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Borrowing Boost For First-timers

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http://www.thisismoney.co.uk/mortgages/mor...page_id=58&ct=5

THE UK's biggest building society has increased the amount of money it will lend to first-time homebuyers struggling to get on to the property ladder.

Nationwide will now lend 4.25 times the income of a single person or the joint income of a couple - up from 3.4 times income for an individual and 3.7 times joint income.

A single first-time buyer earning £25,000 can now borrow £106,250 - an extra £21,250 compared with previous limits. A couple with a joint income of £50,000 can borrow £27,500 more than before.

The move is the latest in a series of initiatives aimed at helping first-time buyers who now pay an average £154,000 for a property from an average income of £21,266.

Nationwide says the higher income multiples are part of their overall affordability calculation, so the increased borrowings should not lead to people taking on debts they cannot afford.

For first-time buyers, Portman BS has scrapped its higher lending charge - a fee that is slapped on loans for buyers with less than a 10% deposit, which can add hundreds of pounds to the cost of buying a home. Meanwhile, Northern Rock announced that its Together mortgage, which allows buyers to borrow more than the property is worth, has been a staggering success.

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I read this article earlier today. How does enabling someone to borrow more than common sense dictates so they can buy something that's overpriced help them exactly?

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I read this article earlier today. How does enabling someone to borrow more than common sense dictates so they can buy something that's overpriced help them exactly?

Whilst I agree that many people are stupid, and all people should be made aware of the risks, I believe in a free society where if a person of sound mind is prepared to take the risk, and a bank is also prepared to take the risk, then why should society interfere?

If the credit looseniing is unsustainable (which it may well be) then the only result will be the crash will be bigger if / when it happens.

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Whilst I agree that many people are stupid, and all people should be made aware of the risks, I believe in a free society where if a person of sound mind is prepared to take the risk, and a bank is also prepared to take the risk, then why should society interfere?

If the credit looseniing is unsustainable (which it may well be) then the only result will be the crash will be bigger if / when it happens.

Hi,

Problem is, in a bubble fever, as we have seen in history and in the past, greed, corruption and insanity can permeate even sound businesses. The FSA, Bank of England, Treasury, etc., are meant to apply a break to our innate, self destructive behaviour (humans that is). It seems we never learn. Maybe we are in a new paradigm. From where I look, world interest rates are climbing, the British economy is faltering and unemployment, bancruptcies and repocessions have been climbing for over a year. I also think that some institutions know that NuLab will try to ride out the housing boom as long as they can (a point not lost on the markets) but eventually, it will most likely be the government (aka tax payers) who foot the bill for those unfortunates who materialise when the specultors pull out. 4x income is not shocking but more likely it could be 6x, 7x, or more, for most folk to get a foot up.

Edited by boom_and_bust

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Far from credit tightening it looks like the lenders are becoming ever looser. It's only a matter of time before we see 50 year mortgages, we're heading the way Japan went. Utter madness.

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It's only a matter of time before we see 50 year mortgages, we're heading the way Japan went.

Why would fifty year mortgages matter? We already have infinite mortgages (aka interest-only).

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I have a mate who self-certified and borrowed 6.

A 4.25x mortgage ratio that's actually enforced would be a significant credit tightening compared to 'lie to buy'.

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The money's not worth anything anymore. five years ago £25K was a good wage, now it's subsistence.

By giving the banks your custom you are in effect shooting yourself in the foot, perpetuating a system that leads to the existence of a web forum seeking economic collapse.

Am I the only one who sees this?

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The money's not worth anything anymore. five years ago £25K was a good wage, now it's subsistence.

By giving the banks your custom you are in effect shooting yourself in the foot, perpetuating a system that leads to the existence of a web forum seeking economic collapse.

Am I the only one who sees this?

Dom your quite right but I seemed to have mis-placed that £180K I had in cash so I guess I will have to see the bank :blink:

TB

PS: See your point

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http://www.thisismoney.co.uk/mortgages/mor...page_id=58&ct=5

The move is the latest in a series of initiatives aimed at helping first-time buyers who now pay an average £154,000 for a property from an average income of £21,266.

"Helping"?

Seriously though, looks like the lenders are going to try and squeeze a bit more blood out of the first time buyers stone. Wasn't it Norfolk where a large percentage of FTBs were defaulting on mortgages?

Billy Shears

Edited by BillyShears

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IF THE LENDERS WON'T tighten, the market will do the job (eventually)

Today, Long term US interest rates pushed above 5.00%.

Look for those rate rises to soon spread to the UK

Let's see. Larger salary multiples and higher interest rates. I wonder what the expected consequences of that are.

Billy Shears

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Most of the people I know who have bought houses recently just seem to have got tired of the whole house price arguments. I think most of them are taking on silly risks, but there you go.

My best friend and his wife, both earning good salaries just bought a nice house, but let's hope neither of them ever loses their job - they could not survive on one income. Another friend just paid over the odds for a small north facing 2 up 2 down in an out of the way place. One colleague at work was less than truthful on her self cert a year or two ago, and it was quite startling and sad to recently hear her talking about her worries paying the mortgage now. Another colleague has a part ownership / part rent deal on a small one bedroom place a way out of town, where it's not safe to leave his car parked.

Does this really sound like a good thing to anyone? Are we all wealthier than we were a few years ago?

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IF THE LENDERS WON'T tighten, the market will do the job (eventually)

Today, Long term US interest rates pushed above 5.00%.

Look for those rate rises to soon spread to the UK

How soon, you always seem to stop short of saying when - just a guess would do, with an argument to back it up.

Soon, could be 5 years away, depending on how you calibrate these things.

:lol:

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In the last few months the Halifax website mortgage calculator has allowed me an extra £15k. Today they sent me a letter. I have been approved for a monthly overdraft facility of £5k.

Thanks for the slack guys.

Must also thank my credit card company for the £20k

Get real.

Mr Joe.

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The money's not worth anything anymore. five years ago £25K was a good wage, now it's subsistence.

Indeed, no student loan repayments have to be made if you earn less than 24k. Used to be 16K not so long ago.

Perhaps HPI is better described as "Income Crash"...

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  • 301 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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