MAIN HELP TO BUY MARK2 THREAD -

[koala_bear]

HTB1 doesn't particularly create chains of people moving due to the level of FTBs going for new build - hence very small multiplier effect from a transaction. Is HTB2 partially a way of creating more viable chains with multiple transactions (and hence more EA commission stamp duty, removals and arrangement fees).

With extra stamp duty the government will get more than enough to cover the normal rate of repossession if prices drop 10% (and repos even more).

[FreeTrader]

I'm a little sceptical of the supposed reluctance of a number of the lenders to participate in HTB2. It sounds more like a negotiating tactic to me – they know Osborne is keen to have his pre-election mini-boom and consequently they can hold out for generous terms in respect of fees and capital relief.

Look at the flip side if they don't join up – on the proposed fee structure that has already been reported from several sources, a non-insured lender will be at a competitive disadvantage to an insured one.

As for HSBC walking away, the FT article says the company "is 'supportive' and is understood to be considering launching a product under the scheme as early as next week".

This is a high profile politically-motivated scheme, and if you don't participate then there's a danger you get to sit on the naughty step. The government can make life very difficult for any institution that embarrasses it, especially in the present regulatory environment.

[koala_bear]

I'm a little sceptical of the supposed reluctance of a number of the lenders to participate in HTB2. It sounds more like a negotiating tactic to me – they know Osborne is keen to have his pre-election mini-boom and consequently they can hold out for generous terms in respect of fees and capital relief.

Look at the flip side if they don't join up – on the proposed fee structure that has already been reported from several sources, a non-insured lender will be at a competitive disadvantage to an insured one.

As for HSBC walking away, the FT article says the company "is 'supportive' and is understood to be considering launching a product under the scheme as early as next week".

This is a high profile politically-motivated scheme, and if you don't participate then there's a danger you get to sit on the naughty step. The government can make life very difficult for any institution that embarrasses it, especially in the present regulatory environment.

Is suspect we will see a slow initial take up of HTB 2 by the banks as they get their new HTB2 products calibrated properly.

HSBC may participate just to tick the box for exactly the reasons you say but not do massive lending - they may prefer to stick to their more conservative lending model.

The lenders would be silly not to hold out for a better deal especially is some of them don't actually need the scheme.

Edited October 2, 2013 by koala_bear

[Reck B]

Received this yesterday from a local estate agent. They seem pretty excited about HTB.

What colour crayon did he use?

[dances with sheeple]

If you look at the Edinburgh Latest thread it is obvious that the tide is going out fast in less desireable/starter areas, will HTB be able to stem the flow?

[Venger]

Is suspect we will see a slow initial take up of HTB 2 by the banks as they get their new HTB2 products calibrated properly.

HSBC may participate just to tick the box for exactly the reasons you say but not do massive lending - they may prefer to stick to their more conservative lending model.

Dysfunctional and damaging market, when some lenders can not see the case to approve a mortgage application, but on the other side RBS or Lloyds or even Nationwide handing out HtB2 mortgage debt to entitled young-uns.

The HtB lending banks getting short term boost of writing mortgages, although mortgage-books have value. Banks have sold off plenty of their debts to others at big discount. I wonder what global markets would price those mortgage books up at, complicated by Gov promises. Maybe they'd stay away from them.

Don't know how much impact the policy will have, but yesterday the main topic of conversation at one end of my current office (where a number of grads/early 20s) was all about which between H2B1 and H2B2 they 'were going to go for'.

[Venger]

Cameron was interviewed by Sarah Montague on Today this morning and when questioned about the almost universal criticism directed towards HTB he told her that she needed to get out more and listen to what ordinary people who cannot get a mortgage are saying about housing.

http://www.bbc.co.uk...amme-broadcasts (Cameron gives his views on HTB at 2:15.21)

Then, she moved to what is – for me – the killer point. 'You were very critical about Ed Miliband for interfering in the energy market in the way that he did. What is different about interfering in the housing market?'

'The big difference today is that the mortgage market isn't working… there is a market failure here which the government is trying to correct which will help hard-working people.'

But this – market failure – is precisely what Miliband says about the energy market. Having trawled the bars last night, I can tell you that many Conservatives believe their position is identical.

http://blogs.spectat...my-help-to-buy/

Thanks for the link, 7YI, to latest FLS usage data, and an interesting read. ('Taking FLS funding while net lending is reducing is expensive. Lenders are charged a penalty for failing to expand lending while in receipt of FLS funding.')

[koala_bear]

http://blogs.spectat...my-help-to-buy/

Thanks for the link, 7YI, to latest FLS usage data, and an interesting read. ('Taking FLS funding while net lending is reducing is expensive. Lenders are charged a penalty for failing to expand lending while in receipt of FLS funding.')

Nice to know non HPCers thinking the same way

[The Knimbies who say No]

Nice to know non HPCers thinking the same way

Douglas Carswell MP doing a live Q&A on the Telegraph website and this can also be accessed via the hashtag #askcarswell

http://blogs.telegraph.co.uk/news/damianthompson/100239036/douglas-carswell-qa/

Whadya know, HTB came up.....

Comment From Alan Robertson

My local MP (Con) strongly supports the extension of debt servitude via Help to Buy. His majority is circa 2,500. Should I vote for him?

3:07

Douglas Carswell:

Do support him. But send him a copy of von Mises and he may one day see the error of his ways.

Fat chance, Dougie.

[wonderpup]

HSBC may participate just to tick the box for exactly the reasons you say but not do massive lending - they may prefer to stick to their more conservative lending model.

Or stick to laundering drug money.

[Lambie]

Or stick to laundering drug money.

given the choice of dealing with politicians or drug dealers, I'd go for the dealers every time.

At least they're honest.

[The Knimbies who say No]

Aldermore sort of commit to HTB:

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10351243/Third-lender-commits-to-Help-to-Buy-mortgage-scheme.html

They represent a small fraction of the lending market.

The article states that although HTB2 is being launched early, access to the guarantees will not be allowed (and therefore completion of the purchase delayed) until 2nd Jan 2014. It all seems a bit amateurish, if correct.

[FreeTrader]

Posting for comparison:

http://www.leedsbuildingsociety.co.uk/mortgages/rates-high-loan-to-value.html

[zugzwang]

Aldermore sort of commit to HTB:

http://www.telegraph...age-scheme.html

They represent a small fraction of the lending market.

The article states that although HTB2 is being launched early, access to the guarantees will not be allowed (and therefore completion of the purchase delayed) until 2nd Jan 2014. It all seems a bit amateurish, if correct.

So it's not really starting 'til Jan 1st, 2014 after all?

[The Knimbies who say No]

So it's not really starting 'til Jan 1st, 2014 after all?

Maybe being able to get some loan admin done ahead of the start date is useful. Dunno really. It's a bit misleading though.

I wonder whether a bit of gazumping might be on the cards for those that get in early and seem to have a purchase in the bag, and are waiting until January for completion. Can the exchange of contracts be done some time before completion, and would this stop a gazumper?

[FreeTrader]

Maybe being able to get some loan admin done ahead of the start date is useful. Dunno really. It's a bit misleading though.

I wonder whether a bit of gazumping might be on the cards for those that get in early and seem to have a purchase in the bag, and are waiting until January for completion. Can the exchange of contracts be done some time before completion, and would this stop a gazumper?

We need to see the small print, but several sources over the past few days have said that prospective buyers will only be able to get approval for a HTB2 mortgage from next week, with completion in the New Year at the earliest when the funds can be released with the guarantee attached.

It may not matter that much because the buying process is currently taking so long anyway, but it could leave some purchasers vulnerable to gazumping. They might be able to avoid this with early exchange and long completion, but this can be a risky game, particularly in the winter months when the seller may have moved out after exchange, leaving the property empty (unless things have changed, the buyer is responsible for insuring the property once exchange has taken place, even though he/she has no access).

[HPC=dream]

We need to see the small print, but several sources over the past few days have said that prospective buyers will only be able to get approval for a HTB2 mortgage from next week, with completion in the New Year at the earliest when the funds can be released with the guarantee attached.

It may not matter that much because the buying process is currently taking so long anyway, but it could leave some purchasers vulnerable to gazumping. They might be able to avoid this with early exchange and long completion, but this can be a risky game, particularly in the winter months when the seller may have moved out after exchange, leaving the property empty (unless things have changed, the buyer is responsible for insuring the property once exchange has taken place, even though he/she has no access).

This is correct.

[The Knimbies who say No]

We need to see the small print, but several sources over the past few days have said that prospective buyers will only be able to get approval for a HTB2 mortgage from next week, with completion in the New Year at the earliest when the funds can be released with the guarantee attached.

It may not matter that much because the buying process is currently taking so long anyway, but it could leave some purchasers vulnerable to gazumping. They might be able to avoid this with early exchange and long completion, but this can be a risky game, particularly in the winter months when the seller may have moved out after exchange, leaving the property empty (unless things have changed, the buyer is responsible for insuring the property once exchange has taken place, even though he/she has no access).

Interesting regarding potential insurance pitfalls. There's a bit over 12 weeks from the start of next week until the new year, might be just long enough for an HTB2 early bird to get a bit twitchy but likely not a big deal as you say.

[zugzwang]

Interesting regarding potential insurance pitfalls. There's a bit over 12 weeks from the start of next week until the new year, might be just long enough for an HTB2 early bird to get a bit twitchy but likely not a big deal as you say.

But why aren't private mortgage insurers kicking up a fuss? At first glance they stand to lose out massively. Are they getting a cut too?

[The Knimbies who say No]

But why aren't private mortgage insurers kicking up a fuss? At first glance they stand to lose out massively. Are they getting a cut too?

It's a good question. Maybe HTB2 fees are above their own in any case.

Wouldn;t be the first time that private enterprise has been driven out to make room for more crony capitalism.

People talk disparigingly about the Tories selling things off in the past, but aren't they making up for it now.

[FreeTrader]

Zoopla claims that it's a myth that buyers won't be able to complete before Jan 2:

UPDATED: Treasury confirms Help to Buy story broken by Zoopla

Borrowers will be able to buy a home before January with the assistance of the Government’s Help to Buy mortgage guarantee scheme, the Treasury has confirmed.

It was previously thought that borrowers could apply for the deals from next week, but would have to wait until January before any mortgage money was released – as inaccurately reported by the BBC.

But mortgage brokers described the Government’s January start date for the guarantees as ‘arbitrary’, saying lenders could complete on the mortgage applications this month.

Lenders can proceed with the applications as it is technically impossible for a mortgage to default in the time between now and when the guarantee comes into force on January 2. If a mortgage defaults after this date, it will be covered by the Government’s guarantee.

It means thousands of borrowers can use the deals to move home with just a 5 per cent deposit – and could be in their new home well before Christmas.

http://blog.zoopla.co.uk/2013/10/03/breaking-borrowers-can-buy-home-before-january-using-governments-help-to-buy-mortgage-guarantees/

[FreeTrader]

Treasury minister Sajid Javid when asked if he's comfortable with taxpayers underwriting the risk of borrowers defaulting on HTB2 loans:

"It's a risk the taxpayer doesn't really have, and the reason is that when we announce the pricing of this next week, it will be clear that it's commercially priced, and so it's priced in a way that the government will break even on this. Yes, there will be contingent liabilities that the Government rides as part of the mortgage guarantee programme, but the Government will be breaking even so there's no effective taxpayer subsidy, and that's what makes it even more powerful."

http://www.bbc.co.uk/news/uk-politics-24382017 [at 7.33]

[zugzwang]

Zoopla claims that it's a myth that buyers won't be able to complete before Jan 2:

http://blog.zoopla.c...age-guarantees/

That's cleared that up then. But still no admission that mortgage insurance is for the lender not the borrower. As for the guff about buying with a 5% deposit - don't need HTB for that, just a more modest property and a better credit score.

[zugzwang]

Treasury minister Sajid Javid when asked if he's comfortable with taxpayers underwriting the risk of borrowers defaulting on HTB2 loans:

"It's a risk the taxpayer doesn't really have, and the reason is that when we announce the pricing of this next week, it will be clear that it's commercially priced, and so it's priced in a way that the government will break even on this. Yes, there will be contingent liabilities that the Government rides as part of the mortgage guarantee programme, but the Government will be breaking even so there's no effective taxpayer subsidy, and that's what makes it even more powerful."

http://www.bbc.co.uk...litics-24382017 [at 7.33]

The increase in stamp duty will offset losses from a future house price crash? Insurance premiums will be paid by borrowers as with private mortgage insurance but made tax deductible?

[kilroy]

Treasury minister Sajid Javid when asked if he's comfortable with taxpayers underwriting the risk of borrowers defaulting on HTB2 loans:

"It's a risk the taxpayer doesn't really have, and the reason is that when we announce the pricing of this next week, it will be clear that it's commercially priced, and so it's priced in a way that the government will break even on this. Yes, there will be contingent liabilities that the Government rides as part of the mortgage guarantee programme, but the Government will be breaking even so there's no effective taxpayer subsidy, and that's what makes it even more powerful."

http://www.bbc.co.uk/news/uk-politics-24382017 [at 7.33]

MBIA/Fannie/Freddie priced commercially as well............

Will be interesting to see how it is accounted for in gov books.