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Institute Of Housing Calls For Reintroduction Of I/o Mortgages

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Unsurprisingly, rent-a-quote VI Ray Boulger agrees: It's absolutely absurd to lend people an eye-watering sum of money and expect them to be repay it in a timely fashion with the cost of living shooting up the way it is.

Leave that sort of thing to the Continentals, we're much more forward looking over here.

Ray Boulger, from mortgage adviser John Charcol, said restrictions on interest-only residential mortgages had "gone too far". The mortgage market review, which comes into force this month, will worsen the situation further for first-time buyers, he said.

"We are already coming across a number of examples of lenders' requirements which defy common sense."

http://www.ft.com/cm...l#axzz2yxyMlggZ

More first-time buyers would be able to own property if interest-only mortgages were made available to them, a study by the Institutue of Housing has concluded.

Interest-only mortgages - where monthly payments cover just the interest part of the bill, and do not go toward reducing the debt - were widely popular before the banking crisis. But since then they have been all but banned under new, tougher rules.

Landlords are exempt from the rules, as buy-to-let lending is not regulated as tightly.

The difference creates a "substantial advantage" for landlords, according to the authoritative UK Housing Review 2014, an annual publication by the Institute.

It said: "there is one important respect in which investors in private renting are provided with a significant competitive advantage compared to first-time buyers. This arises from the different regulatory stance taken towards the mortgage market for first-time buyers and the market for buy to let mortgages for landlords."

Its figures showed that renting was more expensive in all regions than the cost of meeting interest-only mortgage payments. So if someone renting were able to borrow an interest-only loan, not only would they become property owners but they would see a cut in their monthly outgoings.

Rents_vs_Mortgage_2882997a.PNG

http://www.telegraph...ime-buyers.html

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He is absolutely right we need those125% IO mortgages as well, what could possibly go wrong??

The only problem with 125% mortgages was that the banks had to borrow short from the markets. If the Bank of England could supply the finance directly there'd be nothing wrong with 250% mortgages. In fact we could increase the amount of debt granted to each homeowner every year as a way of 'sharing the proceeds of growth' with hard borrowing families.

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"We are already coming across a number of examples of lenders' requirements house prices which defy common sense."

Fixed it for you, Ray, fixed it...

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More first-time buyers would be able to own property if interest-only mortgages were made available to them, a study by the Institutue of Housing has concluded.

IMHO they don't own a house, but an option to buy on a fixed date at a price set today. Looks good if you're an inflationista, pretty awful otherwise.

Edited by Frugal Git

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I don't see anything wrong with IO mortgages as such. But their must be a limit put on how much people can borrow to buy a house. 4x salary max.

If I could change my mortgage to IO I would paying £40 a month till death makes more sense to me than paying £400 a month for the next 15 years. I think the brake even point would be when I am 200 years old.

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Quite a simple solution. Just apply for a BTL mortgage!

...you need money, cash, reddies, deposit for that....maybe you could borrow it. ;)

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Ray Boulger :rolleyes:.

This is the second time in as many days that Ray Boulger has reappeared out of the woodwork. He's been so quiet recently I thought his company might have gone bust again.

Another one of Osborne's zombies brought back from the dead.

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As somebody mentioned above ... this appears to be worse than 2007! The lessons of 2007 have not been learned ... instead the folly of 2007 is seen as a BENCHMARK ... the Holy Grail to Recovery.

Bloody Idiots!

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No doubt the IO figures don't include the cost of maintenance and the stamp duty cheque you have to send Osborne for the privilege of being allowed to move house.

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I don't see anything wrong with IO mortgages as such. But their must be a limit put on how much people can borrow to buy a house. 4x salary max.

If I could change my mortgage to IO I would paying £40 a month till death makes more sense to me than paying £400 a month for the next 15 years. I think the brake even point would be when I am 200 years old.

how the fck do you know what you would be paying on an IO mortgage till death, given the IO rate was 14% twenty five years ago and 7% twenty five years before that, the interest rate may be anything between 0% and 30% in that period, are the UK public genuinely that retarded and self interested that anything beyond yesterday is irrelevant? if so you are perfectly suited to the archaic state model of whats mine is mine and whats yours is too

Edited by Georgia O'Keeffe

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how the fck do you know what you would be paying on an IO mortgage till death, given the IO rate was 14% twenty five years ago and 7% twenty five years before that, the interest rate may be anything between 0% and 30% in that period, are the UK public genuinely that retarded and self interested that anything beyond yesterday is irrelevant?

Not disputing the point about predicting future rates, but the 14% (wasn't it 12%? can't recall exactly and I was impacted) was very brief and wage inflation wasn't far behind.

30% looks a tad hyperbole. :D

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how the fck do you know what you would be paying on an IO mortgage till death, given the IO rate was 14% twenty five years ago and 7% twenty five years before that, the interest rate may be anything between 0% and 30% in that period, are the UK public genuinely that retarded and self interested that anything beyond yesterday is irrelevant?

The only way I can see interest rates going up massively is if we get 1970 type inflation. 1970 inflation made mortgage debt disappear.

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Not disputing the point about predicting future rates, but the 14% (wasn't it 12%? can't recall exactly and I was impacted) was very brief and wage inflation wasn't far behind.

30% looks a tad hyperbole. :D

interest rates in the uk might be minus 5% in 20 years, it might might be 50% i have forever struggled to understand where NPV has been outmoded by stupidity

Edited by Georgia O'Keeffe

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