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Giordano Bruno

Mortgage Drought Could 'kill Housing Recovery Stone-Dead' Next Month

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“Most lenders would be uncomfortable with mortgage payments that high as a share of income. To put it in context, to bring mortgage payments down to their current share of income with a mortgage interest rate of 6pc would require a doubling in the average deposit from 20pc to 40pc. That would suggest a much greater number of first-time buyers will be refused a mortgage once the Mortgage Market Review comes into force.”

Or alternatively they could buy a cheaper house???

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Mortgage drought could

Sanity at last? :blink:

Not really.

He lists all the awful things that will reduce the number of mortgages available, but ignores the obvious.

i.e. House prices must fall, then people will be able to afford them.

The comments section is typical of the brain washed sheeple, complaining of the things to be included in the test.

BUT surely, a responsible borrower would want to do this to find out if they truly can afford a mortgage.

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So house prices are not going UP UP UP UP UP

I simply can't believe that anyone could be so mean as to introduce "onerous 'affordability' rules" can you ?

They must be mad surely to ensure people and lenders can afford to loan in todays bubbled markets.

So what does this article say about the HTB1 & HTB2 if lenders already do not want to lend 20pc of the property value, so under the "onerous 'affordability' rules" and moderate interest rate rises , shifting mortgage to income from 19pc to more than 27pc (higher than the level seen before the financial crisis) :

“Most lenders would be uncomfortable with mortgage payments that high as a share of income. To put it in context, to bring mortgage payments down to their current share of income with a mortgage interest rate of 6pc would require a doubling in the average deposit from 20pc to 40pc. That would suggest a much greater number of first-time buyers will be refused a mortgage once the Mortgage Market Review comes into force"

So it wouldn't suggest that house prices are UNAFFORDABLE then?

So what will the government DO bring in help to lend 40pc deposits?

Surely this is a disgrace how can anyone suggest that properties should be AFFORDABLE?

Still good to hear there are ways round the "affordability" criteria and that " lenders can choose to use different measures for stress testing" perhaps the one which includes property only goes UP UP UP and the tax payer will lend you the deposit !

This scenario appears to have been left out of the unending RAMPING of late and out of this article this week

Dramatic Scenario of pushing irs to 1.75%

Not being very bright, can someone explain, are the lenders not lending the 20% deposit which the government ARE lending buyers, because the lenders think house prices need to come down 20% and/or because they do not want to lend at more than 19% loan to gross income ?

So if lenders will not lend at more than 19% of gross income, are we saying that the government under HTB ARE encouraging lending which is UNAFFORDABLE and the reason they are encouraging UNAFFORDABLE lending is to keep house prices UNAFFORDABLE, is that correct ?

So will they from July have to start offering 40% deposits?

And if they don't, what will happen to house prices?

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The Halifax mortgage calculator allows a couple both earning £50k before tax to borrow £430k

http://www.halifax.co.uk/mortgages/forms/minicalc/container.asp

Net monthly income on £50k is £2997 gross is £4,167

http://www.thesalarycalculator.co.uk/salary.php

£430k 25 year mortgage at 5% costs £2,514 a month

http://www.drcalculator.com/mortgage/uk/

So mortgage is 42% of net or 30% of gross incomes

(2 x £25k earners can borrow £215k so the same 4.3 x household income, net combined income £3,301, mortgage £1,257 so 38% of net income)

They say families are struggling..... look over there>>>> energy bills have gone up a bit.

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What recovery ?

Prices have been going up. That's not a recovery, that's a return to the insane bubble that collapsed the banking system.

Some people are just stupid I guess.

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Yes, ladies and gentlemen, checking whether you're likely to be able to afford paying your mortgage over a 25 year period is now considered "onerous".

Personally, I just think they write like that to provoke HPCs into posting links here, which gets them more eyeballs and therefore ad revenue.

Mind you, I might be a tad cynical. Maybe she's just got a vested interest in higher house prices.

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What share of income? What, 27%????

Hmmm. I can't imagine many FTBers before the 1990s would've paid 27%. A mere 54% would've looked attractive in the 1980s boom. Surely at least some of the folks in charge remember those days, or did they all have BoMD?

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Mind you, I might be a tad cynical. Maybe she's just got a vested interest in higher house prices.

Seems highly plausible. Articles like that are designed to influence both the public and policymakers. This one should dampen the public's expectations, but at the same time warn off policymakers from meaningful new rules.

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Grant Shapps stymied the MMR in Nov 2010

http://www.independent.co.uk/news/business/news/i-would-have-been-denied-mortgage-says-minister-2145051.html

Backed up by Cameron Jan 2011

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8242121/Banks-have-gone-too-far-in-restricting-mortgages-says-David-Cameron.html

Mortgages of 4.3 x equal joint incomes = 8.6 x a single income. Higher multipliers of combined incomes are totally masking affordability compared to historical levels.

Moreover, its own in-house research suggests that households have become indebted in the past year – such that a fifth of households are now nursing mortgage debt worth five times their incomes

highloantoincomes.jpg

http://www.edmundconway.com/2013/11/28/

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.....no, just common sense, maybe some sanity will enter the market. :mellow:

That's precisely why nothing will change at the moment. There is still too much sanity about and people talking about bubbles here and there.

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.....no, just common sense, maybe some sanity will enter the market. :mellow:

Yes and it only took them 7 years to work it out.

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Onerous "affordability" rules... you mean like the state may force people to live within their means? Noooooooo......

link

The main change is that you will need to show you can comfortably afford your mortgage when you apply.

This will involve providing evidence of your income and showing that you can afford the repayments on top of your other essential spending.

...

However, you will still need to show that you can afford to repay what you borrow without relying on your property growing in value - something that may prove difficult if you're an older borrower relying on a limited retirement income.

...

The new rules don’t specifically prevent you from being able to get a mortgage if you've got poor credit.

But they do state that you MUST get advice if you apply for a mortgage with the intention of using it in part to consolidate debts or increase your borrowing.

...

If you apply for an interest only mortgage you will have to show the lender how you're going to re-pay the loan at the end of the term.

Applications that rely on using an increase in the value of the property to clear the mortgage will not be accepted.

...

The new affordability checks mean it will become more difficult for newly self employed people to get approved for a mortgage because you now need to prove your income

...

The new mortgage rules will apply equally to those looking to get their first mortgage as they will to those looking to remortgage.

This means you'll still need to pass affordability checks before you can switch to a new deal even if you've already got a mortgage.

These 'rules' are hardly onerous.

It's a sad state of affairs when such 'rules' have to be put in place to stop people lying. Lying all the time.

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That's precisely why nothing will change at the moment. There is still too much sanity about and people talking about bubbles here and there.

...sentiment will change things around quickly, fewer will want to buy because of the restrictions, the feeling of being tied into a large amount of debt, lack of freedom to move, and stagnation in the market.......why dose yourself up for many years of inflexibility when you don't have to.....it is not as if your debt is making money any more, when there are now more easy options and choices coming onto the market. ;)

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Perhaps we will see a help to buy help to buy scheme where the Government lends you the money to allow you to qualify for help to buy?

I have no doubt that 'free market' Osborne is working on this even as we speak. :D

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Perhaps we will see a help to buy help to buy scheme where the Government lends you the money to allow you to qualify for help to buy?

I have no doubt that 'free market' Osborne is working on this even as we speak. :D

If only it was help to buy....more like help someone to off load an unwanted property, keeps things moving, generating taxes keeping people in jobs.....transferring property is a major part of our economy....... ;)

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Perhaps we will see a help to buy help to buy scheme where the Government lends you the money to allow you to qualify for help to buy?

:lol::lol::lol:

Nothing surprises these days.

Edited by awaytogo

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Yes and it only took them 7 years to work it out.

No, they knew right away, they bought themselves 7 years before people started to get serious p*ssed off about it.

The last 7 years have ben about saving the bankers necks, not about peoples house prices. The bankers will take the indebted idiots houses and the governments 20% deposit when they think they idiots have dried up.

Why there are not crowds of people outside Westminster on a daily basis demanding an end to this, I will never know.

Saying that, maybe there is and the BBc aren't telling us tongue.gif

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No, they knew right away, they bought themselves 7 years before people started to get serious p*ssed off about it.

The last 7 years have ben about saving the bankers necks, not about peoples house prices. The bankers will take the indebted idiots houses and the governments 20% deposit when they think they idiots have dried up.

Why there are not crowds of people outside Westminster on a daily basis demanding an end to this, I will never know.

Saying that, maybe there is and the BBc aren't telling us tongue.gif

Why are there no crowds of people outside Westminster on a daily basis? The 99% are greater than the 1% so what does it take to start a revolution?

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Why are there no crowds of people outside Westminster on a daily basis? The 99% are greater than the 1% so what does it take to start a revolution?

Ask Egypt. Or Thailand. Or Ukraine. Or Syria. Or Turkey. Protests with differing outcomes.

Or in relatively recent times, other countries such as Venezuela or Iran.

No, wait, we don't have agents provocateurs stirring us. We lack the common theme of elected governments which the West has problems with and thinks it can replace through civil unrest. And the East isn't in that game any more.

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