Tuesday, July 13, 2010

Unless prices fall

Tighter lending rules mean 10-year wait for first-time buyers

First-time buyers who cannot raise a deposit from the "Bank of Mum and Dad" are being forced to rent or remain in their parents' home 10 years longer than middle class "first timers" one building society claims, as regulators propose to make lending rules even tighter. John Wriglesworth, a spokesman for Newcastle Building Society, said: "You cannot get a mortgage at competitive rates unless you have a deposit of 15 per cent or more these days and low interest rates are irrelevant if you cannot raise the required deposit. Now new research based on CML figures shows the average age of first-time buyers who can get help from their parents has fallen to 27, while first-time buyers who are not lucky enough to have rich parents have to wait until they are an average of 37 years old."

Posted by drewster @ 07:37 PM (3345 views)
Please complete the required fields.



35 thoughts on “Unless prices fall

  • I know the I pod generation supposedly spend too much money on phones etc.

    But really they have been absolutely shafted by the older generation.

    They go to Uni in the hope of getting a better job only to leave with £15k of debt. (for the older generation this was free)

    After a few years of work (say late 20’s it would be nice to be settling down with your 1st home. (only to find the older generation have doubled the price of property with a faulty BTL business model)

    So they save up some more whilst being forced to rent from the older generation. (This is the same age now that the older generation would have had half their mortgage debt erased by inflation in the early 70’s)

    Only to find that their hard saved 10% deposit (£15-20k in the South East) now isn’t enough.
    Why ? Because the older generations faulty business model has now broken down and they’ve reduced interest rates to next to nothing to try and support their little empires.

    Now because the banks are all in trouble (because of that older generation) they now require 15% deposit which will only get you an interest rate some 50% higher than someone with a 40% deposit.

    OK say the younger generation, we’ll build are own houses then in our own country and not borrow so much from the banks.

    Oh no say the older generation you vcan’t build on these fields round us, you’ll ruin the view we have from the fields we built on.

    At some poit the younger generation will say F*CK and leave.

    The older generation don’t have the pension pots they thought they had. These were stolen to be paid instead by – you guessed it – the younger generation.

    Reply
    Please complete the required fields.



  • Can you tell by all these posts I’ve got a job I don’t really want to do? LOL

    Reply
    Please complete the required fields.



  • Isn’t this an example of the law of unintended consequences?

    Many HPC regulars have railed against lax lending criteria, now they’ve got tighter lending rules, perhaps they should have thought more about what they were wishing for.

    Reply
    Please complete the required fields.



  • Deciphermonkey says:

    I could not agree more.

    Reply
    Please complete the required fields.



  • “OK say the younger generation, we’ll build are own houses then”

    ROFL!

    Many of the I pod generation couldn’t organise a p*ss up in a brewery let alone build their own houses.

    Reply
    Please complete the required fields.



  • Deciphermonkey says:

    mr g. Are you saying that the younger generation brought this on themselves?

    Reply
    Please complete the required fields.



  • Mr g said:
    “Isn’t this an example of the law of unintended consequences?

    Many HPC regulars have railed against lax lending criteria, now they’ve got tighter lending rules, perhaps they should have thought more about what they were wishing for.”

    Sure that might be the outcome if there is no HPC but if there was then that’d be problem sorted for these FtBs. It seems like tightened lending criteria was a prerequisite for house prices being allowed to correct to levels where people can actually afford to buy again.

    mr g also said:
    “Many of the I pod generation couldn’t organise a p*ss up in a brewery let alone build their own houses.”

    Yep, speaking as one of the ipod generation (albeit without an ipod) I was contemplating yesterday how I couldn’t organise a piss up in a brewery (absolutely no sarcasm intended)

    Reply
    Please complete the required fields.



  • Very well said str…………. makes you really think whats it all about eh…………

    Reply
    Please complete the required fields.



  • In that case Mr G don’t hold out much hope for your pension whether they leave or not.

    Seriously though, me being half way between them and you, I’ve been speaking and dealing with some of them lately with regards to my new I phone. Some of them are surprisingly bright. Even when the conversation wonders away from I phone functions.

    It seems they’re allowed to wear jeans to work though now, which no doubt you’ll find quite offensive. Scruffy lot.

    recaptcha : eliminated tyranny (fat chance)

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    Mr G, now you are being spiteful: “OK say the younger generation, we’ll build are [sic] own houses then” ROFL! Many of the I pod generation couldn’t organise a p*ss up in a brewery let alone build their own houses.”

    How many people of any generation know how to build a house? Effectively none. So what is the relevance of that comment?

    What young people would like to do is to be able to buy one on similar terms and conditions to what people used to have to pay (and yes, there have been property price bubbles before, but this one is twice as big and has lasted twice as long).

    Reply
    Please complete the required fields.



  • Thank goodness FTBs are being forced to wait. It will do them good as they watch house prices collapse and enable them to buy at sensible values a few years down the road.

    I could never understand the British obsession with overpriced housing; most of the FTB stuff is shockingly poorly built rubbish, so why bother?

    Reply
    Please complete the required fields.



  • I don’t like boomer bashing but will say for whatever reason I decided a while back not to buy in UK. It took me 8 years to pay off my student debt, through at times two jobs. I have delayed starting a family for probably too long as i believe in having security for my would be family. Simple and basic ambitions fading away. I will be moving abroad, with my shortage occupation and won’t be paying excessive tax rates to keep my fellow Brits in their homes. Quite honestly I hope the pain lasts for generations to come

    Reply
    Please complete the required fields.



  • agreed. I want to move away. Stop funding the boomers and they can wipe their own a**es in their old age.

    Reply
    Please complete the required fields.



  • Not funny inbreda, I wouldnt wish not being able to wipe ones own on anyone.

    Having an elderly uncle in pampers I would rather have an accident than end up in a care home going out of my mind.

    Reply
    Please complete the required fields.



  • Not if the house prices crash to affordable levels, which will happen in 2015. If all first time buyers would stop buying over-valued houses the prices will drop to affordable level.

    edmund

    Reply
    Please complete the required fields.



  • I am 35, it will take me until I am 50 to pay of 20K of student debt. I should have a deposit by the time I am 65. Just as well the mandatory retirement age of 65 is to be scrapped, as I will need to pay a mortgage until I am 90. On second thoughts, I think I will rent until I die and spend every penny I earn on having fun, I may even move to France or Germany.

    Reply
    Please complete the required fields.



  • I find this really fascinating, especially the first comment. Having written on this website many times in the past and having to succumb to the miseries of makeshift multiple dwellings and th general lack of privacy as well as interacting with a numerous amount of individuals with mental disfunctions, i started to learn astrology. I believe it is indeed a generational consequence, that my parents generation have had such a lucky ticket, but is it? We are in a time of transition, there is a revolution akin to 60’s happening now. So, today’s riches will or could be tomorrows rags. So i say be philosophical, as the hardship endured is one which is character building, it’s tough, but when things change you will appreciate them more. Saturn and jupiter will square the baby boomer generation in 2012 – 15. In astrology pluto is the generational planet, and for my generation this will be a bit of a shock. So if you’re younger, remain positive, as the change is inevitable. Any deluded baby boomer who holds on to old paradigm’s and beliefs will ultimately face the consequences. I pity this generation, as the scorpian said, it’s in my nature. I hope this is not to deep.

    Reply
    Please complete the required fields.



  • Goldbug9999 says:

    “Many HPC regulars have railed against lax lending criteria, now they’ve got tighter lending rules, perhaps they should have thought more about what they were wishing for.”

    Tighter lending rules only hurt in the short term – in the long term prices will adjust down to whatever is “affordable” for a typical first time buyers in the prevailing credit environment. The less credit FTBs have access to, the lower prices will drop and the better off FTBs will be (in the long term). Bring it on.

    … worming gas …

    Reply
    Please complete the required fields.



  • These people are drawing conclusions about FTB’s without realising that the FTB data is itself misleading.

    A lot of people get counted twice as FTB’s (the total number has always been far too high) and the average 37 year olds without family assistance are going to mostly second time round FTB’s, returning to the market after a divorce or period abroad, with previously amassed equity to use as a deposit.

    The reality is that house prices need to be affordable to 90% of the population’s households (ultimately, neither shared equity nor private renting offer a cheap solution) and at the present time, the percentage for whom housing is affordable, is less than 50% if prudent lending practices are observed, and no more than 70% if interest only deals on heavy income multiples are still allowed.

    The reality is that without house price falls, a significant percentage of the population will never be able to afford to buy; and that percentage is far too great to be covered by housing benefit or affordable housing schemes, unless their is a massive building spree, in which event the laws of supply and demand will prevail on the market, so prices will fall anyway..

    Reply
    Please complete the required fields.



  • Goldbug9999 says:

    “What comes first? making sure a feral youth containing zombie like no-hopers survives so they can [email protected] over porn on their Ipads or an ageing population that hold just some morsel of morality in their bones…….”

    The reality is that both generations are (and have been) living at a higher standard of living than is sustainable by our net worth as a nation.Both will have to take a lot of pain over the comming years.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    @ TC 12, you are completely muddling two separate issues. I don’t think working age people mind paying a bit of tax to fund the basic state pension; but what is disgusting is the NIMBY attitudes.

    There’s a quid pro quo – young people pay the tax to see pensioners all right; and old people stop being NIMBYs. A bit of give and take. Charity begins at home, and all that?

    And who is supposed to pay for that care? This is Home-Owner-Ism writ large.

    Reply
    Please complete the required fields.



  • mark wadsworth says:

    And yes I am a Baby Boomer and have done very well out of it. But never once in my life have I ever opposed planning permission for anything. And neither do I oppose replacing taxes on income and production with taxes on land values.

    Reply
    Please complete the required fields.



  • matt_the_hat says:

    Mr g – your a dinosaur. All the problems of today must be laid at the feet of the 50-65 year olds greed. You are right the current generation of working age are underprepared for the challenges ahead. But like someone on here posted I for one can support myself and are not reliant on this generation to pay my bills. I think you always reap what you sow – enjoy your pension!

    Reply
    Please complete the required fields.



  • Eternal Sceptic says:

    It would seem to me the so called tighter lending rules merely mean that the conservative lending rules of 30 years ago are being reintroduced. Perhaps it could be regarded as a return to sanity.My take on the situation is that house prices have to fall to conform to the new reality. In days of yore a 10% deposit and 3.5x average income set the benchmark price for an average house. Today, depending on what is regarded as an average wage, an average house price should be around 100k. A price crash would seem inevitable, all government can do is postpone it.(presumably because many foreclosures would sink the banks)
    Also trying to promote intergenerational warfare, beween the haves and havenots deflects from the reality of the new paradigm. The present value assigned to houses cannot be sustained. The brick and mortar pensions have to decline, and first time buyers have to be able to buy.

    Reply
    Please complete the required fields.



  • letthemfall says:

    49-year-olds, on the other hand – no problem.

    Reply
    Please complete the required fields.



  • Looking at the info regarding the change in mortgages it looks to be very strict, taking into account outgoings etc I think most people will be stuck at 3 times salary, even though it will be based on affordability i think 3 times salary will work out about right.

    expect some serious price drops, as I doubt we will see a stagnant market, the UK would be in serious trouble if the market was stagnant, I personally believe the new government want prices to drop fast and soon, so when it comes to election time prices will have bottomed.

    Reply
    Please complete the required fields.



  • Grumpy @ 5 said…
    Many of the I pod generation couldn’t organise a p*ss up in a brewery let alone build their own houses.

    You really are a nasty old git, aren’t you?

    Reply
    Please complete the required fields.



  • The Leo Pluto Generation (Baby Boomer), in my opinion will end up paying a heavy price, whether it by through house price speculation, pensions, etc, etc. As they were to busy picking the fruit and failing to water the roots. In a previous item, i referred to the last time neptune was in aquarius, the great potato famine in ireland, which coincidentally was connected to greedy landlords, neglect for humanity. The scorpio generation otherwise described as feral on here, their pluto squares the baby boomer generations pluto. As we all know that the financial system is purely a belief system, i believe that this generation will have their day with the baby boomers. Think BP and think achilles, one oil leak. There is nothing for the youth, other than forces, council, retail, prison, crime, prostitution and drugs. The are not singing “i can’t get no satisfaction”, in their case it’s “roll-up for the mystery tour”.

    Reply
    Please complete the required fields.



  • “Many of the I pod generation couldn’t organise a p*ss up in a brewery let alone build their own houses”

    True, but the same can also be said of every generation..

    ..there are many more who would look on the chance to self build with relish and excitement – the opportunity to not only create a home from scratch, but also to have a better home than they might otherwise be able to afford.

    If this government wants to remembered for something better than an endless diet of austerity, a program to liberate half a million or more self build plots from surplus MoD land would be long remembered and celebrated.

    Reply
    Please complete the required fields.



  • @braindeed

    Yes, it’s some members of the I pod generation that make me a nasty git.

    We’ve been here before but I’ll say it again. The “I want it and I want it now” culture has bred a generation who want everything handing to them on a plate, champagne and caviar life styles on beer and takeaway incomes and who generally cannot hack it when times are tough.

    To quote [email protected] “At some poit the younger generation will say F*CK and leave.” That says everything about the younger generation, throw the teddy out of the cot when I can’t have my way.

    The minority who have genuine talent and skills will leave and prosper but the majority will not find employment abroad because of their lack of work ethic and basic skills.

    Reply
    Please complete the required fields.



  • 32. mr g The younger generation are correct, the country has been economically ripped off and young people have been sold rubbish witch cost them years of their lives. The middle classes are a disgrace and the financial class should be sacked. The degrees that cost the young thousands are not worth it unless they are in Medicine or Law ect., any other should not be bought because they will only lead to low paid jobs anyway. so don’t bother. The housing market is foul overpriced and cheaply done up by property developers. I expect some of them are very dodgy indeed if it was DIY electrics. As for selling off mod land – this would only help if the land was sold to young newcomers only buying one plot each. There is no point in selling to rich builders again making things worse putting up prices. The young have been ripped off this is true, so have a lot of the old too, and its all done by the rich, the banks and the unscrupulous amongst us. 32 So mr g don’t denigrate the victims because it just makes you look like a jailer rattling the cage for fun. All I can say to the young is save all you can, do not give your money to an ipod millionaire or to buy dud educational certs – keep every penny for yourselves to build that eco house you will need and leave those secondhand overpriced crap for the old codgers. Take no notice of the nasty git you build your own better and more innovative housing.

    Reply
    Please complete the required fields.



  • Mr G

    As I’ve pointed out a level playing field is all that’s required.

    And if you read some of my basic points it’s far from level at present.

    I for one would be expanding my business, possibly starting another and certainly be buying or even building and furnishing a house.

    The thing that’s stopping me is the over inflated price of property.

    The root cause of which seems to be a combination of previous lax lending, creating over inflated prices due to overly restrictive planning with the speculation (BTL) element added into the restricted market.

    And if that wasn’t enough (although it doesn’t really effect me personally) banks now won’t lend at a sensible/competative rate unless you’ve got 25% deposit.

    I feel bad, but for anyone 10 years younger than me wanting to settle down and start a family it must be absolutely soal destroying.

    In your generation Mr G women had a choice as to whether or not they stayed at home to bring up their children. Since the banks had the marvelous wheeeze of inluding their income in the multiples they of course now ‘have ‘ to go out to work and put the kids in child care. (as the practice of dual multiplier mortgages has simply revalued houses at a higher level).

    Reply
    Please complete the required fields.



  • Str2007 you are right, and the young have been taken for a ride, most of us have by the financial world. All I can say to the ipod generation is stop buying into hi- tech, and stop buying useless degree cert’s. There is only a few degree’s worth doing. Save your money for yourself, and dont buy all these second hand overpriced houses that nasty old gits have been living in yuk. The young bright things should build their own eco housing, demand the governemt sell those mod plots singularly to them and not to big business or property developers. I’m older, but the young need to get miserly , inovative and kick back for themselves, out do those old gits and by pass them you have years on your side..

    Reply
    Please complete the required fields.



  • soul destroying (even)

    Thank you Uncle Tom for joining the ‘self build’ campaign of mine.

    I’d rather hoped for a plot where I live instead of the middle of Salisbury Plain with tanks rumbling past on what still belongs to the MOD.

    I would also hope that should any quantity of plots be released then they are made available for individuals only or small groups to either self build or have houses built.

    IE keep out big developers, BTLers and Flippers etc. Otherwise the exercise would be pointless as someone would simply come along and mop everything up to re-sell or rent on on completion.
    I would also have long term concern that the ‘ear marked land and subsequent houses would always carry a reputaion of poor quality if a few ended up going pear shaped or uncompleted.

    IMO better to grant fresh planning permission throughout every town and village. Just keeping a replenished stock of 5-10 plots (giving a choice) in every town village would be enough to give people some choice and keep the steam out of the market.

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>