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Nationwide triples minimum deposit for UK first-time buyers


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https://www.theguardian.com/business/2020/jun/17/nationwide-triples-minimum-deposit-for-uk-first-time-buyers

Headline talks about First time buyers but in the text it states - Nationwide said the 15% minimum deposit would apply to all new house purchase, remortgage and first-time buyer applicants.

This might be challenging for existing borrowers coming to the end of their fixed % period.

Edited by Bankside
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50 minutes ago, Bankside said:

https://www.theguardian.com/business/2020/jun/17/nationwide-triples-minimum-deposit-for-uk-first-time-buyers

Headline talks about First time buyers but in the text it states - Nationwide said the 15% minimum deposit would apply to all new house purchase, remortgage and first-time buyer applicants.

This might be challenging for existing borrowers coming to the end of their fixed % period.

I think it reads that they will offer current Nationwide customers 90 and 95% products on the current load value, just not issue any such loans to new customers or purchases.

The big challenge will be a large chunk of the FTB market are now restricted to HTB eligible properties, however silly the scheme these are the only houses available to those with <15% deposits.

How many of the surge of enquiries and offers are dependent on either; a >85% mortgage or selling an existing potentially <5 year old new build home to finance it. The potential for slow or broken chains is high.

Edited by Tulip_mania
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24 minutes ago, Tulip_mania said:

I think it reads that they will offer current Nationwide customers 90 and 95% products on the current load value, just not issue any such loans to new customers or purchases.

The big challenge will be a large chunk of the FTB market are now restricted to HTB eligible properties, however silly the scheme these are the only houses available to those with <15% deposits.

How many of the surge of enquiries and offers are dependent on either; a >85% mortgage or selling an existing potentially <5 year old new build home to finance it. The potential for slow or broken chains is high.

Your last point is why any optimism in the market at the moment is ill founded. Most chains have an FTB at the bottom, but also if I am reading this correctly, anyone moving up the chain must have at least a 15% deposit. If they can’t an over inflated price for their 500 sq ft apartment they bought on HTB 4 years ago, then they won’t be moving up. This will be a slow burn as anyone who is not forced to sell will be allowed to stay put, but forced sellers will lead the charge down. September is when things will really kick off, maybe October.

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It's now a death spiral: ?

Ie £100k house would have to drop to £30k before the £5,000 (5%) deposit amounts to 15%. 

Can't see the young being able to triple their lifetime savings in this recession. 

 

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1 hour ago, Sour Mash said:

Good news, about time.

Don't be surprised if there's some sort of taxpayer funded government scheme in the works to provide buyers with a deposit though...

The govt are already looking like abandoning the triple lock pension, and the foreign aid programme, in order to help balance the books post-covid. I'd be surprised if they could afford another naked house price subsidy. But then again they've surprised me before...

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2 hours ago, Saving For a Space Ship said:

Covid credit crunch ?

Yep.  It really is the perfect storm. This will be looked upon by future generations as the point when the world changed.

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2 hours ago, Trump Invective said:

Rightmove suggest all is well, and apparently prices are up. Market has rebounded

They are certainly not going to tell the truth.  Will scare off the few remaining buyers.

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2 hours ago, 24gray24 said:

It's now a death spiral: ?

Ie £100k house would have to drop to £30k before the £5,000 (5%) deposit amounts to 15%. 

Can't see the young being able to triple their lifetime savings in this recession.

I had to check the maths but you are right

Also at 5% a deposit of 22,000 will cover a £450,000 mortgage

at 15% coverage, that drops to just £150,000

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4 hours ago, 24gray24 said:

It's now a death spiral: ?

Ie £100k house would have to drop to £30k before the £5,000 (5%) deposit amounts to 15%. 

Can't see the young being able to triple their lifetime savings in this recession. 

 

So if buyers cannot afford the price, why will people sell?

The majority of boomers and over 70s own their houses outright.

Why am I going to sell, unless I've ran up my LTV.

According to my mortgage agreement with Nationwide, they wont reposses until LTV is at 90%. 

Another thing to consider here, is after all the covid19 deaths, alot of millienials will becoming into inheritance? 

Surely they'll want the best price for any property they inherit, as I won't be selling for any cheaper than I bought, plus improvement costs.

If the bank reposes on mass, where are all these people going? Into what council houses...

What we gonna do, send them all to Liverpool and Stoke?

I doubt the goverment will allow a major house price crash, 15% max, with alot of intervention and policies to prop it up.

I actually suspect this will happen, 5-10% drop on the lower end of the market, 15-20% top end London.

First time buyers, prevent falls in with pent up demand, lower end.

I'm still seeing property local to me selling within a week.

Goverment steps in, with new help to buy initiatives, new savings accounts, more QE, inflation to erode debt. If we see mass job losses in August/September.

Edited by Speed1987
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1 minute ago, Speed1987 said:

I doubt the goverment will allow a major house price crash, 15% max, with alot of intervention and policies to prop it up.

The government cannot magic up millions of jobs, though.  What good will all this intervention be, if there's simply not the confidence in the job market?

TBC: Sept onwards.

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5 minutes ago, Speed1987 said:

According to my mortgage agreement with Nationwide, they wont reposses until LTV is at 90%. 

This doesn't make sense?  As long as you keep up with your monthly payments, why would Nationwide reposses?

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1 minute ago, blackhole said:

The government cannot magic up millions of jobs, though.  What good will all this intervention be, if there's simply not the confidence in the job market?

TBC: Sept onwards.

What's to say the government, doesn't just extend these mortgage holidays?

Or relaxes the 2 meter rule and let's some more over 65s, die instead.

Nationwide have promised no repossessions for 1 year.

Prolonged furlough scheme...

Increased benefits...

Plenty of inflation, to erode debt. I think that's more realistic.

 

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11 minutes ago, Martin_JD said:

This doesn't make sense?  As long as you keep up with your monthly payments, why would Nationwide reposses?

The suggestion is people will have little to no income after furlough ends.

In other words, the house I live in, the LTV is currently at 50%. I own half.

Nationwide wont reposses until 90%, I could go several years without payments and it wont be repossessed.

So even if house prices dropped by 15% I still have 25%, to play with, that would take about 5 years of no payments or more.

Even at 5%, remaining equity, most would be able to hold off a default, for 2 years.

That's in the dire situation...

Edited by Speed1987
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7 minutes ago, Speed1987 said:

What's to say the government, doesn't just extend these mortgage holidays?

Or relaxes the 2 meter rule and let's some more over 65s, die instead.

Nationwide have promised no repossessions for 1 year.

Prolonged furlough scheme...

Increased benefits...

Plenty of inflation, to erode debt. I think that's more realistic.

 

You tell me, can they afford it?  Given the urgency to already wind down the furlough scheme.

Can banks afford to hold onto properties forever and ever on mortgage holidays?

IIRC Nationwide have applied many conditions to the 1 year "no repo" rule.  Its at their discretion.  Think they'll be applying that to someone in the airline industry?

All of these options come with some significant and ugly side effects.  

Let's not forget Brexit too...

Edit:  why do we have debt, taxes, if the government can simply magic it all / extend and pretend forever?

Edited by blackhole
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2 minutes ago, blackhole said:

You tell me, can they afford it?  Given the urgency to already wind down the furlough scheme.

Can banks afford to hold onto properties forever and ever on mortgage holidays?

IIRC Nationwide have applied many conditions to the 1 year "no repo" rule.  Its at their discretion.  Think they'll be applying that to someone in the airline industry?

All of these options come with some significant and ugly side effects.  

Let's not forget Brexit too...

Aren't most banks deep into property though? If the property market fails, doesn't that mean they fail also...

In raw capitalism, they'd be ******ed, but the government always bail them out, somehow.

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3 minutes ago, Speed1987 said:

The suggestion is people will have little to no income after furlough ends.

In other words, the house I live in, the LTV is currently at 50%. I own half.

Nationwide wont reposses until 90%, I could go several years without payments and it wont be repossessed.

So even if house prices dropped by 15% I still have 25%, to play with, that would take about 5 years of no payments or more.

Even at 5%, remaining equity, most would be able to hold off a default, for 2 years.

That's in the dire situation...

I think you're misunderstanding how repossessions work -  the lender doesn't care about your LTV as long as you're paying off the money they've loaned you every month.

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6 minutes ago, Martin_JD said:

I think you're misunderstanding how repossessions work -  the lender doesn't care about your LTV as long as you're paying off the money they've loaned you every month.

I'm describing my agreement, although most are possibly different with other lenders...

Most agreements with Nationwide, have a mortgage holiday facility built in.

I understand how repossessions work, what I'm stating is this mortgage holiday facility, acts as a buffer to a repossession.

With my agreement, I can run the LTV from 50% to 90% before they repossess, if I couldn't afford to make payments. I've experienced no financial difficulties because of covid19.

If alot of people out there have these agreements, they will not experience repossession. If they can't afford to make payments.

 

Edited by Speed1987
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This is an issue for us. Mortgage advisor told us last week 15% was the minimum she had access too. We were about to buy a house in epsom (currently renting in Clapham ). We have a brand new daughter so it’s tight in this 1 bed flat and about to get tighter.

However; I have to now stump up from 10-15% (find another 25k) with a pay cut and a mom on maternity! Looks like i’ll Be out of the housing market and saving for another 2 years to get to that 15% -unless they reverse this decision or house prices plummet. But perhaps it’s all just as well! 

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