline maybe? "Lending Up But 1 In 4 Can't Get A Mortgage."
3. drk said...
Strong anecdotal evidence of Bank of Mum and Dad stepping in around my part of West Sussex. Presumably the parents believe housing is also a one way bet! By nature, I do not like to be vindictive but this country really needs a wake-up call regards house prices, let's hope it is sooner rather than later.
4. peter_2008 said...
So... insanity marches on.
To further help GB deprive future generations and pensioners, the parents (future pensioners) are voluntarary throwing away money which should have been their own pension and inheritance money to they children.
When people have no money left, that's when GB will declair himself "Ruler of the Universe" and nobody will object, because for them democracy and freedom is all about cheap interest rate.
5. mrflibble said...
If I went cap in hand to Mum & Dad and asked them to stump up a deposit for me to buy a house the response would be, how do I put this, colourful...
I know parents are only trying to do the best for their kids, but it is this sort of thing that got us into this mess in the first place. The best action now is to let the market find it's own bottom, a bottom that is hopefully low enough for young people to buy themselves their own place without any form of crooked assistance.
A 3.5x mortgage on a single income with a genuinely saved 10% is where we need to get to.
6. titaniccaptain said...
Well said mrflibble.
But is there a serious irresponsibility on part of the children asking the parents to risk their money and possible economic stability to buy a house or is it a case of being ill informed by the media and not being given the facts that the economic state of this country is so bad that there is no way house prices can regain an upward trend for a long time?
7. titaniccaptain said...
That should read
"risk their money and possible financial stability to buy a house".......that will teach me to blog on 123124243124235 blogs at the same time
8. mrr19121970 said...
It's not such a bad thing. Better greedy mum and dad picking up the bill rather than Joe tax payer when it all goes sour.
9. mrflibble said...
@8. mrr19121970
Agreed, the trouble is the rest of us are then left competing with these fools and their bottomless pockets for the very basic things in life, like a roof over our heads.
Housing's got like eBay, you get a couple of numpties bidding for something and the prices ends up over retail...
10. wdbeast said...
"The CML said today that around 80 per cent of first-time buyers under the age of 30 appear to be receiving help from their parents"
And the other two had won the lottery!
11. 51ck-6-51x said...
I don't know the tax laws all that well, but I do know that a large gift without incurring taxation may be made so long as the parent(s) do not die within a set period ( 7 years? ), furthermore a trust may be set up at a small cost to get around that too I think.
Therefore, if the parent(s) expects this gift value to be greater than the present value of the taxed inheritance; even with an immediate fall of value in the property market of their worst case expectation AND they do not expect to need the cash at all before they die then it actually makes sense to do this.
However, some, at least, should realise that if they expect further falls in property values a trust could be set up and the monies invested in something a little less risky.
I wonder how many of these parents actually seek financial advice on the matter.
12. 51ck-6-51x said...
wdbeast
- chortle. Could even be the other ONE.
13. george monsoon said...
Stupid parents, poor children.!
14. 51ck-6-51x said...
tax-implications-of-parents-helping - not extensive, but gives an idea why some may be willing to "throw away their money" - it may not be their money that they are throwing away, but the tax man's portion of it - even factoring in large falls in the real cost of housing. ( Just an arbitrage in response to taxation distorting markets as usual )
15. matt_the_hat said...
I must say this is good to hear in a way..
I asked my parents for a little help (1/60 of their net wealth) only to be refused, we missed out on a bargain which someone else made a return of 50% in 6 months(albeit with capital and resources we did not have). Before anyone starts this was just a home for us. As an expecting parent I think its great that some people want to help the next generation at a time when it matters not when their 50 with inheritance that adds a few more thousands to the bank.
16. uncle tom said...
Rather suggests that most current FTB's have parents who are desperate to see the back of them..
17. inbreda said...
Silly question....
If you own a second home, and sell it for a profit, you pay capital gains tax right?
So if you sell it at a loss, is the loss offsetable against other profits (e.g. work income?)
How much s a 40% drop in prices going to hurt the tax man?
18. need-a-crash said...
This has been the case for ages hasn't it. I mean no FTB could afford in the boom years without parental help and the only friends of mine who are my age and who own property did so with parental help.
What gets me is we have a left-wing government and this is their legacy... only those with rich parents can buy property. Anyone who votes Labour should give this SERIOUS consideration at the next election!
19. Clockslinger said...
need-a crash, yes it would add up that even more parents (who could afford it) would be throwing their cash into property as an investment for children, grandchildren and so on when the market was rising fast...just look at the number of parents who bought places for their student kids especially in towns with better universities (Durham and York I remember being discussed in the Saturday broadsheets). So one would expect there to be little addition to this trend now.
20. letthemfall said...
matt_the_: "
I asked my parents for a little help (1/60 of their net wealth) only to be refused"
What, with your charm?? These old timers just don't appreciate their kids.
21. Clockslinger said...
...However,sorry, I can't agree that Nu- Lab was EVER a "left wing" party...same as the Thatcherism except Nu Lab MP's get tumescent at the thought of money and a consultancy whist a Tory expects money and a consultancy and only gets tumescent about stuff like call girls, asphyxiation and getting your daughter to perjure herself in libel cases...don't you remember? Victorian values and back to basics?
22. techieman said...
17 inbreda - yes you are right its a silly question. You can only offset a capital loss against a capital gain (not work income tax....... although that's not 100% accurate). In any case what constitute a "second home" rather than a "first home" depends on what you determine it to be.