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darkmarket

Guardian: Smaller deposits raise hopes for UK first-time homebuyers

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"Research on the amount of time it takes to save for a down payment on a home suggests buyers have been helped by the greater availability of mortgage loans at higher loan-to-value (LTV) ratios.

The estate agent Hamptons International said that in the final months of 2016 it would take an average single first-time buyer 11 years and nine months to save a 15% deposit. But reducing the deposit to 10% cut the saving time to eight years and three months. For a deposit of just 5% the time to save was four years.

Hamptons highlighted Bank of England figures that suggest such deals with smaller deposits have become more widespread in recent years. The proportion of loans made at a 90% or more LTV ratio was 5% in 2016, up from 3.8% in 2015.

Hamptons said that increasing availability of lending at higher LTV, combined with lower mortgage rates, had improved the ability to buy for first-time buyers.

...Richard Sexton, a director at e.surv, said: “This is a trend which started at the end of last year and has continued into 2017. Likely buoyed by the number of government schemes and low mortgage rates across the board, small-deposit buyers are growing in strength in today’s mortgage market."

Desperate times indeed.

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Why not cut the deposit to 0% and everyone can buy immediately?

Better yet. Give them a further top up of 25% on the mortgage so they can do up their new home on day one.

What could go wrong?

 

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Better still give them a free home and get the tax payer to forward funds to the lender directly.

Financial communism. 

No risk for home owner, no risk for the bank. The only risk certainty is the collapse of the state.

 

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Yah I love reruns. What can go wrong will this, I mean it all worked out so well last time, didn't it?

Being serious this smacks of desperation illuminating how close to collapse things are.

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3 hours ago, Parkwell said:

Why not cut the deposit to 0% and everyone can buy immediately?

Better yet. Give them a further top up of 25% on the mortgage so they can do up their new home on day one.

What could go wrong?

 

Agree agree agree, it's bloody madness - 'make lending easier' - yep, that's the answer, the problem for the last 20 years has plainly been how hard it is to borrow!

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Just BS in a very quiet sales season.

Nice of May yo announce GE. Thats 2017 income gone.

All the EA flyers i get are all about rental servuces. 10 years ago rental income was looked at as sh1t. Now its their main profit centre. Shame its going too.

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Debt is wealth.....inflation is wealth, kills the debt...... work no longer pays to live, work only pays to enable debt.....no asset debt, no work required.....

Debt pays the wages, debt creates inflation to enable more debt.....get it out there, pump it up, kill cash, devalue savings, who needs savings when there is copious free give away debt.....debt keeps people working until they don't.;)

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The main number I took away was that the proportion of LTV at 90% or higher was up from 3.8% (2015) to 5.0% (2016). 

There might well be more products but the number of first time buyers rose by 8% (http://www.telegraph.co.uk/business/2017/02/23/first-time-buyers-keep-housing-market-solid/) last year, and with the spike and then falling away of BTL purchases that alone might explain the movement. 

One thing that isn't mentioned in the article though is that income multiples have started to fall. Before Christmas I had a mortgage offer for 5.2 times joint. Since that expired the best we can get is 4.8. 

Personally I'd happily settle for 100% mortgages capped at 4 times earnings, rather than allowing people to stick 15% down and then borrow much higher multiples. 

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42 minutes ago, Lord D'arcy Pew said:

Better still give them a free home and get the tax payer to forward funds to the lender directly.

Financial communism. 

No risk for home owner, no risk for the bank. The only risk certainty is the collapse of the state.

 

Free home.

You know that's what I don't get.  Maggie selling off all those council houses giving the bankers income through more private sector lending seems really stupid when as gov if wanted to do even better, you'd just build and build tons of new council places, charged to the tax payer with gov like now the main driver of banker credit.

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6 hours ago, darkmarket said:

The estate agent Hamptons International said that in the final months of 2016 it would take an average single first-time buyer 11 years and nine months to save a 15% deposit. But reducing the deposit to 10% cut the saving time to eight years and three months. For a deposit of just 5% the time to save was four years.

And you can obviously cut that down to about 6 month's if you simply stop buying iPhones and going to Starbucks(!)

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35 minutes ago, Diver Dan said:

And you can obviously cut that down to about 6 month's if you simply stop buying iPhones and going to Starbucks(!)

You should write a book!

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6 hours ago, Parkwell said:

Why not cut the deposit to 0% and everyone can buy immediately?

Better yet. Give them a further top up of 25% on the mortgage so they can do up their new home on day one.

All that pretending to have learned lessons and responsibility was getting boring anyway.

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8 hours ago, Parkwell said:

Why not cut the deposit to 0% and everyone can buy immediately?

Better yet. Give them a further top up of 25% on the mortgage so they can do up their new home on day one.

What could go wrong?

 

They've been there down that.. it's called the sub prime mortgages (2003 - 2008). The minds of the mass don't remember it's devastating effects to the financial world.

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8 hours ago, Parkwell said:

Why not cut the deposit to 0% and everyone can buy immediately?

Better yet. Give them a further top up of 25% on the mortgage so they can do up their new home on day one.

What could go wrong?

 

A slave in debt, not in chains.

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11 minutes ago, maverick73 said:

A slave in debt, not in chains.

One person's slave to debt is anothers freedom......debit is opposite to credit......nobody would be in credit if not for others debt.;)

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Seemingly even the massive amount of props and subsidies aren't working now.  Everything but the kitchen sink

Edited by billybong

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6 hours ago, adarmo said:

The main number I took away was that the proportion of LTV at 90% or higher was up from 3.8% (2015) to 5.0% (2016). 

There might well be more products but the number of first time buyers rose by 8% (http://www.telegraph.co.uk/business/2017/02/23/first-time-buyers-keep-housing-market-solid/) last year, and with the spike and then falling away of BTL purchases that alone might explain the movement. 

One thing that isn't mentioned in the article though is that income multiples have started to fall. Before Christmas I had a mortgage offer for 5.2 times joint. Since that expired the best we can get is 4.8. 

Personally I'd happily settle for 100% mortgages capped at 4 times earnings, rather than allowing people to stick 15% down and then borrow much higher multiples. 

As your 5.2 and 4.8 was joint income I assume your happy 4 times earnings is also joint income?

Say £25k and £15k at 4x joint, no deposit that's £180k lending to support current house prices

I'd prefer 3x Main plus 1x Second income with 10% deposit, so £90k + £10k = £100k houses.

Mortgage interest on an extra £80k for the long term, job done for the bankers.

 

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6 minutes ago, Tiger131 said:

The only option is to recreate the 2007 pre-bust conditions that got us to where we are now.

So go from  positive then to neutral now to negitive to keep the plates spinning.....

 

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2 hours ago, winkie said:

One person's slave to debt is anothers freedom......debit is opposite to credit......nobody would be in credit if not for others debt.;)

Doesn't Fractional Reserve Banking make this much worse at +30:1 lending/credit to virtual real asset price ratio's.
Nonsensical but I think that's how the money multiplier works for these financial geniuses.
How they ever manage to loose money is beyond me.

 

£1 lent out to 30 debtors, make 2% per £1 = 2p,
x30 = 60p/yr on a single real £1

Did I miss a meeting?

Edited by DarkHorseWaits-NoMore

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5 hours ago, Democorruptcy said:

As your 5.2 and 4.8 was joint income I assume your happy 4 times earnings is also joint income?

Say £25k and £15k at 4x joint, no deposit that's £180k lending to support current house prices

I'd prefer 3x Main plus 1x Second income with 10% deposit, so £90k + £10k = £100k houses.

Mortgage interest on an extra £80k for the long term, job done for the bankers.

 

The point I was making is that it's the multiples that can be used to at least contain house price inflation while not penalizing those in a position to not save a deposit. You are making the same point but suggesting lower multiples. I could say, no make it 2 ties main and one times joint. Doesn't really matter what you or I think is the right multiple, the multiples could be adjusted according to market data to apply the brakes. 

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On 5/1/2017 at 8:33 PM, adarmo said:

The point I was making is that it's the multiples that can be used to at least contain house price inflation while not penalizing those in a position to not save a deposit. You are making the same point but suggesting lower multiples. I could say, no make it 2 ties main and one times joint. Doesn't really matter what you or I think is the right multiple, the multiples could be adjusted according to market data to apply the brakes. 

I agree multiples can be used to contain (or increase) HPI. My point was that your suggested 4x household income is nearer where prices are now and I would prefer them to be cheaper. I'd also prefer the MMR to have a maximum 25 year mortgage term.

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And when the deposits are down to 0% or 1% then we can expect headlines such as: "50-year mortgages raise hopes for UK first-time homebuyers". And then "Mortgages until you die raise hopes for UK first-time homebuyers". And then "Innovative new cardboard box homes raise hopes for UK first-time homebuyers"

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