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The property market's early warning signs are flashing red


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The last paragraph in the article reads :

"It’s important to tune into these signals, and other unusual sources of data, to drown out the noise of the headline figures. Much like an early warning system of an earthquake, you can feel the tremors that are about to strike."

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"TSB has said that it will only offer mortgages to those with more than 40pc deposits, essentially cutting out any buyers except equity-rich second-steppers. According to UK Finance, the trade body, the average mortgage has a 32pc deposit."

I'm loving this move to 40% deposits. Though the average is 32%, I'd be very interested to know what the average deposit of a first time buyer is. I suspect much lower, and as we all know, first time buyers are probably the most important element of the housing market. Without them the ponzi scheme has no thrust. 

I'm so looking forward to 2021. 

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"TSB has said that it will only offer mortgages to those with more than 40pc deposits, essentially cutting out any buyers except equity-rich second-steppers. According to UK Finance, the trade body, the average mortgage has a 32pc deposit."

I'm loving this move to 40% deposits. Though the average is 32%, I'd be very interested to know what the average deposit of a first time buyer is. I suspect much lower, and as we all know, first time buyers are probably the most important element of the housing market. Without them the ponzi scheme has no thrust. 

I'm so looking forward to 2021. 

You have to be careful of how widespread.

For example there are still plenty of 25% deposit mortgages available, HSBC, Natwest, Virgin Money, Santander, Barclays etc etc (540 in total). Some 10% and more 15%.

HTB is still available for 5% deposits, as you know taxpayer risk for the rest.

 

As for TSB they said the withdraw was to allow them to deal with demand and work through their backlog of applications. Believe that if you will.

 

 

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You have to be careful of how widespread.

For example there are still plenty of 25% deposit mortgages available, HSBC, Natwest, Virgin Money, Santander, Barclays etc etc (540 in total). Some 10% and more 15%.

HTB is still available for 5% deposits, as you know taxpayer risk for the rest.

 

As for TSB they said the withdraw was to allow them to deal with demand and work through their backlog of applications. Believe that if you will.

 

 

Barclays pulled their 25% deals too

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10 minutes ago, TheCountOfNowhere said:

Can we assume that 32% is the unearned untaxed equity peolle are using to trade up and price non home owners out of shelter? 

We can safely assume it is. 

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I think this is why ‘average’ house prices are up this year, because the sales are heavily weighted toward second/third steppers and not FTBs at the lower end of the market.

Take my wife and I’s immediate social circle for example. Of the dozen couples all in our late 30s, 4 have moved this summer and 3 others including ourselves are actively looking/have places listed. As a group we all bought our first family homes 7-10 years ago but it’s no coincided that the summer of 2020 is when everyone now wants to move. 
 

Stamp duty hiatus, healthy market and the threat of further restrictions is seeing people buy more flexible family homes. Pricey city flats being cashed in at profits I’m severely jealous of!!

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I tried to get an adviser from them unbiased.co.uk, gave them my details, joint income of 24k pa, 25k deposit, want to borrow 125k. Got an email today. Nope. None of our advisers has time right now. They won't speak to likes of you. Get your finances in better shape and come back. That's basically what they said.

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I tried to get an adviser from them unbiased.co.uk, gave them my details, joint income of 24k pa, 25k deposit, want to borrow 125k. Got an email today. Nope. None of our advisers has time right now. They won't speak to likes of you. Get your finances in better shape and come back. That's basically what they said.

More that 5x joint income? Nope.

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I’ve posted similar on this a month or so ago...bit anecdotal but trusted sources I hope.

Father in law owns an IFA covering mostly NW - so Liverpool, Manc, North Wales but now doing a lot of mortgages in London. A friend is a one-man band IFA local to me in Wales but both saying the same. FTB no chance as most want 95% LTV and unless finances healthy and credit score spot on - otherwise you’re wasting their time as there’s so much easier work to be had.
In laws are recruiting 5 new mortgage advisors this Month because of work load, but it’s all second and third steppers or people looking to move to IO mortgages, and a lot with flats in London being rented out for air bnb.

Both say they spend a huge amount of time back and forth tweaking the application which is time consuming. Plus lenders often come back with a no, but offer a yes if certain criteria is met or they accept a 1% hike in the rate which messes up payment plan for the client.....and wait for it, if they take out another product such as insurance with the lender! Remind you of PPI anyone?!

Father in law says banks are lending but its time consuming and a far more nervous and fussy market than before COVID.

 

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I’ve posted similar on this a month or so ago...bit anecdotal but trusted sources I hope.

Father in law owns an IFA covering mostly NW - so Liverpool, Manc, North Wales but now doing a lot of mortgages in London. A friend is a one-man band IFA local to me in Wales but both saying the same. FTB no chance as most want 95% LTV and unless finances healthy and credit score spot on - otherwise you’re wasting their time as there’s so much easier work to be had.
In laws are recruiting 5 new mortgage advisors this Month because of work load, but it’s all second and third steppers or people looking to move to IO mortgages, and a lot with flats in London being rented out for air bnb.

Both say they spend a huge amount of time back and forth tweaking the application which is time consuming. Plus lenders often come back with a no, but offer a yes if certain criteria is met or they accept a 1% hike in the rate which messes up payment plan for the client.....and wait for it, if they take out another product such as insurance with the lender! Remind you of PPI anyone?!

Father in law says banks are lending but its time consuming and a far more nervous and fussy market than before COVID.

 

Of course they're lending... The subprime enabler, term funding, is back on the table. 

 

These ####s will stop at nothing to prop up their asset prices.  

 

While real jobs are being lost Parasites take on more staff to cream off a cut of the magicked up, stolen,  cash. 

I look forward to the revolution 

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I tried to get an adviser from them unbiased.co.uk, gave them my details, joint income of 24k pa, 25k deposit, want to borrow 125k. Got an email today. Nope. None of our advisers has time right now. They won't speak to likes of you. Get your finances in better shape and come back. That's basically what they said.

Why do you need a broker, go direct to the bank

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I’ve posted similar on this a month or so ago...bit anecdotal but trusted sources I hope.

Father in law owns an IFA covering mostly NW - so Liverpool, Manc, North Wales but now doing a lot of mortgages in London. A friend is a one-man band IFA local to me in Wales but both saying the same. FTB no chance as most want 95% LTV and unless finances healthy and credit score spot on - otherwise you’re wasting their time as there’s so much easier work to be had.
In laws are recruiting 5 new mortgage advisors this Month because of work load, but it’s all second and third steppers or people looking to move to IO mortgages, and a lot with flats in London being rented out for air bnb.

Both say they spend a huge amount of time back and forth tweaking the application which is time consuming. Plus lenders often come back with a no, but offer a yes if certain criteria is met or they accept a 1% hike in the rate which messes up payment plan for the client.....and wait for it, if they take out another product such as insurance with the lender! Remind you of PPI anyone?!

Father in law says banks are lending but its time consuming and a far more nervous and fussy market than before COVID.

 

Thanks. Or course if price drops set in then second steppers might not have much equity and may be looking 85%+ mortgages too. That might, I guess, get interesting?

Edited by Si1
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I think this is why ‘average’ house prices are up this year, because the sales are heavily weighted toward second/third steppers and not FTBs at the lower end of the market.

Take my wife and I’s immediate social circle for example. Of the dozen couples all in our late 30s, 4 have moved this summer and 3 others including ourselves are actively looking/have places listed. As a group we all bought our first family homes 7-10 years ago but it’s no coincided that the summer of 2020 is when everyone now wants to move. 
 

Stamp duty hiatus, healthy market and the threat of further restrictions is seeing people buy more flexible family homes. Pricey city flats being cashed in at profits I’m severely jealous of!!

😂 What ‘profit’ is there unless you are cashing out your chips and leaving the housing market?

Making the very likely assumption these sellers of flats are moving to family homes that cost more, it’s likely the extra debt now require to fund the difference between those two homes has increased since the purchase of the original flat.

Nothing to be jealous of, I pity them.

 

 

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😂 What ‘profit’ is there unless you are cashing out your chips and leaving the housing market?

Making the very likely assumption these sellers of flats are moving to family homes that cost more, it’s likely the extra debt now require to fund the difference between those two homes has increased since the purchase of the original flat.

Nothing to be jealous of, I pity them.

 

 

I’m afraid it’s yourself that’s making the assumptions. Prices in Edinburgh were strong even amidst the 2008/9 dip... and they’ve continued to rise disproportionately higher than the remainder of Scotland since then. 
 

I’m seeing friends transfer some pretty impressive levels of equity toward family homes of a similar price but out with the city.

I hate perpetual HPI as much as most on this forum, but let’s admit to ourselves that millions of people continue to benefit greatly from this insane market. I feel like a right mug overpaying £200 a month when friends are moving back to my home town having accrued over £1000 a month in HPI in the city!!!!

Edited by Pmax2020
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Why do you need a broker, go direct to the bank

I'd agree in principle. Though if you spend time on the MSE mortgage forums it's clear it's very difficult to get a mortgage deal if you've any kind of black mark on your credit record.

Most people nowadays have to plan for months to be ready to apply for a mortgage. They will pick apart your last 3 months bank statements at a transaction level. Get your travel and childcare costs to make sense on your bank statement compared to your application (as most people tend to underdeclare these) , make sure you don't have any red flag transactions like 'gambling payments' on your account, clear or tidy up overdrafts and credit cards at least 3 months prior to the application, spend weeks trying to remove markers from your credit record for small payments you missed ages ago to silly little things like a missed mobile bill payment or sky payment etc.

Under the new credit rules any small things like these can really erode your affordability.

Even applying for more than one mortgage can impact your chances of getting one. You will normally be advised to take a 'cooling off period' of at least 6 months if you've failed 2 proper applications. This will be shown on your credit record. In theory your broker will chose a bank likely to accept you on first pass. 

Mortgage affordability under MMR is a bit of a dark art, most people still have no idea the amount they will be lent will be reduced by childcare costs, student loan repayments etc. I recall one exple when MMR came in where a single guy on a low salary would be given a mortgage of £80k, but if their application was rerun to add a partner on benefits and 1 dependant child then under the rules it would drop by £79k to less than a grand despite the fact they were still taking home the same salary. Its nowhere as simple as 4x salary anymore. 

As the market is pushing most people to the very edge of their affordability, this becomes more important as the banks feel they can pick and choose customers. I'd say the proliferation of mortgage brokers is a canary in the coal mine for a broken market. 

Edited by regprentice
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I think this is why ‘average’ house prices are up this year, because the sales are heavily weighted toward second/third steppers and not FTBs at the lower end of the market.

Take my wife and I’s immediate social circle for example. Of the dozen couples all in our late 30s, 4 have moved this summer and 3 others including ourselves are actively looking/have places listed. As a group we all bought our first family homes 7-10 years ago but it’s no coincided that the summer of 2020 is when everyone now wants to move. 
 

Stamp duty hiatus, healthy market and the threat of further restrictions is seeing people buy more flexible family homes. Pricey city flats being cashed in at profits I’m severely jealous of!!

So are the 'second steppers' selling their flats or small houses to FTBs or BTLs? 

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So are the 'second steppers' selling their flats or small houses to FTBs or BTLs? 

I know a number of houses simply being left empty - assuming they are being used as collateral to get mortgages.

 

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I'd agree in principle. Though if you spend time on the MSE mortgage forums it's clear it's very difficult to get a mortgage deal if you've any kind of black mark on your credit record.

Most people nowadays have to plan for months to be ready to apply for a mortgage. They will pick apart your last 3 months bank statements at a transaction level. Get your travel and childcare costs to make sense on your bank statement compared to your application (as most people tend to underdeclare these) , make sure you don't have any red flag transactions like 'gambling payments' on your account, clear or tidy up overdrafts and credit cards at least 3 months prior to the application, spend weeks trying to remove markers from your credit record for small payments you missed ages ago to silly little things like a missed mobile bill payment or sky payment etc.

Under the new credit rules any small things like these can really erode your affordability.

Even applying for more than one mortgage can impact your chances of getting one. You will normally be advised to take a 'cooling off period' of at least 6 months if you've failed 2 proper applications. This will be shown on your credit record. In theory your broker will chose a bank likely to accept you on first pass. 

Mortgage affordability under MMR is a bit of a dark art, most people still have no idea the amount they will be lent will be reduced by childcare costs, student loan repayments etc. I recall one exple when MMR came in where a single guy on a low salary would be given a mortgage of £80k, but if their application was rerun to add a partner on benefits and 1 dependant child then under the rules it would drop by £79k to less than a grand despite the fact they were still taking home the same salary. Its nowhere as simple as 4x salary anymore. 

As the market is pushing most people to the very edge of their affordability, this becomes more important as the banks feel they can pick and choose customers. I'd say the proliferation of mortgage brokers is a canary in the coal mine for a broken market. 

I'm hoping to buy a flat in London next year and as an FTB, I was told back in 2015 by my bank that I need to do the following -

1. Clear off my student loans which I did

2. Increase my salary which I did

3. Get a higher deposit which I now have

I've now got a sizeable deposit which is growing each month WFH so I am not anticipating any further hurdles but I find your post very interesting that banks are reluctant to lend to FTBs.

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  • 439 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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