Tuesday, October 12, 2010

Beastly bankers aren’t lending 125% mortgages, boo hoo

Large mortgage deposits are creating a lost generation of homebuyers

Britain is in danger of creating a whole generation of people who will never be able to buy their own homes. This is the conclusion of Professor Steve Wilcox, chair of the Centre for Housing Policy at the University of York, in collaboration with insurance company Genworth Financial. The number of mortgages worth 90% of a property's value has fallen from 245,000 in 2006 to 28,000 in 2009 - a decrease of 89%. Wilcox suggests several solutions, including the return of mortgage indemnity guarantees, paid for by the buyer, which protects the lender should the buyer default. But a major lender recently told me it was not confident insurers had sufficient financial strength, post credit crunch, to pay out claims on MIG if many people are made redundant and default on their mortgages.

Posted by drewster @ 09:56 PM (1315 views)
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4 thoughts on “Beastly bankers aren’t lending 125% mortgages, boo hoo

  • The solution is to let property find it’s own value by refusing to prop up a market fed by ridiculously low interest rates which in turn create massive distortions in a market now funded by essentially free money from the taxpayer and savers. In the process this near-fraud, instigated by the BOE, props up negligent and incompetent banks which were the root cause of the credit problem and the gross property over-valuations in the first place.

    Intelligent buyers will simply avoid the housing market until prices have returned to sanity even if this process takes 3-5 years as it must. Patience will prove to be a great virtue while this ludicrous Ponzi scheme unravels.

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  • Some great comments under this one. Always good to see journos being given a hard time for writting cr#p.

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  • mark wadsworth says:

    The comments are by and large most excellent.

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  • I suppose it’s possible that this Prof Wilcox may have been misquoted by the Guardian, but it is so, so depressing to continually see the lack of mortgage finance given as the reason for few ftb’s in the market. In a shallow, short term, ignorant way you could blame it on the requirement for higher deposits but you’d have thought a broad sheet newspaper and certainly a professor would be able to look at things a little bit deeper.

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