Bloo Loo Posted July 23, 2013 Share Posted July 23, 2013 (edited) But now they will throw it at people who havent had to save a big deposit. My opinion, and quite a simplistic rule, but it applies to almost anything you buy. If you earn the money to buy it, you are more careful. When the govt stumps up a deposit, people are less careful. See the volumes sold for new build HTB. Lots of new builds near us have struggled for ages. Property bee has shown the builders putting up prices, and still they sell all their plots very quickly. If you are buying a house, you simply need to offer more than the next highest bidder. This has created a 2 tier market where those with unearned equity will pay silly money, but generally at the higher end of the market. At the lower end, people who have had to save their 10% plus are much more cautious about buying, and will negotiate. As a result prices in my area at the bottom end of the market have fallen consistently since the short lived the dead cat bounce in spring 2009. However a new breed of buyer is about to be set free. I expect the lower end will be pumped up. I think what you are really describing is a return to LIAR LOANS.. the ability to outbid a competitor is difficult if you are on a salary you have to prove...that extra £5K you need to "win" the house of your dreams comes from more borrowing in most cases....LIAR LOANS acheive this very nicely. Edited July 23, 2013 by Bloo Loo Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted July 23, 2013 Share Posted July 23, 2013 Well, I don't know...... If the government are throwing money at artificially rigging the housing market, who am I to stand in the way of being given an interest free loan for 5 years, after which the interest on it will be 1.75%. I am a cash buyer with pitiful interest rates on my money and have been quite fearful of this scam for a while now, but why not take advantage of it? I mean I can see the government are judasing me with it and screwing me around, by rigging the market, by so why not take their money and screw them back for a change? I could get a mortgage, get their 20%, pay off my mortgage immediately, and voila!! And if the house you buy drops 30% or 40%, would that still represent a good investment? Personally, I'll continue to rent and collect 10% interest, over the next five years, on the money I'd otherwise have tied up in an illiquid, depreciating, asset. Quote Link to comment Share on other sites More sharing options...
TrevorS Posted July 23, 2013 Share Posted July 23, 2013 SO here we have a scheme, ill thought out, pulled apart in public, and today, they are meeting with the beneficieries of this largess and amongst themselves are discussing how it will all work...to EACH SIDES MUTUAL ADVANTAGE. In my view, this meeting is a sign of severe CORRUPTION. Adam Smith: "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty or justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary." Published in 1776. Fresh as paint. Quote Link to comment Share on other sites More sharing options...
winkie Posted July 23, 2013 Share Posted July 23, 2013 How can you pay a mortgage when you can't save a deposit? Why buy an inferior place you will be stuck with when you no longer want it with help that ends up not being helpful? Quote Link to comment Share on other sites More sharing options...
Caveat Mortgagor Posted July 23, 2013 Share Posted July 23, 2013 (edited) I think what you are really describing is a return to LIAR LOANS.. the ability to outbid a competitor is difficult if you are on a salary you have to prove...that extra £5K you need to "win" the house of your dreams comes from more borrowing in most cases....LIAR LOANS acheive this very nicely. A few 95% mortgages are available today. Interest rates at 6.59%+ Current HTB mortgages (on newbuild) are available at circa 3%. What do effect do you think that will have on affordability if the second phase of HTB is funded with similarly cheap money? According to the BBC mortgage calculator, a £100k repayment mortgage over 25 years at 6.59% would cost £688 per month If the mortgage is at 3%, the same £688 would pay for a mortgage of £143800. This means someone who can pony up a poxy 5 to 7 grand can make the payment on a purchase price of £150k, instead of the £105k house they could afford previously. The key will be how expensive these mortgages are in terms of the rate being charged. Edited July 23, 2013 by Caveat Mortgagor Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted July 23, 2013 Share Posted July 23, 2013 A few 95% mortgages are available today. Interest rates at 6.59%+ Current HTB mortgages (on newbuild) are available at circa 3%. What do effect do you think that will have on affordability if the second phase of HTB is funded with similarly cheap money? According to the BBC mortgage calculator, a £100k repayment mortgage over 25 years at 6.59% would cost £688 per month If the mortgage is at 3%, the same £688 would pay for a mortgage of £143800. This means someone who can pony up a poxy 5 to 7 grand can make the payment on a purchase price of £150k, instead of the £105k house they could afford previously. The key will be how expensive these mortgages are in terms of the rate being charged. Which buys what in places people want to live? An ex-council flat above a shop? Prices have to collapse, this scheme won`t replace the LIAR LOAN phenomenon. Quote Link to comment Share on other sites More sharing options...
57percent Posted July 23, 2013 Share Posted July 23, 2013 The key will be how expensive these mortgages are in terms of the rate being charged. Still no mention of the cost to the banks. I suspect it will be very cheap. Quote Link to comment Share on other sites More sharing options...
dkennedy1001 Posted July 23, 2013 Share Posted July 23, 2013 A few 95% mortgages are available today. Interest rates at 6.59%+ Current HTB mortgages (on newbuild) are available at circa 3%. What do effect do you think that will have on affordability if the second phase of HTB is funded with similarly cheap money? According to the BBC mortgage calculator, a £100k repayment mortgage over 25 years at 6.59% would cost £688 per month If the mortgage is at 3%, the same £688 would pay for a mortgage of £143800. This means someone who can pony up a poxy 5 to 7 grand can make the payment on a purchase price of £150k, instead of the £105k house they could afford previously. The key will be how expensive these mortgages are in terms of the rate being charged. This is it in a nutshell. I was going for a mortgage this week on a 500K home and my repayments would have been £2,700 a month. I have now spotted this scheme rolling out in Jnuary and for 5 years my repayments will be £1,800 a month so a saving of £900 a month! These figures are based on the interest rates from phase one offered by Santander. No brainer to hold off till January now... Quote Link to comment Share on other sites More sharing options...
57percent Posted July 23, 2013 Share Posted July 23, 2013 This is it in a nutshell. I was going for a mortgage this week on a 500K home and my repayments would have been £2,700 a month. I have now spotted this scheme rolling out in Jnuary and for 5 years my repayments will be £1,800 a month so a saving of £900 a month! These figures are based on the interest rates from phase one offered by Santander. No brainer to hold off till January now... But they're not the same scheme. Under phase 1, you're only paying interest on 75% of the loan (5% deposit, 20% interest free loan from govt). Under the second phase, you're still paying 95%, but 20% is guaranteed by the govt at a cost (still undefined). The rates will be lower, but not as low as phase 1 and all of the loan. Quote Link to comment Share on other sites More sharing options...
Caveat Mortgagor Posted July 23, 2013 Share Posted July 23, 2013 Which buys what in places people want to live? An ex-council flat above a shop? Prices have to collapse, this scheme won`t replace the LIAR LOAN phenomenon. Maybe I blinded you by giving an example of a £100k mortgage. This effect isnt restricted to people spending such amounts. Think of the figures as being 'for every £100k spent'. The purchasing power based on affordability means from January the buyer with a 5% deposit could spend a little over 40% more than before. In other words, for every £105k they spent before, they will be able to 'afford' to pay £150k when this scheme comes in (again assuming the rates of 3%) How much of a game changer this policy is, will be dependant upon the rates attached to these mortgages. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted July 23, 2013 Share Posted July 23, 2013 Maybe I blinded you by giving an example of a £100k mortgage. This effect isnt restricted to people spending such amounts. Think of the figures as being 'for every £100k spent'. The purchasing power based on affordability means from January the buyer with a 5% deposit could spend a little over 40% more than before. In other words, for every £105k they spent before, they will be able to 'afford' to pay £150k when this scheme comes in (again assuming the rates of 3%) How much of a game changer this policy is, will be dependant upon the rates attached to these mortgages. Fair enough, but having to actually come up with 5 or 10 or 20k is very different to signing up for a Liar Loan, or "getting" 25% on top of the loan for "Improvements"? The borrowing landscape has changed dramatically from the run up to 2007. How many families really have deposits saved in this climate? Quote Link to comment Share on other sites More sharing options...
tomandlu Posted July 23, 2013 Share Posted July 23, 2013 How can you pay a mortgage when you can't save a deposit? Presumably, because you are no longer paying rent? Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted July 23, 2013 Share Posted July 23, 2013 Presumably, because you are no longer paying rent? So are the government providing a rent free period when you can save the deposit? Quote Link to comment Share on other sites More sharing options...
northeast Canuck Posted July 23, 2013 Share Posted July 23, 2013 Heard on the BBC that there will be an upper income limit of £150k (although I cannot find it anywhere written down). If this is the case, then surely it makes a mockery of the whole thing - you can qualify and stress test but not be TOO good or you don't qualify? Seems to me that the upper range of the HTB would be almost impossible to qualify for as you would need the income to get a mortgage for £570k (stress tested), pay the £24k stamp duty, but not make more than £150k? Definitely not thought through properly. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted July 23, 2013 Share Posted July 23, 2013 Whilst you are on to something with the change to the incentives to repossess, the first of the repossessions are unlikely to be be for at least 1 year / 18 months / 2 years (delete as applicable). So how long before the numbers become significant enough to have an impact? The money being thrown at housing will lift prices in the short term. In 3 years time when the bubble blowing stops, the repo's could be picking up pace. Possible perfect storm in 3 years time?? I see this as nothing more than the political game playing that Gordon so loved.... Scorched earth. Leave a horrible sh!tty mess for the next Government to clean up It cannot be just a 3 year scheme. They cannot go from one day people being able to largely ignore 20% of the house price to the next day having to pay it. House prices would collapse. The only way out of a scheme like this, if they want one, is to taper it down. Something like a 2% reduction per year over 10 years or 1% over 20 years. Quote Link to comment Share on other sites More sharing options...
koala_bear Posted July 23, 2013 Share Posted July 23, 2013 (edited) It cannot be just a 3 year scheme. They cannot go from one day people being able to largely ignore 20% of the house price to the next day having to pay it. House prices would collapse. The only way out of a scheme like this, if they want one, is to taper it down. Something like a 2% reduction per year over 10 years or 1% over 20 years. Agreed, but you mean they have thought beyond the next 3 years? I suspect that have only had bullish thoughts so they think this will fix everything. Edited July 23, 2013 by koala_bear Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted July 23, 2013 Share Posted July 23, 2013 It is going to be a helluva mess when it all unwinds, the country I mean, not just this nonsense. Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted July 23, 2013 Share Posted July 23, 2013 (edited) Agreed, but you mean they have thought beyond the next 3 years? I suspect that have only had bullish thoughts so they think this will fix everything. How long will it take to re-sell our housing stock under this scheme? There was a report earlier this year saying it was now valued at £5 trillion (£5.4 trillion in 2007). http://www.savills.co.uk/_news/newsitem.aspx?intSitePageId=0&intNewsSitePageId=120112-1&intNewsMonth=2&intNewsYear=2013 With taxpayers on the hook for 20% surely it's complete currency collapse if house prices fall later on? It isn't like they can raise tax revenues on such an indebted nation is it? Edited July 23, 2013 by Democorruptcy Quote Link to comment Share on other sites More sharing options...
@contradevian Posted July 23, 2013 Share Posted July 23, 2013 (edited) http://www.iod.com/i...not-help-to-buy 'The world must have gone mad - housing market needs help to supply, not help to buy' 23 July 2013 Reacting to the announcement of an extension to the Help to Buy scheme, under which the Government will guarantee part of a home-buyer's mortgage on properties worth up to £600,000, Graeme Leach, Chief Economist at the Institute of Directors, said: "The housing market needs help to supply, not help to buy and the extension of this scheme is very dangerous. Government guarantees will not increase the supply of homes, but they will drive up prices at a time when it seems likely that house prices are already over-valued. "When the scheme is withdrawn any rise in prices that has taken place will be undermined, with potentially disastrous results. There is a real risk that the housing market will become dependent on the underwriting by government, making it very difficult politically to shut the scheme down. This should be of great concern. "The world must have gone mad for us to now be discussing endless taxpayer guarantees for mortgages. "Instead of trying to pump-up prices, the Government should focus on relaxing planning laws and reducing Local Authority charges on developers to make it easier to build more homes." ENDS Edited July 23, 2013 by aSecureTenant Quote Link to comment Share on other sites More sharing options...
tomandlu Posted July 23, 2013 Share Posted July 23, 2013 So are the government providing a rent free period when you can save the deposit? Aren't you rather switching the goalposts on your own question? The deposit is much smaller than would be required otherwise and, from then on, the mortgage payments are instead of rent? I am not, btw, for a moment suggesting anything other than this scheme is barking-mad and vile, but I can see why it might make sense for a young family starting out who haven't quite cottoned on to the serious shafting they are going to get further down the line. I just hope they enjoy raising a family in an overpriced mouse-hole... Quote Link to comment Share on other sites More sharing options...
DTMark Posted July 23, 2013 Share Posted July 23, 2013 Aren't you rather switching the goalposts on your own question? The deposit is much smaller than would be required otherwise and, from then on, the mortgage payments are instead of rent? I am not, btw, for a moment suggesting anything other than this scheme is barking-mad and vile, but I can see why it might make sense for a young family starting out who haven't quite cottoned on to the serious shafting they are going to get further down the line. I just hope they enjoy raising a family in an overpriced mouse-hole... On that subject, there's the next logical extension of this scheme: the mortgage repayment protector. If we ever did see a rise in mortgage interest rates, the government could then step in and hold down rates by providing a government guarantee that your mortgage rate would not rise above a certain amount, giving "confidence" and returning "stability" to the market. Of course, so the theory goes, "the markets" would have their say in the end. But that one's simple - just keep printing more and more money and stealing from pension funds. In that respect there are no "markets". The plates could go on spinning on this one for years. And then there's the other logical extension of this scheme, which I've posited earlier on. Tying together university loans and home loans in one great big package, with the students themselves providing a form of securitisation to help underpin the entire scheme based on the idea that in order to buy product B - the house to live in - the student must buy product A - the university tuition. Keeps the debt ball rolling a bit longer. It doesn't mean that anyone would have to go to university, of course, and incur 30 grand of debt. They would only have to do this if they wanted to be able to afford a home to live in. Which is effectively the same thing. Quote Link to comment Share on other sites More sharing options...
TrevorS Posted July 23, 2013 Share Posted July 23, 2013 'The world must have gone mad - housing market needs help to supply, not help to buy' "Hello? Anybody home? Think, McFly. Think!" Quote Link to comment Share on other sites More sharing options...
Bruce Banner Posted July 23, 2013 Share Posted July 23, 2013 Good grief man, get a grip. The only thing that matters is May 2015; the election. They can worry about all the QE FLS SMI HtB exit strategies later ... probably easier just to let them all become permanent (which was always the plan by the way). With today's breed of career politician there is no plan beyond re-election. Anything can happen and probably will, which is why illiquid assets should be avoided. Liquid cash and the will to move it as and when necessary, is the way to go for me, at least for the foreseeable future. Quote Link to comment Share on other sites More sharing options...
dances with sheeple Posted July 23, 2013 Share Posted July 23, 2013 Aren't you rather switching the goalposts on your own question? The deposit is much smaller than would be required otherwise and, from then on, the mortgage payments are instead of rent? I am not, btw, for a moment suggesting anything other than this scheme is barking-mad and vile, but I can see why it might make sense for a young family starting out who haven't quite cottoned on to the serious shafting they are going to get further down the line. I just hope they enjoy raising a family in an overpriced mouse-hole... They would still need to come up with a deposit of about 20k for a family home in the SE, different to the days of picking an amount of money you want to borrow and signing something? But your point is fair enough,. they don`t need so much deposit. I still think this will just fall flat, there are far too many cross-winds affecting the country`s finances and the sheeple`s finances. Quote Link to comment Share on other sites More sharing options...
57percent Posted July 23, 2013 Share Posted July 23, 2013 They would still need to come up with a deposit of about 20k for a family home in the SE, different to the days of picking an amount of money you want to borrow and signing something? But your point is fair enough,. they don`t need so much deposit. I still think this will just fall flat, there are far too many cross-winds affecting the country`s finances and the sheeple`s finances. As I see it, it will nearly all go to remortgaging. Those on high LTV will be moved as quick as possible to H2B. Win-win for the 'owner' and the bank. Big loss for the taxpayer. Slight loss for HPC as there will be less people needing to sell. Has anyone asked Gidiot how this helps with supply (not that I believe supply is an issue either). Have the opposition mentioned this? It's more of a Labour type policy. Madness. Any way to complain? Quote Link to comment Share on other sites More sharing options...
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