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Mortgages Denied To A Generation

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http://www.dailymail.co.uk/money/article-1351702/COMMENT-LISA-BUCKINGHAM-Mortgages-denied-generation.html

The shock of the economy hitting the buffers in the fourth quarter appears to have prompted the Government to pick up the cattle prod in an attempt to electrify laggard sectors.

Notably, Housing Minister Grant Shapps has ordered a meeting of major mortgage lenders next month to explain the latest record low levels of mortgage borrowing. New home loans (stripping out redemptions) totalled just £880million in December, the lowest level for more than a decade.

Shapps knows that the economy will not start to fire with the housing market in its current moribund state and intends to carpet the major banks and building societies. He believes that even good risks are being turned down for mortgages and is appalled that the average age of a first-time buyer (not helped by their parents) is now 37.

It is estimated that nearly 1.5million households want to own a home but are locked out by high prices and the lack of available mortgages.

Shapps intends to press the industry for innovative solutions, such as shared owner ship and schemes for parents to help their children buy homes.The problem for Shapps is not only is he up against an industry with its hands firmly in its pockets, but all the regulatory work under way is pushing in a direction that Shapps does not like. Apart, that is, from the fact that it will inevitably maintain the downward pressure on house prices. The Bank of England is happily pursuing its belief that loan-to-value criteria should not be relaxed to protect lenders should values fall far and fast and, to a lesser extent, to protect borrowers from themselves.

Meanwhile, the Financial Services Authority is discussing constraints that one source close to the talks said would amount to social engineering and, unless reversed, would deprive future generations of the chance of home ownership at all.

The FSA - apparently working from the basis of protecting those who failed to cope with their mortgage payments rather than those who would do anything to be given the chance - wants interest-only loans to be done away with.

Certainly some horror stories exist whereby home owners did not realise they had to repay the capital at the end of the loan, but surely these are a minority. And interest-only loans are a cheaper way for first-time buyers to get a foot on the ladder.

The FSA is also apparently trying to ensure that borrowers can always pay their mortgage over a 25-year period - so if you take a £240,000 32-year loan, the FSA wants to calculate your ability to repay over 25 years. Quite why is anyone's guess, but the pincer movement of the FSA and the Bank of England risks making home ownership a pastime for only the rich and middle-aged in future.

Certainly we must try to prevent people borrowing what they cannot repay, but to punish a generation by keeping them out of the housing market is absurd. And if people cannot buy or move home, their chance of being mobile enough to look for work will be zero.

So the problem is caused by a variety of factors, but not of course thet house prices are too high.

Also, what does she mean in the last paragraph? It makes no sense whatsoever.

Edited by Johnny Cash

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http://www.dailymail.co.uk/money/article-1351702/COMMENT-LISA-BUCKINGHAM-Mortgages-denied-generation.html

The shock of the economy hitting the buffers in the fourth quarter appears to have prompted the Government to pick up the cattle prod in an attempt to electrify laggard sectors.

Notably, Housing Minister Grant Shapps has ordered a meeting of major mortgage lenders next month to explain the latest record low levels of mortgage borrowing. New home loans (stripping out redemptions) totalled just £880million in December, the lowest level for more than a decade.

Shapps knows that the economy will not start to fire with the housing market in its current moribund state and intends to carpet the major banks and building societies. He believes that even good risks are being turned down for mortgages and is appalled that the average age of a first-time buyer (not helped by their parents) is now 37.

It is estimated that nearly 1.5million households want to own a home but are locked out by high prices and the lack of available mortgages.

Shapps intends to press the industry for innovative solutions, such as shared owner ship and schemes for parents to help their children buy homes.The problem for Shapps is not only is he up against an industry with its hands firmly in its pockets, but all the regulatory work under way is pushing in a direction that Shapps does not like. Apart, that is, from the fact that it will inevitably maintain the downward pressure on house prices. The Bank of England is happily pursuing its belief that loan-to-value criteria should not be relaxed to protect lenders should values fall far and fast and, to a lesser extent, to protect borrowers from themselves.

Meanwhile, the Financial Services Authority is discussing constraints that one source close to the talks said would amount to social engineering and, unless reversed, would deprive future generations of the chance of home ownership at all.

The FSA - apparently working from the basis of protecting those who failed to cope with their mortgage payments rather than those who would do anything to be given the chance - wants interest-only loans to be done away with.

Certainly some horror stories exist whereby home owners did not realise they had to repay the capital at the end of the loan, but surely these are a minority. And interest-only loans are a cheaper way for first-time buyers to get a foot on the ladder.

The FSA is also apparently trying to ensure that borrowers can always pay their mortgage over a 25-year period - so if you take a £240,000 32-year loan, the FSA wants to calculate your ability to repay over 25 years. Quite why is anyone's guess, but the pincer movement of the FSA and the Bank of England risks making home ownership a pastime for only the rich and middle-aged in future.

Certainly we must try to prevent people borrowing what they cannot repay, but to punish a generation by keeping them out of the housing market is absurd. And if people cannot buy or move home, their chance of being mobile enough to look for work will be zero.

So the problem is caused by a variety of factors, but not of course thet house prices are too high.

Also, what does she mean in the last paragraph? It makes no sense whatsoever.

If they cannot put down roots, they are mobile by default.

Where do they find these people?

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The rents a re too high too - min wage - live at home the only option.

What a craphole the UK has turned into.

you could argue the rents are too low in the uk, nobody has yet managed to come up with a good reason why a Landlord shouldnt have prima noctae rights when a couple first move in to one of their properties

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This angered me when I read it Friday.

Here's a draft of a letter have sent to Shapps this weekend:

Dear mr schnapps. 

I write with reference to the news articles stating that you are calling a summit of mortgage lenders to discuss why they are "not helping first time buyers". but bank lending is far from the problem that first time buyers face, at least not anymore. My partner and I are aspiring first time buyers and I can assure you that the last thing we want is for a bank to lend us a 90% LTV mortgage at 5 times our income, which is what we would need for a modest first time buyer property in our local area. Even at a favourable interest rate the repayments would be crippling and entirely unsustainable as interest rates will inevitably rise. What first time buyers need is simply lower house prices. Banks requiring a minimum of 25% deposit is not an issue if the cost of the house is affordable to begin with. The answer is certainly not increased bank lending. I'm sure you understand all too well the consequences of ever increasing mortgage lending as we are still suffering from fallout today. 

The benefits of affordable housing stretch far beyond that of future generations of buyers. Yes it will cause short term pain for some homeowners with large mortgages but in the long run lower house prices mean smaller mortgages and lower repayments. People would spend less of their income on servicing huge mortgage debt and have more disposable income to spend in the wider economy. These lower living costs would mean lower wages can be paid without lowering living standards. A more varied range of industries would once again become financially viable in particular manufacturing industries could return from overseas creating employment and prosperity. Rather than an economy relying on unsustainable financial services.  The housing boom of the last decade has created a millstone around the neck of this country's economy. Much of Europe and the U.S. Have shed their millstones and so can start to rebuild there economies. Whereas ours is as heavy as ever  and we risk being left behind. 

The last government actively encouraged the unsustainable housing boom and so far it seems that the coalition is not prepared to tackle the problem either.  Building more houses is a very welcome part of the solution but it remains to be seen whether the localism bill will help or hinder this solution. More important than this is that mortgage lending must not be allowed to get out of control again. The FSA mortgage Market review is essential in this respect and to prevent the mistakes of the past, but I fear that the FSA will buckle under the pressure from the mortgage lenders who, it appears, do not like the idea of only lending to borrowers who can afford to repay the loan! I'm sure they will use the opportunity of your meeting to voice their unhappiness about the FSA proposals. 

A period of below wage inflation house price increases is not a viable option. It would take more than twenty years for prices to return to long term levels of affordability if prices were to increase at 2% below wages. 

I would like your assurance that the coalition government is not about to make the same mistakes as the last. 

Yours Sincerley

'Pent Up'

This is a rough draft and I had corrected a few things and tweaked it slightly in the one I sent although I didnt save that copy.

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The nation is still in the Entitlement mind set.

everyone is a winner...failure is not an option.

and that applies to asset prices as well as other endeavours.

for house prices to fall, that means borrowers will fail... cant have that...the shame, the shame.

OMG, its snowing...what are the GMen doing about it?? God forbid the people are asked to stand on their own two feet.

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This angered me when I read it Friday.

Here's a draft of a letter have sent to Shapps this weekend:

Is it OK if I do his reply?

Shapps2.jpg

Dear mr schnapps.

I write with reference to the news articles stating that you are calling a summit of mortgage lenders to discuss why they are "not helping first time buyers". but bank lending is far from the problem that first time buyers face, at least not anymore. My partner and I are aspiring first time buyers and I can assure you that the last thing we want is for a bank to lend us a 90% LTV mortgage at 5 times our income....

post-15752-0-90730300-1296416642_thumb.jpg

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I doubt he will read it at all. More likely one of his minions. But at least this time he can't palm me off with the usual "we'll build more houses", " more lending to first time buyers" ******** like usual. Although I didn't forget to mention shared ownership so no I think his reply will be probably be pointing out the benefits of that.

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Of course they will be Denied mortgages , you cannot run a house if it was free on £6 gross an hour , never mind take out a mortgage to buy it and £6 an hour is the new default wage for most of the next generation or those in that generation who can find a job.

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Of course they will be Denied mortgages , you cannot run a house if it was free on £6 gross an hour , never mind take out a mortgage to buy it and £6 an hour is the new default wage for most of the next generation or those in that generation who can find a job.

The youngsters are unable to buy without help with a large deposit.....the olderns can't afford to raise the money from their dead money assets, anyway their pensions are shrinking in real terms and they may have to sell and downsize to live on the proceeds if they don't happen to have a working member of family that lives with them to help with the bills.

Fewer people can afford to buy alone and fewer people can afford to rent alone.......no funds from banks, work or family = lower house prices to balance the differential......anyway think yourself lucky the banks will not lend now and grab yourself a bargain soon. ;)

Edited by winkie

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THis could be a huge blessing in disguise tbh. As it will eventually make many realise that simply owning a home isn't the aspiration is is made out to be. As well as the fact that the world is a large varied place to explore without anchoring yourself to the ground.

Or becoming a mortgage slave.

Looks like a MEGA HPC to come eh as the entire bottom of the market has been cut away.

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There was an article about this in this month's Cosmopolitan magazine.

Basically saying that 25 year olds graduated with student loans, now no jobs and houses too expensive. I know not that surprising but was surprised to see it there!

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Of course they will be Denied mortgages , you cannot run a house if it was free on £6 gross an hour , never mind take out a mortgage to buy it and £6 an hour is the new default wage for most of the next generation or those in that generation who can find a job.

I think I was wrong when I thought housing was 50% overvalued at the peak. Suspect long term it is more like 70%. The historical ratios are no longer pplcable because the future has been re-written thanks to near history pillaging of the economy.

Edited by OnlyMe

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It's like lemmings complaining there aren't enough to cliffs to throw themselves off. :lol:

What if she retitled the article ' Massive debt burden denied to a Generation'?

The unexamined premise at the root of her thinking is that houses will always appreciate in value- the idea that this may not be true is so outlandish that it simply never enters her head.

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The rents a re too high too - min wage - live at home the only option.

What a craphole the UK has turned into.

Agreed - I'm still living at home. Both mortgage or rent would be too high for me to lead a successful life otherwise (you get the drift)

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There was an article about this in this month's Cosmopolitan magazine.

Basically saying that 25 year olds graduated with student loans, now no jobs and houses too expensive. I know not that surprising but was surprised to see it there!

25 years ago most 25 year olds had bought their own places . Quite a few if married had had kids .

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nobody has yet managed to come up with a good reason why a Landlord shouldnt have prima noctae rights when a couple first move in to one of their properties

You seem to be arguing for the legalisation of rape, is that what gets you off?

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  • 309 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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