Mortgage Market Turned on its head!
05 January 2009, 01:28 PM
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Mortgage Market Turned on its head!
Mortgage lenders are continuing to demand larger deposits as they ration home loans to their customers.
The credit crunch and subsequent shortage of mortgage funds has produced a similar collapse in the number of home loans where lenders ask for a 10% deposit, once the traditional down payment.
These have fallen from nearly 1,200 at the start of February 2008 to just 148 now.
At the other end of the scale, the number of deals that need a minimum 40% deposit has shot up from just 24 to 341.
Ray Boulger, of mortgage brokers John Charcol, said life had become much tougher for people who could only put down a small deposit.
"The spread between the interest rate you pay if you have a small or a big deposit has widened considerably," he said.
Source:- BBC NEWS | Business | Mortgage rationing gets tougher
GOOD! About time sensible borrowing was encouraged!
The credit crunch and subsequent shortage of mortgage funds has produced a similar collapse in the number of home loans where lenders ask for a 10% deposit, once the traditional down payment.
These have fallen from nearly 1,200 at the start of February 2008 to just 148 now.
At the other end of the scale, the number of deals that need a minimum 40% deposit has shot up from just 24 to 341.
Ray Boulger, of mortgage brokers John Charcol, said life had become much tougher for people who could only put down a small deposit.
"The spread between the interest rate you pay if you have a small or a big deposit has widened considerably," he said.
Source:- BBC NEWS | Business | Mortgage rationing gets tougher
GOOD! About time sensible borrowing was encouraged!
05 January 2009, 01:33 PM
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House prices are going to have to come down along way then as a result to encourage first time buyers.
Remember no first time buyers means the housing market becomes very stagnant therefore making it difficult for all of us if we want to move.
Remember no first time buyers means the housing market becomes very stagnant therefore making it difficult for all of us if we want to move.
05 January 2009, 02:34 PM
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its catch 22, they want people to take out mortgages to stop the stagnating market but are making things unreachable for the market they are trying to get.
I think we should be looking at the sort of deposits that you have to put down to buy forgien 15 -30 % and more in some places.
I think we should be looking at the sort of deposits that you have to put down to buy forgien 15 -30 % and more in some places.
05 January 2009, 04:21 PM
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I think if we could all understand the market by now everyone would be calmer.
The cycle doesn't change.We will go back to sensible prices/lending practices,then it will start all over again.People buying,house prices rising,lending getting a bit more generous (but never a repeat of the last 10 years)
Hopefully the graph showing house prices going up next time won't be near vertical but a more sensible steady rise.
The cycle doesn't change.We will go back to sensible prices/lending practices,then it will start all over again.People buying,house prices rising,lending getting a bit more generous (but never a repeat of the last 10 years)
Hopefully the graph showing house prices going up next time won't be near vertical but a more sensible steady rise.
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05 January 2009, 04:31 PM
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I think if we could all understand the market by now everyone would be calmer.
The cycle doesn't change.We will go back to sensible prices/lending practices,then it will start all over again.People buying,house prices rising,lending getting a bit more generous (but never a repeat of the last 10 years)
Hopefully the graph showing house prices going up next time won't be near vertical but a more sensible steady rise.
The cycle doesn't change.We will go back to sensible prices/lending practices,then it will start all over again.People buying,house prices rising,lending getting a bit more generous (but never a repeat of the last 10 years)
Hopefully the graph showing house prices going up next time won't be near vertical but a more sensible steady rise.
Otherwise, nothing will change.
Last edited by Gear Head; 05 January 2009 at 04:42 PM.
05 January 2009, 04:45 PM
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The wages point is the important one. The ratio between average earnings and average hous eprice is the important figure. And that was the number that reached unsustainable levels. House prices will only recover to previous levels once that ratio is sutainable - i.e. £200,000 average requires a average salary of around £35,000 and we are some years off that.
05 January 2009, 04:48 PM
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I still think the max should be 4x income even though I was brought up on 2.5 x joint or 3 x main wage.
But yes,wages are the key and no ones earnings have kept pace (not surprisingly)
But yes,wages are the key and no ones earnings have kept pace (not surprisingly)
05 January 2009, 04:49 PM
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The wages point is the important one. The ratio between average earnings and average hous eprice is the important figure. And that was the number that reached unsustainable levels. House prices will only recover to previous levels once that ratio is sutainable - i.e. £200,000 average requires a average salary of around £35,000 and we are some years off that.
05 January 2009, 04:54 PM
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Just to highlight - The UK average wage is around £24,000. If you are suggesting that the UK average property price should therefore be around £75,000 - £100,000. Then prepare for armageddon 
05 January 2009, 05:37 PM
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More likely £120 - £130k.
05 January 2009, 05:47 PM
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05 January 2009, 08:58 PM
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I'm watching a young lad at work (24 years old) - he is renting at the moment and wants to buy.
He is an Engineer, in a secure discipline, on a reasonable wage ... his partner is an Accountant, earning more than him.
They are renting, but would love to buy. They have been offered a £275,000 mortgage, but do not want that much or on the interest rate offered!
They have their eye on a house which has lowered its price from £299k to £249k ...... as these are the people who will kick-start the market I asked him what they would pay for the house in question - at what price would they step out of renting and buy what they want?
His answer? "We would buy right now, at £200k"
Not scientific, I know .... but it would suggest that prices are still 20% higher than it needs to get moving again. When he buys I am jumping in too, as he will be right on the front of the wave!
He is an Engineer, in a secure discipline, on a reasonable wage ... his partner is an Accountant, earning more than him.
They are renting, but would love to buy. They have been offered a £275,000 mortgage, but do not want that much or on the interest rate offered!
They have their eye on a house which has lowered its price from £299k to £249k ...... as these are the people who will kick-start the market I asked him what they would pay for the house in question - at what price would they step out of renting and buy what they want?
His answer? "We would buy right now, at £200k"
Not scientific, I know .... but it would suggest that prices are still 20% higher than it needs to get moving again. When he buys I am jumping in too, as he will be right on the front of the wave!
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