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Quarter Of Uk Borrowers Reliant On Help To Buy

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Meanwhile the Bank of Dumb and Mad continues to blindly reinvest their pyramid rewards from Brown. dry.gif

http://www.mortgages...-on-help-to-buy

A quarter of mortgage borrowers reliant on Help to Buy

Mortgage Solutions | 16 Dec 2013 | 10:15

Adam Williams

Over a quarter of Brits seeking a mortgage in the next 12 months are reliant on government schemes such as Help to Buy, according to the Mortgage Advice Bureau.

Research found 12% of UK adults plan to take out a mortgage in the next year to either buy a first home, move between properties or remortgage an existing house.

More than a quarter (28%) of these said they could only afford to do so with the help of a government scheme like Help to Buy.

A further 26% said they could only afford a mortgage with financial support from parents or family with only a third (32%) stating they could obtain a mortgage without any assistance.

The research also said more than 40% of adults surveyed were planning to take out a mortgage between now and the end of 2016, the date when the Help to Buy scheme is expected to end.

Brian Murphy, head of lending at Mortgage Advice Bureau, said: "People are fast realising the wind is blowing in their favour when it comes to joining or moving up the property ladder.

"Buyers are voting with their feet and we are seeing great enthusiasm for low deposit mortgages. The type of 95% mortgages encouraged by Help to Buy are familiar products and part of what's needed in a healthy market to cater for the full range of buyer needs.

"Helping remove the need for hefty deposits is where government support has really come into its own. Some lenders have joined the official scheme while others are offering 95% mortgages on their own. Either way, the end result for homebuyers is better access to mortgages they can realistically afford.

"Lenders are being careful to lend responsibly, with affordability checks in place to protect borrowers against future rate rises. Government help means the Bank of Mum and Dad can take a well-earned break with affordable mortgages in better supply."

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Meanwhile the Bank of Dumb and Mad continues to blindly reinvest their pyramid rewards from Brown. dry.gif

http://www.mortgages...-on-help-to-buy

OK being pretty dumb does "Over a quarter of Brits seeking a mortgage in the next 12 months are reliant on government schemes such as Help to Buy, according to the Mortgage Advice Bureau" equal what the DCLG official said to Mr Benn that is" that because Help to Buy would involve only 2 per cent of the 3.4 million transactions in the housing market over the next three years, “we do not expect the scheme to have a measurable impact on house prices”.

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Looks like a ponzi scheme to me, I'd steer clear.

I agree but it is difficult to avoid it when the UK government, pension funds and banks are so heavily invested in it. When it collapses it will be like a black hole, sucking everything into it.

The UK will end up like Romania.

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OK being pretty dumb does "Over a quarter of Brits seeking a mortgage in the next 12 months are reliant on government schemes such as Help to Buy, according to the Mortgage Advice Bureau" equal what the DCLG official said to Mr Benn that is" that because Help to Buy would involve only 2 per cent of the 3.4 million transactions in the housing market over the next three years, "we do not expect the scheme to have a measurable impact on house prices".

It would appear that Osborne has gone beyond helping the market out - like Nick Leeson in Singapore, he is the f***ing market!

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Yes but how many are simply taking the free money? I'd certainly use HTB even if I didn't need to.

Absolutely, if you were buying then you'd be dumb not to take advantage of 'free money'.

I did that with the 'scrappage scheme' for cars. It was a dumb waste of taxpayer money but since I had an eligible old car and was looking to buy anyway, I was only too happy to take the handout. I was going to end up bearing the costs like every other taxpayer anyway.

However, I could see the housing market becoming addicted to this scheme in the same way that financial markets are addicted to money printing and like QE it being left open ended.

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Yes but how many are simply taking the free money? I'd certainly use HTB even if I didn't need to.

Can you explain why? I can see no reason to use the scheme if one can afford to get a more competitive mortgage on the open market, subject to having a decent deposit. The rates are higher, and there are various conditions (like having to pay back more if prices rise) that are pretty awful.

Indeed, by the look of the guidelines - whether or no they are enforced is a different question - buyers who can afford not to use the scheme aren't allowed to do so (i.e. those with a big (%) deposit).

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Absolutely, if you were buying then you'd be dumb not to take advantage of 'free money'.

I did that with the 'scrappage scheme' for cars. It was a dumb waste of taxpayer money but since I had an eligible old car and was looking to buy anyway, I was only too happy to take the handout. I was going to end up bearing the costs like every other taxpayer anyway.

However, I could see the housing market becoming addicted to this scheme in the same way that financial markets are addicted to money printing and like QE it being left open ended.

Different sort of scheme, but even then, its highly likely that by using scrappage your ability to negotiate of the list price was weakened compared to a cash buyer without a lump to trade in, which would almost certainly negate some of the benefit, if not most.

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Buyers are voting with their feet and we are seeing great enthusiasm for low deposit mortgages cost crack cocaine.

Many will be paying for that enthusiasm later.

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Absolutely, if you were buying then you'd be dumb not to take advantage of 'free money'.

I did that with the 'scrappage scheme' for cars. It was a dumb waste of taxpayer money but since I had an eligible old car and was looking to buy anyway, I was only too happy to take the handout. I was going to end up bearing the costs like every other taxpayer anyway.

However, I could see the housing market becoming addicted to this scheme in the same way that financial markets are addicted to money printing and like QE it being left open ended.

At their height in 2008, Fannie and Freddie owned or guaranteed almost half of the $12tn US mortgage market. :blink:

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Different sort of scheme, but even then, its highly likely that by using scrappage your ability to negotiate of the list price was weakened compared to a cash buyer without a lump to trade in, which would almost certainly negate some of the benefit, if not most.

There was no trade-in - just a 2k straight up discount before even starting price negotiations (my old car would have been worth about £4-500). I just signed a form and some third party came and took away the old motor directly for scrapping, the dealer never touched it.

I negotiated a 2.5k additional discount and I was buying with cash so no finance/PCP/etc to mess around with and confuse the situation. Maybe I could have got 4.5k off just by negotiating but I think that would have exceeded my bargaining skills.

A completely stupid scheme aimed at fabricating a short term boost at the expense of longer term sustainability, underwritten by the taxpayer - but I'd have been dumb not to take the 'free' government cheese.

Similarly with large amounts of 5-yr interest free, taxpayer-underwritten cash for mortgage borrowers available courtesy of our desperate government I'd imagine that many will take advantage. I wouldn't let it tempt me into buying something that I wouldn't otherwise go for but if you are buying and it's there, take it.

The real problem will be people who use the scheme to buy something they couldn't otherwise afford and get landed into negative equity. The banks will be OK of course since the taxpayer pretty much covers any losses they might make from repossession in the event of default.

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Are a quarter of all borrowers - SUB PRIME ?

Much higher than that. Potentially more than half if you include those getting a leg up from FLS and BOMAD too. :o

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I thought HTB was for FTBs only?

HTB1 is FTB only. HTB2 is open to home owners and remortgage customers too (as of today).

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10519972/Help-to-Buy-now-mortgages-are-available-for-borrowers-who-dont-want-to-move.html

Niche bank Aldermore has launched the first Help to Buy mortgage guarantee product that's available for remortgages as well as home purchases.

The two-year fixed-rate mortgage is priced at 5.28pc with a £999 fee. This is considerably more expensive than the cheapest 95pc loan-to-value deal available - Yorkshire Building Society's two-year fix for 4.69pc - which is not part of Help to Buy.

But by being available to existing borrowers who have little equity in their property, and who are paynig a high rate, it could offer some households a way out of the "mortgage trap". But commentators are sceptical about how many people could benefit in practice.

Aldermore has also launched a Help to Buy loan for borrowers with a 10pc deposit. The mortgage costs 4.98pc, fixed for two years, also with a £999 fee.

Last week, Virgin Money launched its Help to Buy offering for borrowers with a 5pc deposit - a two-year fix at 5.29pc and a three-year fix at 5.39pc. It also has a five-year fixed deal priced at 5.49p.

For borrowers with a 10pc deposit, Virgin Money launched a two-year fix at 4.29pc, a three-year deal at 4.69pc and a five-year fix at 4.89pc. The whole range is fee-free.

Virgin said it plans to roll out the deals to remortgage customers in the new year.

Research by the Mortgage Advice Bureau found just over one in four active mortgage seekers can only afford a 5pc deposit.

It said just one in five can put down a deposit of more than 20pc, while almost two thirds are looking for deals with a maximum deposit of 10pc.

There are now five lenders with Help to Buy mortgage guarantee products – Royal Bank of Scotland, Lloyds Banking Group, HSBC, Virgin Money and Aldermore.

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I thought HTB was for FTBs only?

No- the upper limit is 600,000-so they must have remortgage in mind as well. Or maybe they have built the HPI caused by the scheme into the scheme? :ph34r:

There is an alice in wonderland quality to this- if HTB pushes up house prices the 5% deposit needed might start to amount to the same cash down as the 10% level that HTB was supposed to reduce- so we end with with the same barrier to entry, just at a higher level of price.

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No- the upper limit is 600,000-so they must have remortgage in mind as well. Or maybe they have built the HPI caused by the scheme into the scheme? :ph34r:

There is an alice in wonderland quality to this- if HTB pushes up house prices the 5% deposit needed might start to amount to the same cash down as the 10% level that HTB was supposed to reduce- so we end with with the same barrier to entry, just at a higher level of price.

Yeah, you're right:

https://www.gov.uk/affordable-home-ownership-schemes/help-to-buy-mortgage-guarantees

HTB1 was for new-builds only.

Absurd.

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'Research' from the 'The mortgage Advice Bureau'. It sort of sounds like an official body but I bet its just a group of mortgage advisors or ifa's.... :)

Edited by Ash4781

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No- the upper limit is 600,000-so they must have remortgage in mind as well. Or maybe they have built the HPI caused by the scheme into the scheme? :ph34r:

There is an alice in wonderland quality to this- if HTB pushes up house prices the 5% deposit needed might start to amount to the same cash down as the 10% level that HTB was supposed to reduce- so we end with with the same barrier to entry, just at a higher level of price.

Well, it wasn't called moronic and stupid for nothin'.

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