Tuesday, September 2, 2008

Crux of the matter

'What we need is confidence to give 100% mortgages'

This time last year if a couple came in looking for a mortgage with a 5% deposit there would have been 600 options for them. Now there are just two mortgages available at exorbitant rates. The housing market is not going to be affected by stamp duty. It is down to lenders getting cold feet."

Posted by gardeniadotnet @ 05:50 PM (750 views)
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5 thoughts on “Crux of the matter

  • Simple fact:- If say a normal 2Bed property was 3 x National average annual wage in value, I doubt there would be a problem with ‘confidence’.

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  • gardeniadotnet says:

    Not only has the confidence gone, it ain’t coming back.

    Why do so few of us seem to understand this?

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  • Agree with Plato’s comment. Until prices come down to an affordable level, 3X earnings, this situation will continue.

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  • Confidence to give 100% mortgages?

    There’s something fundamental which a lot of the media still don’t really get. the credit crunch is over 1 year old!

    That’s not a crunch, it’s not even a temporary squeeze – it is a permanent downsize; a permanent reassessment of the risks inherent in lending large amounts of money to people for housing. In other owrds you’re never going to see 100% mortgages at low rates again. Get used to it!

    Neither the government nor house sellers can bring themselves to acnowledge this because of its implications – they are regressing into denial by shouting for housing measures and pumping billions into the housing market to no avail.

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  • Indeed, what is there to be confident about? The amazing thing is that, aided and abetted by the government at taxpayer expense, the banks still lend money they don’t have for leveraged purchase of overpriced houses that are rapidly falling in value.
    The stamp duty holiday should crash the lower middle of the market nicely, as others have said anyone trying to sell a 200K home will no doubt be offered 174, 499.99 or less! Because stamp duty does start to get significant for the more expensive properties.
    Also, if any FTBs are dumb enough to take up the HomeBuy scheme they will shun used properties, thereby making them even harder to sell.
    You couldn’t make it up!

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