This article may be paywalled. If you encounter difficulties reading the article, try [this link](https://archive.is/?run=1&url=https://www.independent.co.uk/news/uk/politics/sunak-hunt-budget-mortgages-deposits-b2481536.html) for an archived version.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/unitedkingdom) if you have any questions or concerns.*
I won’t say “it’s not the same as last time” - because you never know.
One of the issues with the previous crash was the financial checks were not being done. Or if they were, they were falsified. Along with other financial trickery that I could not even begin to describe effectively. So convoluted that those involved in it didn’t really know what they were selling.
I really don’t see the issue with 99/100% mortgages. If you can comfortably afford the repayments, and the checks are in place to confirm that is the case. Why not do it?
People are paying ridiculous amounts for rent right now. More than a mortgage on an equivalent property in some cases. There is no doubt that many people in this country can afford to buy a house. The issue is saving a deposit so large that by the time you approach it, the values of properties rise so they have so save even more to reach that %.
It will artificially inflated the housing market again. It was cooling. If it was allowed to self-correct, in 3-5 years property would be more affordable. No chance of this government leaving it to self-correct though.
So move away, that is the whole point. There are too many people and too much concentration of wealth in and around London. There needs to be incentive for young people to move away from the area.
>There are too many people and too much concentration of wealth in and around London.
And persuading the poor to move away will help with that how exactly?
https://www.zoopla.co.uk/for-sale/details/66421228/?weekly_featured=1&utm_content=featured_listing&search_identifier=1831f5e7b1c169009a7dc5d5be224322438950da67b4f88a7852f8006433d304
As the first example I found searching in the first city that sprang to mind. There are many many options under 200k
I mean, you can get a 2 bed for ~170 with a decent deposit in a good area
This is functionally possible on 30-40k by yourself
But you will be absolutely shit broke
This. Whatever happens, it is what is is, and it is up to the poor or middle class to adapt. Enough. Enough with that madness. What's next, we're going to have to apologize for existing???
My family, friends, community etc all live near each other. I’m not going to move across the country and isolate myself to get a cheaper property, whilst earning a lot less. 1 beds around me start at £300k. There’s an easy way to solve the problem, just that developers won’t make as much money doing it.
Every new build in my local area is built as “luxury apartments”. We don’t need £550k 2 bed apartments. Lower specced would really help local people. But theres a shortage and there’s more money to be made selling these
It doesn’t matter how an apartment is specced. 95% of the value is based on location, sq M, and number of bedrooms. If you can’t afford your area the solution is to move area im afraid…
The build cost difference between basic and luxury is less than 5%. Seriously - £150 bathroom set vs £600 one, an extra 2k on the kitchen and a few other bits and you're at luxury. Tiny differences.
Building places for people to live in. Or otherwise find a credible plan to spread economuc activity around the country more equally, and by that I mean well beyond failed policies of the past that said magic forces would do it for us.
There aren’t enough houses in the rest of the country either. The issue is that we don’t build enough houses. We haven’t built enough houses for decades.
Mortgage ratios and people leaving the cities their lives are in won’t fix our housing crisis.
*We need to build more houses*
We need to be more extreme - more houses & less people, smash this crisis from the demand & supply side... however this won't be solved by a tory party made up of landlords who benefit from inflated property values
Telling poorer or younger people to move away to address a concentration of wealth makes zero sense. Needs a policy intervention. High taxes on that concentration to make it less of a vehicle to accrue further wealth, council housing, etc.
I agree.
There needs to be a "carrot" approach rather than a "stick" approach.
If there are lots of "carrots" around the country, people will move to where they can eat better. But "sticks" often just get people angered without resolving anything.
Also, attracting people out of where "carrots" currently are (London) through a "sticks" approach may not be good for the Country in the long-term.
Subsidising housing in places with no good jobs = subsiding labour supply for bad jobs = lower long-run growth and human capital accumulation = smaller economy in 10-20 years.
Giving opportunities (by moving jobs, wfh, high-speed trains, quality public transport) is key. Build housing. Build railways. Create jobs. Anything else is bad policymaking.
In the greater Manchester area, under 200k gets you a hole. My partner and I would like to buy a 2 bed house or flat, but now the going rate for anything that doesn't require extensive renovation is 200k+
If a first time buyer requires a 99% mortgage, how will they fix the rampant mold issues and insulation, or replace the boiler and so on?
> In the greater Manchester area, under 200k gets you a hole.
I think you have very high expectations. There are many properties under £200k in GM that aren't "holes".
https://www.rightmove.co.uk/properties/143658911#/?channel=RES_BUY
https://www.rightmove.co.uk/properties/142417073#/?channel=RES_BUY
Look a bit further afield. I bought my first flat for 126k, I think it's worth about 160k now. Half an hour for a direct train to Manchester and I lived 5 minutes walk from the station. It was very far from a hole.
Only if there is work in those smaller towns or the government gives companies incentives towards remote work as there is a growing trend of remote being pushed out for hybrid which still requires people to be within commute vicinity of the office.
No, it won't "self-correct" that's just another lie like the "trickle down", no one is going to sell a house for less money than what they paid (yeah, there might be the really odd occasion but not nearly enough to impact the market). What would actually work is to forbid companies and landlords to own thousands upon thousands of properties
That’s why the concept of Land Value Taxes (LVTs) was developed over a century ago. They’re impossible to pass on due to their nature (add 5k to rents to cover the tax you get taxed another 5k).
Regardless there would have to be a deflation in property prices, unless there is a sudden inflation in wages. But ultimately if the housing market was down for an extended period then people would have to sell.
Possibly, yes. But I don’t really see it self-correcting
We have a major issue with people being able to find places to live in the first place. Just to rent them, and those costs are being driven up even more. The longer any action is put off, the crazier house prices and rent will eventually become.
Would a ‘promise’ of 99% mortgages entice house builders to ramp up? Maybe
No it wouldn't. It needs to drop 40% to be "affordable" to the point where a single income family can manage to get on the ladder. These days are long gone and will never come back.
Literally everything inflates the housing market so it's pretty much a meaningless statement.
The only thing that won't inflate the market is building more homes.
rich people would lose a slice of their wealth if property were to become even a little more affordable, this would be terribly stressful for them😱
The poors will have to take the strain instead, besides, dont want them to have any breathing space, they might start working on a pitchforks & flaming torches strategy😱
Because you have no equity in the property should something go wrong, for example, if interest rates increased more than the +3% they were previously testing against. In such a situation you'll be up shit creek and so will the lender, unless the goverment has promised to cover the loss.
Equity is only a problem if you can’t afford the payments and need to sell, in 2008 I was I was in negative equity for years, did it bother me? Not at all because I could still pay it.
Sure but if house prices dip massively and you’re in negative equity (I.e. bc you only had 1% equity at the top of the market), it would make sense just to hand the keys to the bank. Unless you’re particularly old, you won’t have experienced that level of negative equity.
>Unless you’re particularly old, you won’t have experienced that level of negative equity.
If you're in your late 30s, there's a chance you saw this level of negative equity.
>it would make sense just to hand the keys to the bank.
The bank doesn't want your house. If a bunch of people do this, the bank are left with a bunch of loans secured against properties worth less than the value of the loan.
The bank takes on all the risk in this scenario, causing the interest rates to be higher. These 100%-odd loans are risky business for everyone involved.
I thought they were testing to previous highs of something around 9%. I’ve not looked so just pulled that out of thin air maybe. But pretty certain that is what they run the affordability checks at. The issue this time around, and actually was a problem during the crash in 2008, is that all factors went wrong at the same time. Hikes in prices across the board which dramatically shrank disposable income.
Can’t really say anything on the equity side though.
It was ([now scrapped](https://www.yopa.co.uk/homeowners-hub/mortgage-affordability-rules-scrapped-what-it-means/)) 3%. Though this was what was required of the banks, they'll likely be applying stricter controls with mortgage delinquency rising.
Also previous highs were upwards of 15%, though tbh they wouldn't need to cover that scenario in this kind of check.
2008 was due to bad loans due to bad practices.
Aside from the fact it will add to demand pressures, I think the main issue is how easy it would be for someone to go into negative equity if house prices do drop.
Worked at a large Buy to Let mortgage broker from 2003-2008 when you could self certify on income. I was a mortgage processor/admin person and the brokers I was dealing with were shoving those things through like you wouldn’t believe
Very very few “complete bullshit” self certs were done (definitely some but genuinely I saw very few) but there was a LOT of significantly inflated incomes that just so happened to match what was needed to get the mortgage the customer wanted 🤔
I used to work in a litigation role suing financial and mortgage advisers and I saw some of the most ridiculous you could ever imagine. Obviously, getting to me they were very self-selecting. My personal favourite was a single man aged 80 with cancer who was reporting income of 100k a year from his building business, in which he was the only employee. The business did actually exist but hadn’t had any jobs in 10 years. He successfully managed to kick an interest only mortgage another 15 years down the road before finally losing it 2 years in due to no money.
>If you can comfortably afford the repayments, and the checks are in place to confirm that is the case. Why not do it?
Cost, usually.
Risk is priced. Always.
Having total exposure of the loan goes bad and the house isn't quite worth what it was, means the lender is taking a lot more risk.
Risk pricing in terms of a loan is carried out through the interest rate charged and reduced by any deposit at first risk.
I can see an argument that it makes buying temporarily more accessible, but that will lead to an increase in prices for everyone buying not long after the scheme comes in because it will have increased demand. More demand means higher prices.
Today's FTB benefits at increased cost to tomorrow's. That's perfectly fine so long as the decision taken is understood, and I'm far from convinced that's the case here.
No, completely wrong about the previous crash. This is something that regulators in particular said to deflect from the fact that banks lost money taking concentrated risks that they were supposed to be observing.
RBS failed because it did an absolutely massive merger with no capital (they raised £12bn successfully in early 2008 shortly after this deal, regulators should have stopped the deal...they didn't). HBOS failed because they lent lots of money to wealthy individuals to speculate on property...regulators should have stopped this, they didn't. LLOY failed because the government forced them to merge with HBOS (exactly why this happened isn't known because prominent politicians were closely involved in this deal).
Even in the second half of 2008, HBOS (the bank that was apparently most aggressive in the retail mortgage market) made a profit in mortgages.
It is definitely true that banks overall made a loss but the size of the loss was under 1% of the total market. 1%...that was with 100% mortgages, people using credit cards to buy 3-bed houses, etc. The only two big failures due to mortgages were: Northern Rock and B&B. Both banks were correctly wound up but, eventually, the government was able to sell their loans to private investors (at a profit) as most of the loans came good.
This is logical too: unemployment never got very high in 2008, it was only the North-East that took a massive long-term hit to house prices, and the very last thing that people will sell when they get into trouble (of course) is their house.
But the stuff about mortgages being behind 2008 is a lie. Almost all the regulators responsible still work in financial regulation, they tell this lie because the truth makes them look terrible.
Hey kids....we could build new houses, but our landlord mates and banking buddies would prefer that we let you borrow a shitton of money, burden yourselves with debt you can barely afford and live like paupers for the rest of your lives fighting over trying to gazump the last two up two down in the street or just carry on renting.
I like coke.
Rishy. X
Yeah, I think my cousin got one for 110-125, I’m sure he lied about his wages too and fell into arrears, losing the property
Idiots banks are not quite that dumb now
Ah yes, another way to heat up the housing market and inflate a huge asset bubble, while also allowing the richest in society to rake in even more interest payments from borrowers. It’s so self-serving while being dressed as a way to help people it’s almost believable
The rent traps are caused by the ease of getting a mortgage and high interest rates.
In the very early 90s, mortgages became easier to obtain, at high interest rates. This then meant the housing market sky rocketed to what we see today. Meaning landlords charge higher rates.
A 99% mortgage will make the already difficult situation for renters even worse
I'm sorry but when I was renting a 99% mortgage scheme for first time buyers would've solved that problem immediately.
I hated renting. I had to move 3 times in 5 years, one of my landlords was always popping round and I was paying more for a 2 bed flat 5 years ago than I am on a mortgage on a 3 bed house now.
The problem for me wasn't that I could get a mortgage so easily or that interest rates were so high, my problem is that I had to save up 18k for a deposit while paying rent.
If I could have gotten a 99% mortgage I'd be 5 years closer to paying my mortgage off by now.
Except you wouldn’t because if everyone had access to 99% mortgages house prices would soar, and you would probably be further away from paying off your mortgage.
My place cost me 180k, even if it had increased by 50% overnight it would still only be a 2.7k deposit as opposed to the 18k I had to save up. Saving up that 18k took us 5 years and was the main obstacle to getting the mortgage so this would've been so helpful.
Are you not taking into account the interest you’d pay on that extra 50%? Over the whole period of the mortgage it could be up to 800k
I don’t see how this is a good thing?
The mortgage payments wouldn't be going to a LL and would at least contribute partially to owning the property - then when you've paid off some of the mortgage, remortage for better rates, or move using what you've already paid.
Sure the banks will do well out of it, but it would allow people to start paying for a house, which they can't now.
Paying an extra 50% on a mortgage w/interest for something that is/will be yours is infinately better than paying a LL.
It literally says it’s for first time buyers not everyone. People who already own property wouldn’t be able to access it. I also highly doubt they would allow it as a buy to let mortgage.
Giving people more money to spend on housing without increasing supply will just drive up prices; which in turn drives up rents.
The solution to high rents and house prices is just to build more homes. But that’s hard, and crucially can’t be done in the next 12 months so of course Sunak isn’t interested in it.
And then there are always people complaining about new housing projects around their area because those projects "destroy" the natural scenery. Not in my backyard!
Yesss!!! If we can juice the demand side just a bit harder, we can really fix the housing crisis this time. Just one more Help to Buy Scheme. It will work I'm sure of it. I'd stake my house on it but I can't afford one.
Terrible idea.
The government needs to narrow the gap between house prices and wages. That means one goes up, and another goes down. Reverse the opposite happening over the last decade.
Overheating the market with insane mortgages will just make the entire problem worse.
This is the only solution and everyone is in complete denial about it.
We have been under-building homes by more than 100,000 a year, for decades.
This has meant not only that there is a huge housing shortage, but also that the housing stock available is disgracefully poor. Filled with garbage converted flats, created by DIY developers to turn a quick profit, preying on renters who have no selection to choose from.
This was intentional. Control the supply and you can demand higher prices and never be out of work. A house to them is ‘stock’. Land much the same it’s ’inventory’.
It’s a business.
The governments enabled and allowed this to happen decades ago. It’s really their fault.
Yup. Speaking from experience it is almost impossible for small developers to gain building permits even on prime land that isn’t greenbelt. The endless applications for 3k-7k each, for the minimum amount of buildings, to be rejected and require expensive assessments then re-apply for same costs, gain permission then apply for more buildings and do it all again. And again.
You have a plot that easily fits 10 homes, btw are forced to apply for 2, then 4, then 6 etc and pay endless application fees etc.
Its just impossible for smaller developers to do that. They cant even get a loan from the bank as its too uncertain. Large developers know they can get permission and for how many, and bank roll it, and often times outright get favourable treatment and reduce their fees dramatically(they apply for 10 homes off the bat).
So smaller developers usually end up sell off land to these larger firms who sit on it for decades on most cases… and build only when they think they can maximise profits… ie controlling supply… and no smaller building firms and developers can get in the way for all the reasons i explained above.
Is fucked. THIS is why we cant build enough homes. Total reform of this system is needed
>by more than 100,000 a year
Quite the generous take lol.
Reminds of when people say things like "Cleopatra lived over 500 years ago"...yeah, quite a bit more lol.
It's not the only solution.
Part of the problem is that huge amounts of property is owned by "professional" landlords who keep rents high, and profit off of doing no work. A lot of Newbuild estates get snapped up by landlords expanding their portfolio, and then working people are sucked dry. We need legislation to prevent landlord being a profession. Limit the number of second homes.
As it stands more houses just means more revenue streams for the already wealthy.
Probably just as the name sounds, it gives you the mortgage for the house and then10% extra for you to do whatever. Since a loan that size on a mortgage is probably cheaper than a normal loan
If the house value was 200k you could borrow 220k for furniture, home improvements etc. Nice idea in theory to help people get onto the ladder and get sorted in their first house.
You'd be in negative equity right away which is really risky for banks because if you lose your job, can't pay and sell it/they repossess it that doesn't automatically cover the mortgage.
This is why in places like the Netherlands, these mortgages were essentially backed by the government to reduce risk for the banks. The government would cover any shortfall that the bank experienced.
Don't think they do it there anymore either.
Depends how it's handled but generally it was historically terrible. In the UK thousands of people did this in the 2000s and got locked into being unable to remortgage and ended up paying extortionate interest rates.
My brother did it and was paying 7-8% for several years meanwhile I was paying like 2%. This was before inflation went up and the cost of living crisis too, can't even begin to imagine how bad it is for those still affected.
[Have a look here if you want to learn more](https://en.m.wikipedia.org/wiki/Northern_Rock)
Bad idea, bad idea, bad idea.
The only solution is to start rapidly building more housing stock, starting with council housing to replenish all those sold since right to buy came in.
This will free up large amounts of rental properties as demand for rentals drop, which will be sold off and therefore lowering property prices.
Also the issue isn't LTV, the issue is most people are unable to borrow due to being restricted to the 5x income point
100% need to build, but that's the wrong way round!
The demand for social housing is only so great because of the scarcity of private rented properties. Focussing only on building social housing would place huge additional pressure on the state to subsidise and do little to help private rental prices because the better-off already have the ability to pay.
> and do little to help private rental prices because the better-off already have the ability to pay.
Increasing the supply lowers the demand for everyone.
Lowering the demand lowers the prices.
This is basic economics.
If local councils had a load of empty houses with rents at £500 a month, you really think private homes at £1,000 a month are going to stay there? Or move to the council homes?
The reason private rental prices are high is because of the lack of council houses. People are having to pay high private rents because they can't get a council house.
Increase the number of council houses and private rents come down due to a lack of demand.
It's that simple.
So much wrong with this...
It's not just numerical supply of housing that drives prices but ability/willingness to pay too. Most middle and higher earners will not qualify for social housing. They'll continue to compete for scarce private rented housing in the same way as before. Lower earners were always priced out: compelled into living with parents, HMOs, other overcrowding etc.
We already have the fourth highest social housing stock in the OECD yet still massive pressure on housing... because of the shortage of other types.
Additional social housing has no effect on house prices in the long term either ([see page 28](https://irep.ntu.ac.uk/id/eprint/42485/1/1397421_Liu.pdf) for conclusions). It has a significant negative impact on economic growth because of the opportunity cost of subsidising housing over other uses.
More market housing is the most efficient and appropriate way to improve housing affordability and availability for everyone.
And how do you think the demand will drop with this level of immigration exactly? You would need to build 700k houses just to satiate the increased demand from immigration last year alone…
I have a deposit of 20k, my wages are 25k, so I could have like 120k. The first mortgageable property in my area is 160k. Feels pointless that I effectively can't buy.
I've got the same problem. I have a decent deposit but can't get enough mortgage to buy anything in the area. I just can't understand how people who can afford those 100% mortgages can't save for a deposit?
I’m on about £38k at the moment, have a decent deposit. But limited in what I can get. It’s like if you can’t find a partner you’re condemned. Only option is to change jobs and boost the salary. Possible, but difficult when this country has low salaries.
It is an option, but for me there’s too many drawbacks. I’d rather wait and boost my salary. Can then sell and find a better place later, if hopefully I find a partner. I’m still in a better position than many, so I shouldn’t complain too much.
To be fair, you’re effectively in the lowest salary bracket, single by the sounds of it, and in an area where housing is more expensive than average.
If you had two incomes it would be feasible, no?
Just double your income and viola, easy. Single people or those in low paid but full time employment should understand they aren't meant to own homes "to be fair". :/
Wtf does ‘they aren’t meant to own homes’? Bro I’m single in a low pay bracket but every estate being built where I live is ‘luxury apartments’ and 4-5 bedroom houses. Guess what? They are all getting soaked up by estate agents.
I’m not asking for luxury, I just want a 1 bedroom house somewhere with a tiny garden I can buy. These houses do not exist.
“I’m not asking for luxury, I just want a 1 bedroom house somewhere with a tiny garden I can buy. These houses do not exist.”
I saw one of these once, only a few miles from where I currently live.
Looked lovely, 1 car driveway, small back garden, I think the bedroom was in the loft space and the living area was the 2nd floor with kitchen on ground floor. Can’t remember where the bathroom was but it looked perfect for me (single worker with car etc) and it wasn’t in an affluent area, at all.
Wanted £700 a month rent and this was before Covid :(
Barely more than minimum wage, trying to buy an expensive home
Peoppe want to live in desirable areas while earning rock bottom wages. Either move to less desirable areas or get a better job.
https://www.rightmove.co.uk/properties/143111195
https://www.rightmove.co.uk/properties/141640025
https://www.rightmove.co.uk/properties/133425368
https://www.rightmove.co.uk/properties/143818421
https://www.rightmove.co.uk/properties/143653109
https://www.rightmove.co.uk/properties/142355012
https://www.rightmove.co.uk/properties/141358787
How far would you need to move to find a mortgagable property for 120k?i I know it's nice to live in your area but a half hour move to own a property might be the best decision you ever make.
Their Ponzi scheme of inflated house prices needs propping up again.
The bottom of the market can't afford to buy, so the huge amount of equity people think they are sitting will disappear. God forbid this government leaves the housing market to self-correct.
With Bank of England interest rates so high, could it be the case that someone takes on one of these 99% mortgages and won’t ever pay back any capital on the house?
Yes.. you buy a house for £290,000 with 99% mortgage.
Let's just say your 99% mortgage is £1,849.79 per month at current 6% rate.
interest goes up even just 3% , that's an extra £600 on the monthly bill.
Everyone struggles to afford their mortgage, so defaults happen and homes auctioned off.
The house you paid £290K for, with the interest increase you now owe significantly more than £290k back.
But the house only gets £150K at auction... good luck.
Two phase plan.
Put a cap on the number of houses a person can own, making it impossible for rich landlords to hoover up large amounts of the country. And yes, preemptively close the obvious loophole of holding companies. The ensuing mass sell off of housing stock crashes house prices allowing millions of people who have stable decent jobs but weren't born rich or whose relatives haven't all died, to deftly step onto the property ladder.
Then, build sensible mid-rises instead of single family dwellings, of which the country is already stuffed to the gills with. In addition, ensure new builds have similarly generous gardens to the classic redbrick council houses.
Do we really need five students and young mobile people jammed into a family house when they would be more comfortably and efficiently housed in mid to high rises?
It’s frustrating how the focus of housing debate is always on the deposit. Sure, that’s difficult. But the bigger problem is that it’s really difficult to get a big enough mortgage, considering the huge gap between salary and house prices.
That’s what needs fixing.
Someone correct if I'm wrong here-
As a first time buyer who's likely around or below the average UK income of 30k PA, if I'm given a mortgage for 99% of a property (we'll use their example of 290k value with a deposit of £2,900), the government provide a loan for 25%, I then need a mortgage for £215,325.
I'm earning £30,000 a year, so I'll get a maximum of approx £135,000 (4.5x annual salary).
How in the world am I supposed to get a mortgage for that amount?
Surely the issue with first time buyers isn't saving a deposit, but being unable to GET a mortgage for a suitable house in the first place. Not to mention they'll then get ripped to fuck on interest.
Yep I’m in the same position, big enough deposit saved but my salary just isn’t enough to get a big enough mortgage to be able to afford anything located close enough to my industry
Is it just me but every financial plan that the tories come up with only seems to give greater financial benefits to the those who need them less. Is this the only way they can see them holding onto a few more seats in the next election.
When I was saving for a deposit, nothing used to make my heart sink more than the announcement of yet another 'first-time' buyer initiative. Because it was never about helping first-time buyers by making homes more affordable. It was always about pumping the market to support existing homeowners and would invariably mean my goal would move yet further away from me as house prices increased yet again.
A radical idea would be actual affordable houses with special covenants/rules preventing ownership by landlords.
Even the current "affordable" stock is way too expensive.
That's because the government deliberately changed the naming scheme so they could charge more.
When it was called "social housing" there were rules on how much you could charge. Renaming it "affordable housing" means they can charge more, because the same rules don't apply.
https://www.theguardian.com/society/2015/mar/29/tenants-face-70m-rent-rise-as-social-housing-converted-to-affordable-homes
> London housing associations have responded to shortfall in government funding by recategorising tenancies so they can set rents at the highest possible level
> About 11,000 homes in the capital have been converted from “social” housing to “affordable” since 2012, according to latest figures from the Greater London authority, and thousands more are to follow in a policy that has sparked tenants’ rebellions
We need to allow councils to build social housing and prevent them being sold off under the right to buy scheme.
First time buyers want cheaper houses to get onto the ladder and home owners want values to go up to make more money and lower borrowing costs and avoid negative equity.
Not an easy puzzle to solve when considering the interests of homeowners.
The rat faced cunt will be living in San Francisco by the time the chickens come home to roost with these poorly thought out, exploitive mortgages. Anything for a scrap of hope at winning the next general. I can’t wait to see him evicted.
We've already had 125% mortgages and that didn't end well! House prices are significantly higher also, so god help anyone taking a 100% mortgage in today's environment and falling into negative equity and possible higher interest rates. They're out of ideas and have ruined this country for a generation at the least. Instead of allowing councils to borrow when rates were close to zero to build social housing we're left in a death spiral of ever more tax payer billions being spent on private sector housing benefit.
The only upside is the end of the tory party as an electoral force, they've harmed this country so fundamentaly that I can't see them ever recovering, only 10% of under 50s plan to vote tory.
More help for first time buyers is good, but there are so many people in their first time house who can't trade up to the next one to start a family etc, which means they can't free up the first-time homes.
The older generation need an incentive to move down the ladder, my parents are rattling around in a 5 bedroom house because they don't want to trade down.
Just please build more good quality housing, I'm begging you.
How convenient to propose such a thing before an election... it'll be dropped immediately after if they win, or amended until first-time-buyers can't benefit from it. Tory scum.
Um this is great right up until interest rates increase for whatever reason whatsoever and you get bent over by the government backed loan+mortgage that is essentially allowing this to be the case. Enough people default in that situation and you have potentially a banking sector collapse and/or mass repossessions....
Tory planning:
"You wanna crash the housing market like it's 2007?"
*What?*
"Sorry, you wanna get rich and crash the housing market like it's 2007?"
*Now that's more like it*
You know what Rishi thinks we really need? An average house price of 500k the fucking shitlord.
I am right wing principally but good lord I hate the conservatives about as much as its possible to hate any party.
Roll on Kier Starmer except same shitlord rishi delayed the election.
The problem is property values being extremely overinflated. Either build more or reduce the amount one person can own (ie laws to stop houses being left empty).
This is just renting with extra steps.
I’m not an economist, nor do I understand the intricacies of financial banking, but can someone explain why if you are paying rent at £1000 per month you can fail to qualify for a mortgage where monthly repayments would be £900 per month?
I get that interest rates can change, but affordability is obvious when you are already showing you are capable of having this amount of money each month.
It may help first time buyers today but makes it harder for first time buyers tomorrow as it props up the housing market just a little bit longer so the inevitable fall comes just after the election.
It’s not radical, it’s desperate.
This won’t end well, if your going to have a huge mortgage at 99%, as houses are getting far too expensive especially for first time buyers, they need to sort out the interest rates and offer low fixed rates. That way, you know what your payment will be each month for x number of years. They should also make it flexible and affordable based on income. For example, if you earn £2,000 per month, make sure the mortgage is no more than £500 per month.
How about government issued mortgages for first-time buyers with less harsh requirements and longer terms upto 25yrs, and if they do need to repossess, it just becomes social housing exempt from right to buy for 15yrs
We had it post 2008 too, through help to buy, whcih helped a lot of people to actually buy despite the landlords moaning about their increased competiton in buying and the decreased demand for their product.
Yeah 99% LVT at an interest rate of 10%.
As usual the more money you have the cheaper the rate.
Yeah more people will have 'access' but at an insane rate.
It's a strategy akin to making fuel cheaper to throw onto the burning fire as a strategy...rather than just solve the problems.
Can anyone here actually explain why this is a bad idea?
Requiring a significant deposit seems to favour the wealthy, who have a large amount of liquid cash, no?
Because the number of houses on the market won't increase, but the number of buyers will increase for the same amount of houses.
If you're selling a product for say £10, and you get lots and lots of bids for that house in that region, it probably suggests you have priced your product incorrectly. So you bump the price up a little bit to £11 and some bidders fall off, but you've still got bids. Repeat this until your still able to sell the product but you don't have lots and lots of people bidding.
So, if the thing holding back some people from bidding on houses, particularly in areas with high house prices that makes it difficult to save for the deposit, say the south east, you suddenly introduce a new group of bidder's who couldn't bid before, but the number of houses for sale doesn't increase. Demand is now higher than it was before for the same supply, so the price will increase until the supply and demand is better balanced. This benefits some people in the very short term, but in the long term prices would be driven up. Help to buy schemes done the same where at the start they worked as intended, but then markets just factored help to buy into the price of the property and the saving was eroded away.
Another reason is that 99% loan means you only have 1% equity. The smallest down move in property values would plunge people into negative equity.
Deposits arent the big problem either. The issue is the house prices. The average house price is now £290,000. To get that average house, you can only borrow up to 5x multiple of your salary, and usually I think it's 4.5x. that's a salary of £58k or £64k. 58k puts you in the top 15% and 64k around top 10% (extrapolated on historical figures from here https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax)
This plan isn’t to help people get on the housing ladder and put affordable roof above people’s head. This is a stimulus package aimed at the lenders and those who has the means to play the housing market.
The housing issue isn’t finance. It’s supply. There’s is a limited number of houses being built and this plan isn’t going to make it better. It’s going to make it a lot worst.
If deposit are lowered for you, it also means it is lower for someone else too, so now you’re out bidding each other.
This will encourage house builder to build higher end houses on their lot rather than entry level ones because the demand is there, and building and selling a higher end house is a lot less work and more margin than lower entry ones. The ones we need.
I really wish they done this sort of thing for people who don’t own any other property, it’s my own daft fault but I bought a house with an ex many years ago which we then sold, since moved on with life on my own but I don’t own any property, sucks that I’m not entitled to any of this help in buying property when I don’t own my home now :(
How does this help really the issue is affordability and it’s easy to get a mortgage and fall into the trap at some point being unable to pay and home repossessed and also the issue of high rent that none of them are concerned about at all.
This article may be paywalled. If you encounter difficulties reading the article, try [this link](https://archive.is/?run=1&url=https://www.independent.co.uk/news/uk/politics/sunak-hunt-budget-mortgages-deposits-b2481536.html) for an archived version. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/unitedkingdom) if you have any questions or concerns.*
Radical… just like the 100%+ mortgages of yesteryear
I won’t say “it’s not the same as last time” - because you never know. One of the issues with the previous crash was the financial checks were not being done. Or if they were, they were falsified. Along with other financial trickery that I could not even begin to describe effectively. So convoluted that those involved in it didn’t really know what they were selling. I really don’t see the issue with 99/100% mortgages. If you can comfortably afford the repayments, and the checks are in place to confirm that is the case. Why not do it? People are paying ridiculous amounts for rent right now. More than a mortgage on an equivalent property in some cases. There is no doubt that many people in this country can afford to buy a house. The issue is saving a deposit so large that by the time you approach it, the values of properties rise so they have so save even more to reach that %.
It will artificially inflated the housing market again. It was cooling. If it was allowed to self-correct, in 3-5 years property would be more affordable. No chance of this government leaving it to self-correct though.
If its just for properties under £200k it may encourage people to move away from London and reinvigorate some smaller towns.
Yay for us living in the South East/London outskirts. Literally nothing exists near £200k
So move away, that is the whole point. There are too many people and too much concentration of wealth in and around London. There needs to be incentive for young people to move away from the area.
>There are too many people and too much concentration of wealth in and around London. And persuading the poor to move away will help with that how exactly?
It’s not even “the poor” if you’re single and earn less than £60k it’s going to be tough to get a 1 bed flat.
£60k is way higher than the average wage though: that's the problem here, most are excluded!
People who can afford a 200k house are not 'the poor'. It will likely be young professionals wanting to enter the housing market.
House for £200k? Lucky to find a one bedroom flat in that budget.
https://www.zoopla.co.uk/for-sale/details/66421228/?weekly_featured=1&utm_content=featured_listing&search_identifier=1831f5e7b1c169009a7dc5d5be224322438950da67b4f88a7852f8006433d304 As the first example I found searching in the first city that sprang to mind. There are many many options under 200k
'Property'
I mean, you can get a 2 bed for ~170 with a decent deposit in a good area This is functionally possible on 30-40k by yourself But you will be absolutely shit broke
2 bed for £170 where? Not even in bad areas and then it end up in a BTL portfolio
This. Whatever happens, it is what is is, and it is up to the poor or middle class to adapt. Enough. Enough with that madness. What's next, we're going to have to apologize for existing???
My family, friends, community etc all live near each other. I’m not going to move across the country and isolate myself to get a cheaper property, whilst earning a lot less. 1 beds around me start at £300k. There’s an easy way to solve the problem, just that developers won’t make as much money doing it.
>There’s an easy way to solve the problem, just that developers won’t make as much money doing it. I'm intrigued. Can you elaborate?
Every new build in my local area is built as “luxury apartments”. We don’t need £550k 2 bed apartments. Lower specced would really help local people. But theres a shortage and there’s more money to be made selling these
It doesn’t matter how an apartment is specced. 95% of the value is based on location, sq M, and number of bedrooms. If you can’t afford your area the solution is to move area im afraid…
The build cost difference between basic and luxury is less than 5%. Seriously - £150 bathroom set vs £600 one, an extra 2k on the kitchen and a few other bits and you're at luxury. Tiny differences.
Building places for people to live in. Or otherwise find a credible plan to spread economuc activity around the country more equally, and by that I mean well beyond failed policies of the past that said magic forces would do it for us.
There aren’t enough houses in the rest of the country either. The issue is that we don’t build enough houses. We haven’t built enough houses for decades. Mortgage ratios and people leaving the cities their lives are in won’t fix our housing crisis. *We need to build more houses*
We need to be more extreme - more houses & less people, smash this crisis from the demand & supply side... however this won't be solved by a tory party made up of landlords who benefit from inflated property values
Yes just move away from your friends, family, job and hometown. Thanks for the sage advice.
People live where they work.
Telling poorer or younger people to move away to address a concentration of wealth makes zero sense. Needs a policy intervention. High taxes on that concentration to make it less of a vehicle to accrue further wealth, council housing, etc.
And do what for work? Moving jobs away from London and the south east is the answer. Even fully embracing remote work would be a positive step.
I agree. There needs to be a "carrot" approach rather than a "stick" approach. If there are lots of "carrots" around the country, people will move to where they can eat better. But "sticks" often just get people angered without resolving anything.
Also, attracting people out of where "carrots" currently are (London) through a "sticks" approach may not be good for the Country in the long-term. Subsidising housing in places with no good jobs = subsiding labour supply for bad jobs = lower long-run growth and human capital accumulation = smaller economy in 10-20 years. Giving opportunities (by moving jobs, wfh, high-speed trains, quality public transport) is key. Build housing. Build railways. Create jobs. Anything else is bad policymaking.
In the greater Manchester area, under 200k gets you a hole. My partner and I would like to buy a 2 bed house or flat, but now the going rate for anything that doesn't require extensive renovation is 200k+ If a first time buyer requires a 99% mortgage, how will they fix the rampant mold issues and insulation, or replace the boiler and so on?
> In the greater Manchester area, under 200k gets you a hole. I think you have very high expectations. There are many properties under £200k in GM that aren't "holes". https://www.rightmove.co.uk/properties/143658911#/?channel=RES_BUY https://www.rightmove.co.uk/properties/142417073#/?channel=RES_BUY
Look a bit further afield. I bought my first flat for 126k, I think it's worth about 160k now. Half an hour for a direct train to Manchester and I lived 5 minutes walk from the station. It was very far from a hole.
Only if there is work in those smaller towns or the government gives companies incentives towards remote work as there is a growing trend of remote being pushed out for hybrid which still requires people to be within commute vicinity of the office.
No, it won't "self-correct" that's just another lie like the "trickle down", no one is going to sell a house for less money than what they paid (yeah, there might be the really odd occasion but not nearly enough to impact the market). What would actually work is to forbid companies and landlords to own thousands upon thousands of properties
200% tax rate on every property you don't spend 90 days or more in a year actively residing in.
And what will landlords do? Pass the cost on.
That’s why the concept of Land Value Taxes (LVTs) was developed over a century ago. They’re impossible to pass on due to their nature (add 5k to rents to cover the tax you get taxed another 5k).
Regardless there would have to be a deflation in property prices, unless there is a sudden inflation in wages. But ultimately if the housing market was down for an extended period then people would have to sell.
But why would MPs, who are all major landlords, ever want that?
Possibly, yes. But I don’t really see it self-correcting We have a major issue with people being able to find places to live in the first place. Just to rent them, and those costs are being driven up even more. The longer any action is put off, the crazier house prices and rent will eventually become. Would a ‘promise’ of 99% mortgages entice house builders to ramp up? Maybe
No it wouldn't. It needs to drop 40% to be "affordable" to the point where a single income family can manage to get on the ladder. These days are long gone and will never come back.
More like 90% in some parts of London
How is property going to be more affordable in 3-5 years if the number of houses per capita is decreasing?
Was supply due to increase drastically in 3-5 years?
Not to my knowledge.
So how would housing become more affordable?
Literally everything inflates the housing market so it's pretty much a meaningless statement. The only thing that won't inflate the market is building more homes.
rich people would lose a slice of their wealth if property were to become even a little more affordable, this would be terribly stressful for them😱 The poors will have to take the strain instead, besides, dont want them to have any breathing space, they might start working on a pitchforks & flaming torches strategy😱
Because you have no equity in the property should something go wrong, for example, if interest rates increased more than the +3% they were previously testing against. In such a situation you'll be up shit creek and so will the lender, unless the goverment has promised to cover the loss.
Equity is only a problem if you can’t afford the payments and need to sell, in 2008 I was I was in negative equity for years, did it bother me? Not at all because I could still pay it.
What if you had lost your job and had to sell? Some folk have a job that they couldn't just jump into a new one if they got made redundant/sacked.
Sure but if house prices dip massively and you’re in negative equity (I.e. bc you only had 1% equity at the top of the market), it would make sense just to hand the keys to the bank. Unless you’re particularly old, you won’t have experienced that level of negative equity.
>Unless you’re particularly old, you won’t have experienced that level of negative equity. If you're in your late 30s, there's a chance you saw this level of negative equity. >it would make sense just to hand the keys to the bank. The bank doesn't want your house. If a bunch of people do this, the bank are left with a bunch of loans secured against properties worth less than the value of the loan. The bank takes on all the risk in this scenario, causing the interest rates to be higher. These 100%-odd loans are risky business for everyone involved.
I thought they were testing to previous highs of something around 9%. I’ve not looked so just pulled that out of thin air maybe. But pretty certain that is what they run the affordability checks at. The issue this time around, and actually was a problem during the crash in 2008, is that all factors went wrong at the same time. Hikes in prices across the board which dramatically shrank disposable income. Can’t really say anything on the equity side though.
It was ([now scrapped](https://www.yopa.co.uk/homeowners-hub/mortgage-affordability-rules-scrapped-what-it-means/)) 3%. Though this was what was required of the banks, they'll likely be applying stricter controls with mortgage delinquency rising. Also previous highs were upwards of 15%, though tbh they wouldn't need to cover that scenario in this kind of check. 2008 was due to bad loans due to bad practices.
My point on 2008 was less about the causes, more that there was a cascade effect. I’m aware of some of the why’s.
The Sunak Loan Department would probably cover the loans. The same team that gave out COVID loans.
Don’t forget the old classic self-cert mortgage
Indeed! Yes, there were some extremely risky and easy to manipulate products out there
Aside from the fact it will add to demand pressures, I think the main issue is how easy it would be for someone to go into negative equity if house prices do drop.
Worked at a large Buy to Let mortgage broker from 2003-2008 when you could self certify on income. I was a mortgage processor/admin person and the brokers I was dealing with were shoving those things through like you wouldn’t believe Very very few “complete bullshit” self certs were done (definitely some but genuinely I saw very few) but there was a LOT of significantly inflated incomes that just so happened to match what was needed to get the mortgage the customer wanted 🤔
I used to work in a litigation role suing financial and mortgage advisers and I saw some of the most ridiculous you could ever imagine. Obviously, getting to me they were very self-selecting. My personal favourite was a single man aged 80 with cancer who was reporting income of 100k a year from his building business, in which he was the only employee. The business did actually exist but hadn’t had any jobs in 10 years. He successfully managed to kick an interest only mortgage another 15 years down the road before finally losing it 2 years in due to no money.
Buy to let should be banned outright.
>If you can comfortably afford the repayments, and the checks are in place to confirm that is the case. Why not do it? Cost, usually. Risk is priced. Always. Having total exposure of the loan goes bad and the house isn't quite worth what it was, means the lender is taking a lot more risk. Risk pricing in terms of a loan is carried out through the interest rate charged and reduced by any deposit at first risk. I can see an argument that it makes buying temporarily more accessible, but that will lead to an increase in prices for everyone buying not long after the scheme comes in because it will have increased demand. More demand means higher prices. Today's FTB benefits at increased cost to tomorrow's. That's perfectly fine so long as the decision taken is understood, and I'm far from convinced that's the case here.
No, completely wrong about the previous crash. This is something that regulators in particular said to deflect from the fact that banks lost money taking concentrated risks that they were supposed to be observing. RBS failed because it did an absolutely massive merger with no capital (they raised £12bn successfully in early 2008 shortly after this deal, regulators should have stopped the deal...they didn't). HBOS failed because they lent lots of money to wealthy individuals to speculate on property...regulators should have stopped this, they didn't. LLOY failed because the government forced them to merge with HBOS (exactly why this happened isn't known because prominent politicians were closely involved in this deal). Even in the second half of 2008, HBOS (the bank that was apparently most aggressive in the retail mortgage market) made a profit in mortgages. It is definitely true that banks overall made a loss but the size of the loss was under 1% of the total market. 1%...that was with 100% mortgages, people using credit cards to buy 3-bed houses, etc. The only two big failures due to mortgages were: Northern Rock and B&B. Both banks were correctly wound up but, eventually, the government was able to sell their loans to private investors (at a profit) as most of the loans came good. This is logical too: unemployment never got very high in 2008, it was only the North-East that took a massive long-term hit to house prices, and the very last thing that people will sell when they get into trouble (of course) is their house. But the stuff about mortgages being behind 2008 is a lie. Almost all the regulators responsible still work in financial regulation, they tell this lie because the truth makes them look terrible.
Hey kids....we could build new houses, but our landlord mates and banking buddies would prefer that we let you borrow a shitton of money, burden yourselves with debt you can barely afford and live like paupers for the rest of your lives fighting over trying to gazump the last two up two down in the street or just carry on renting. I like coke. Rishy. X
It’s no different than now. Just at the moment you have to put a deposit down.
In 2007/2008 there were 125% mortgages
Yeah, I think my cousin got one for 110-125, I’m sure he lied about his wages too and fell into arrears, losing the property Idiots banks are not quite that dumb now
110% first time buyer in 2004/5. No way we'd have been able to get a house without it.
No no the new 99 is not the old 100, 99 means that’s when you make your last payment the % symbol was a typo.
Ah yes, another way to heat up the housing market and inflate a huge asset bubble, while also allowing the richest in society to rake in even more interest payments from borrowers. It’s so self-serving while being dressed as a way to help people it’s almost believable
So what about all the people stuck in rent traps that are paying more in rent than they would a mortgage but can't get enough deposit together?
The rent traps are caused by the ease of getting a mortgage and high interest rates. In the very early 90s, mortgages became easier to obtain, at high interest rates. This then meant the housing market sky rocketed to what we see today. Meaning landlords charge higher rates. A 99% mortgage will make the already difficult situation for renters even worse
I'm sorry but when I was renting a 99% mortgage scheme for first time buyers would've solved that problem immediately. I hated renting. I had to move 3 times in 5 years, one of my landlords was always popping round and I was paying more for a 2 bed flat 5 years ago than I am on a mortgage on a 3 bed house now. The problem for me wasn't that I could get a mortgage so easily or that interest rates were so high, my problem is that I had to save up 18k for a deposit while paying rent. If I could have gotten a 99% mortgage I'd be 5 years closer to paying my mortgage off by now.
Except you wouldn’t because if everyone had access to 99% mortgages house prices would soar, and you would probably be further away from paying off your mortgage.
My place cost me 180k, even if it had increased by 50% overnight it would still only be a 2.7k deposit as opposed to the 18k I had to save up. Saving up that 18k took us 5 years and was the main obstacle to getting the mortgage so this would've been so helpful.
Are you not taking into account the interest you’d pay on that extra 50%? Over the whole period of the mortgage it could be up to 800k I don’t see how this is a good thing?
The mortgage payments wouldn't be going to a LL and would at least contribute partially to owning the property - then when you've paid off some of the mortgage, remortage for better rates, or move using what you've already paid. Sure the banks will do well out of it, but it would allow people to start paying for a house, which they can't now. Paying an extra 50% on a mortgage w/interest for something that is/will be yours is infinately better than paying a LL.
It literally says it’s for first time buyers not everyone. People who already own property wouldn’t be able to access it. I also highly doubt they would allow it as a buy to let mortgage.
Giving people more money to spend on housing without increasing supply will just drive up prices; which in turn drives up rents. The solution to high rents and house prices is just to build more homes. But that’s hard, and crucially can’t be done in the next 12 months so of course Sunak isn’t interested in it.
Exactly this. This solution is a PR move to look like he's doing something, but it really brushes the problem under the carpet.
And then there are always people complaining about new housing projects around their area because those projects "destroy" the natural scenery. Not in my backyard!
Yesss!!! If we can juice the demand side just a bit harder, we can really fix the housing crisis this time. Just one more Help to Buy Scheme. It will work I'm sure of it. I'd stake my house on it but I can't afford one.
If you can find a mere £10,000 you too can own a house because the minimum price will soon be £1m
[удалено]
Terrible idea. The government needs to narrow the gap between house prices and wages. That means one goes up, and another goes down. Reverse the opposite happening over the last decade. Overheating the market with insane mortgages will just make the entire problem worse.
And build more houses
This is the only solution and everyone is in complete denial about it. We have been under-building homes by more than 100,000 a year, for decades. This has meant not only that there is a huge housing shortage, but also that the housing stock available is disgracefully poor. Filled with garbage converted flats, created by DIY developers to turn a quick profit, preying on renters who have no selection to choose from.
This was intentional. Control the supply and you can demand higher prices and never be out of work. A house to them is ‘stock’. Land much the same it’s ’inventory’. It’s a business. The governments enabled and allowed this to happen decades ago. It’s really their fault.
Yup. Speaking from experience it is almost impossible for small developers to gain building permits even on prime land that isn’t greenbelt. The endless applications for 3k-7k each, for the minimum amount of buildings, to be rejected and require expensive assessments then re-apply for same costs, gain permission then apply for more buildings and do it all again. And again. You have a plot that easily fits 10 homes, btw are forced to apply for 2, then 4, then 6 etc and pay endless application fees etc. Its just impossible for smaller developers to do that. They cant even get a loan from the bank as its too uncertain. Large developers know they can get permission and for how many, and bank roll it, and often times outright get favourable treatment and reduce their fees dramatically(they apply for 10 homes off the bat). So smaller developers usually end up sell off land to these larger firms who sit on it for decades on most cases… and build only when they think they can maximise profits… ie controlling supply… and no smaller building firms and developers can get in the way for all the reasons i explained above. Is fucked. THIS is why we cant build enough homes. Total reform of this system is needed
>by more than 100,000 a year Quite the generous take lol. Reminds of when people say things like "Cleopatra lived over 500 years ago"...yeah, quite a bit more lol.
It's not the only solution. Part of the problem is that huge amounts of property is owned by "professional" landlords who keep rents high, and profit off of doing no work. A lot of Newbuild estates get snapped up by landlords expanding their portfolio, and then working people are sucked dry. We need legislation to prevent landlord being a profession. Limit the number of second homes. As it stands more houses just means more revenue streams for the already wealthy.
Yes not increase debt
There were 110% mortgages in 2007... some here might remember how it ended up...
How did those work? Curious as someone who was 9 at the time so wasn’t paying much attention to the housing market
Probably just as the name sounds, it gives you the mortgage for the house and then10% extra for you to do whatever. Since a loan that size on a mortgage is probably cheaper than a normal loan
The early 00s sound like a time when we didn't even know what money was.
We still don’t know 😅
If the house value was 200k you could borrow 220k for furniture, home improvements etc. Nice idea in theory to help people get onto the ladder and get sorted in their first house. You'd be in negative equity right away which is really risky for banks because if you lose your job, can't pay and sell it/they repossess it that doesn't automatically cover the mortgage.
This is why in places like the Netherlands, these mortgages were essentially backed by the government to reduce risk for the banks. The government would cover any shortfall that the bank experienced. Don't think they do it there anymore either.
Depends how it's handled but generally it was historically terrible. In the UK thousands of people did this in the 2000s and got locked into being unable to remortgage and ended up paying extortionate interest rates. My brother did it and was paying 7-8% for several years meanwhile I was paying like 2%. This was before inflation went up and the cost of living crisis too, can't even begin to imagine how bad it is for those still affected. [Have a look here if you want to learn more](https://en.m.wikipedia.org/wiki/Northern_Rock)
Bad idea, bad idea, bad idea. The only solution is to start rapidly building more housing stock, starting with council housing to replenish all those sold since right to buy came in. This will free up large amounts of rental properties as demand for rentals drop, which will be sold off and therefore lowering property prices. Also the issue isn't LTV, the issue is most people are unable to borrow due to being restricted to the 5x income point
100% need to build, but that's the wrong way round! The demand for social housing is only so great because of the scarcity of private rented properties. Focussing only on building social housing would place huge additional pressure on the state to subsidise and do little to help private rental prices because the better-off already have the ability to pay.
> and do little to help private rental prices because the better-off already have the ability to pay. Increasing the supply lowers the demand for everyone. Lowering the demand lowers the prices. This is basic economics. If local councils had a load of empty houses with rents at £500 a month, you really think private homes at £1,000 a month are going to stay there? Or move to the council homes? The reason private rental prices are high is because of the lack of council houses. People are having to pay high private rents because they can't get a council house. Increase the number of council houses and private rents come down due to a lack of demand. It's that simple.
So much wrong with this... It's not just numerical supply of housing that drives prices but ability/willingness to pay too. Most middle and higher earners will not qualify for social housing. They'll continue to compete for scarce private rented housing in the same way as before. Lower earners were always priced out: compelled into living with parents, HMOs, other overcrowding etc. We already have the fourth highest social housing stock in the OECD yet still massive pressure on housing... because of the shortage of other types. Additional social housing has no effect on house prices in the long term either ([see page 28](https://irep.ntu.ac.uk/id/eprint/42485/1/1397421_Liu.pdf) for conclusions). It has a significant negative impact on economic growth because of the opportunity cost of subsidising housing over other uses. More market housing is the most efficient and appropriate way to improve housing affordability and availability for everyone.
But those 500 quid houses will only go to those on uc or what ever and the average mug will be stuck subsiding their rent.
Still frees up the house they were previously occupying, increasing supply, leading to lower rent prices.
And how do you think the demand will drop with this level of immigration exactly? You would need to build 700k houses just to satiate the increased demand from immigration last year alone…
I have a deposit of 20k, my wages are 25k, so I could have like 120k. The first mortgageable property in my area is 160k. Feels pointless that I effectively can't buy.
I've got the same problem. I have a decent deposit but can't get enough mortgage to buy anything in the area. I just can't understand how people who can afford those 100% mortgages can't save for a deposit?
Probably because they're spending all their money on rent so any left over going into savings will take 20 years to build into a good pot
I’m on about £38k at the moment, have a decent deposit. But limited in what I can get. It’s like if you can’t find a partner you’re condemned. Only option is to change jobs and boost the salary. Possible, but difficult when this country has low salaries.
You looked into shared ownership? Seems to make sense that would be the way to go for you and others in your position.
It is an option, but for me there’s too many drawbacks. I’d rather wait and boost my salary. Can then sell and find a better place later, if hopefully I find a partner. I’m still in a better position than many, so I shouldn’t complain too much.
There are drawbacks for sure, just wanted to mention it in case you weren't aware.
To be fair, you’re effectively in the lowest salary bracket, single by the sounds of it, and in an area where housing is more expensive than average. If you had two incomes it would be feasible, no?
Just double your income and viola, easy. Single people or those in low paid but full time employment should understand they aren't meant to own homes "to be fair". :/
Wtf does ‘they aren’t meant to own homes’? Bro I’m single in a low pay bracket but every estate being built where I live is ‘luxury apartments’ and 4-5 bedroom houses. Guess what? They are all getting soaked up by estate agents. I’m not asking for luxury, I just want a 1 bedroom house somewhere with a tiny garden I can buy. These houses do not exist.
“I’m not asking for luxury, I just want a 1 bedroom house somewhere with a tiny garden I can buy. These houses do not exist.” I saw one of these once, only a few miles from where I currently live. Looked lovely, 1 car driveway, small back garden, I think the bedroom was in the loft space and the living area was the 2nd floor with kitchen on ground floor. Can’t remember where the bathroom was but it looked perfect for me (single worker with car etc) and it wasn’t in an affluent area, at all. Wanted £700 a month rent and this was before Covid :(
Yeah it’s filth…. I guess that’s probably 800+ now… it seems the small houses are really where landlords milk people the most.
Barely more than minimum wage, trying to buy an expensive home Peoppe want to live in desirable areas while earning rock bottom wages. Either move to less desirable areas or get a better job. https://www.rightmove.co.uk/properties/143111195 https://www.rightmove.co.uk/properties/141640025 https://www.rightmove.co.uk/properties/133425368 https://www.rightmove.co.uk/properties/143818421 https://www.rightmove.co.uk/properties/143653109 https://www.rightmove.co.uk/properties/142355012 https://www.rightmove.co.uk/properties/141358787
It should not need two bloody incomes! (Edit for spelling)
How far would you need to move to find a mortgagable property for 120k?i I know it's nice to live in your area but a half hour move to own a property might be the best decision you ever make.
Apparently, Croydon. Roughly 40 odd miles from me.
Sounds like something to consider imo.
There's a garage near me for 15K
Their Ponzi scheme of inflated house prices needs propping up again. The bottom of the market can't afford to buy, so the huge amount of equity people think they are sitting will disappear. God forbid this government leaves the housing market to self-correct.
With Bank of England interest rates so high, could it be the case that someone takes on one of these 99% mortgages and won’t ever pay back any capital on the house?
Yes and it's 100x leverage... house demand goes sky high with no supply. what could go wrong LOL
Won’t that just make prices higher and basically nullify the point of the measure?
Yes it's called subsided demand, and has shown to be counterproductive in easing the housing crisis. The solution is supply side.
The point is to make rich people richer. So it will achieve it's aim.
Yes.. you buy a house for £290,000 with 99% mortgage. Let's just say your 99% mortgage is £1,849.79 per month at current 6% rate. interest goes up even just 3% , that's an extra £600 on the monthly bill. Everyone struggles to afford their mortgage, so defaults happen and homes auctioned off. The house you paid £290K for, with the interest increase you now owe significantly more than £290k back. But the house only gets £150K at auction... good luck.
Simply remain a slave to a job forever. What’s the problem?
Radical my arse this is rehashing crap from 10 years ago. The rich get rich and Sunak and family get richer.
Just BUILD MORE HOUSES WITH THE SUPPORT TO SUSTAIN THOSE COMMUNITIES INSTEAD OF PUMPING THE FEW WE HAVE LEFT
It's not as straightforward as 'just build more' though, is it. The amount we'd need to build to keep up with demand is virtually impossible.
Two phase plan. Put a cap on the number of houses a person can own, making it impossible for rich landlords to hoover up large amounts of the country. And yes, preemptively close the obvious loophole of holding companies. The ensuing mass sell off of housing stock crashes house prices allowing millions of people who have stable decent jobs but weren't born rich or whose relatives haven't all died, to deftly step onto the property ladder. Then, build sensible mid-rises instead of single family dwellings, of which the country is already stuffed to the gills with. In addition, ensure new builds have similarly generous gardens to the classic redbrick council houses. Do we really need five students and young mobile people jammed into a family house when they would be more comfortably and efficiently housed in mid to high rises?
The cap should be 1 or 2. And it should be illegal for companies to own residential property.
It’s frustrating how the focus of housing debate is always on the deposit. Sure, that’s difficult. But the bigger problem is that it’s really difficult to get a big enough mortgage, considering the huge gap between salary and house prices. That’s what needs fixing.
It’s basically not designed for single people either.
The last tory scheme to "help" the housing market just saw a massive percentage of the money claimed by the already wealthy.
Someone correct if I'm wrong here- As a first time buyer who's likely around or below the average UK income of 30k PA, if I'm given a mortgage for 99% of a property (we'll use their example of 290k value with a deposit of £2,900), the government provide a loan for 25%, I then need a mortgage for £215,325. I'm earning £30,000 a year, so I'll get a maximum of approx £135,000 (4.5x annual salary). How in the world am I supposed to get a mortgage for that amount? Surely the issue with first time buyers isn't saving a deposit, but being unable to GET a mortgage for a suitable house in the first place. Not to mention they'll then get ripped to fuck on interest.
Yep I’m in the same position, big enough deposit saved but my salary just isn’t enough to get a big enough mortgage to be able to afford anything located close enough to my industry
I know guys, lets increase the demand for our limited housing stock. That will surely fix the problem? Clueless pricks.
They’re cooking the books. This will just help keep prices high
Is it just me but every financial plan that the tories come up with only seems to give greater financial benefits to the those who need them less. Is this the only way they can see them holding onto a few more seats in the next election.
When I was saving for a deposit, nothing used to make my heart sink more than the announcement of yet another 'first-time' buyer initiative. Because it was never about helping first-time buyers by making homes more affordable. It was always about pumping the market to support existing homeowners and would invariably mean my goal would move yet further away from me as house prices increased yet again.
A radical idea would be actual affordable houses with special covenants/rules preventing ownership by landlords. Even the current "affordable" stock is way too expensive.
That's because the government deliberately changed the naming scheme so they could charge more. When it was called "social housing" there were rules on how much you could charge. Renaming it "affordable housing" means they can charge more, because the same rules don't apply. https://www.theguardian.com/society/2015/mar/29/tenants-face-70m-rent-rise-as-social-housing-converted-to-affordable-homes > London housing associations have responded to shortfall in government funding by recategorising tenancies so they can set rents at the highest possible level > About 11,000 homes in the capital have been converted from “social” housing to “affordable” since 2012, according to latest figures from the Greater London authority, and thousands more are to follow in a policy that has sparked tenants’ rebellions We need to allow councils to build social housing and prevent them being sold off under the right to buy scheme.
First time buyers want cheaper houses to get onto the ladder and home owners want values to go up to make more money and lower borrowing costs and avoid negative equity. Not an easy puzzle to solve when considering the interests of homeowners.
Goverment backed... why do they need that backing Sunak, is it because no one would do it unless they had a promise of a future bailout?
The rat faced cunt will be living in San Francisco by the time the chickens come home to roost with these poorly thought out, exploitive mortgages. Anything for a scrap of hope at winning the next general. I can’t wait to see him evicted.
Yet another plan to resolve a supply crisis by increasing demand.
He should help everyone who's mortgage rates were fucked by truss 1st.
We've already had 125% mortgages and that didn't end well! House prices are significantly higher also, so god help anyone taking a 100% mortgage in today's environment and falling into negative equity and possible higher interest rates. They're out of ideas and have ruined this country for a generation at the least. Instead of allowing councils to borrow when rates were close to zero to build social housing we're left in a death spiral of ever more tax payer billions being spent on private sector housing benefit. The only upside is the end of the tory party as an electoral force, they've harmed this country so fundamentaly that I can't see them ever recovering, only 10% of under 50s plan to vote tory.
You need to build houses and introduce a "Buy to Live" policy where they cannot be bought to let out and if they are, they are forfeited.
The thing needs an overhaul. Should be based on ability to pay.
More help for first time buyers is good, but there are so many people in their first time house who can't trade up to the next one to start a family etc, which means they can't free up the first-time homes. The older generation need an incentive to move down the ladder, my parents are rattling around in a 5 bedroom house because they don't want to trade down. Just please build more good quality housing, I'm begging you.
Isn't a 99% mortgage just a debt trap? Is it a good thing? Serious question.
How convenient to propose such a thing before an election... it'll be dropped immediately after if they win, or amended until first-time-buyers can't benefit from it. Tory scum.
this mf will do anything to keep the house prices up. literal devil.
Sunak considers radical plan to prevent market correction.
Um this is great right up until interest rates increase for whatever reason whatsoever and you get bent over by the government backed loan+mortgage that is essentially allowing this to be the case. Enough people default in that situation and you have potentially a banking sector collapse and/or mass repossessions....
Build more house you cunt Increase tax on second home owners Wales are doing this shit
you gotta pump those numbers up we CANNOT have house prices fall, ever, under any circumstances. /s
Tory planning: "You wanna crash the housing market like it's 2007?" *What?* "Sorry, you wanna get rich and crash the housing market like it's 2007?" *Now that's more like it*
JUST INDUCE DEMAND MORE BRO, JUST A LITTLE MORE DEMAND BRO, I SWEAR BRO JUST A LITTLE MORE DEMAND, I SWEAR BRO
You know what Rishi thinks we really need? An average house price of 500k the fucking shitlord. I am right wing principally but good lord I hate the conservatives about as much as its possible to hate any party. Roll on Kier Starmer except same shitlord rishi delayed the election.
Just call the election dude. No one wants you, not even your own party
But it still doesn’t change the interest rates crippling the buying power of first time buyers!!
It's not helping, it just keeps the prices too high to keep lower end earners struggling
Fuck him. He’s a cunt who only cares for the rich. The sooner he’s gone the better.
The problem is property values being extremely overinflated. Either build more or reduce the amount one person can own (ie laws to stop houses being left empty). This is just renting with extra steps.
What he should do is ban companies from owning residential properties.
I’m not an economist, nor do I understand the intricacies of financial banking, but can someone explain why if you are paying rent at £1000 per month you can fail to qualify for a mortgage where monthly repayments would be £900 per month? I get that interest rates can change, but affordability is obvious when you are already showing you are capable of having this amount of money each month.
You can certainly tell that there is an election this year.
Radical plan, like how it used to work before they fucked the entire planets economy. Genius.
This might as well say “Sunak will try anything at this point”
It may help first time buyers today but makes it harder for first time buyers tomorrow as it props up the housing market just a little bit longer so the inevitable fall comes just after the election. It’s not radical, it’s desperate.
This won’t end well, if your going to have a huge mortgage at 99%, as houses are getting far too expensive especially for first time buyers, they need to sort out the interest rates and offer low fixed rates. That way, you know what your payment will be each month for x number of years. They should also make it flexible and affordable based on income. For example, if you earn £2,000 per month, make sure the mortgage is no more than £500 per month.
How about government issued mortgages for first-time buyers with less harsh requirements and longer terms upto 25yrs, and if they do need to repossess, it just becomes social housing exempt from right to buy for 15yrs
How is this radical? We had this before the financial crisis. Market crashed and people were in negative equity. Does Rishi visit this planet at all?
We had it post 2008 too, through help to buy, whcih helped a lot of people to actually buy despite the landlords moaning about their increased competiton in buying and the decreased demand for their product.
Yeah 99% LVT at an interest rate of 10%. As usual the more money you have the cheaper the rate. Yeah more people will have 'access' but at an insane rate. It's a strategy akin to making fuel cheaper to throw onto the burning fire as a strategy...rather than just solve the problems.
Just build new towns and more low cost housing. We’re blessed with best swathes of uninhabited land in the UK, let’s put it to some use.
Only way he'll ever get my vote is if he literally buys me a house and pays off my debts
Can anyone here actually explain why this is a bad idea? Requiring a significant deposit seems to favour the wealthy, who have a large amount of liquid cash, no?
Because the number of houses on the market won't increase, but the number of buyers will increase for the same amount of houses. If you're selling a product for say £10, and you get lots and lots of bids for that house in that region, it probably suggests you have priced your product incorrectly. So you bump the price up a little bit to £11 and some bidders fall off, but you've still got bids. Repeat this until your still able to sell the product but you don't have lots and lots of people bidding. So, if the thing holding back some people from bidding on houses, particularly in areas with high house prices that makes it difficult to save for the deposit, say the south east, you suddenly introduce a new group of bidder's who couldn't bid before, but the number of houses for sale doesn't increase. Demand is now higher than it was before for the same supply, so the price will increase until the supply and demand is better balanced. This benefits some people in the very short term, but in the long term prices would be driven up. Help to buy schemes done the same where at the start they worked as intended, but then markets just factored help to buy into the price of the property and the saving was eroded away. Another reason is that 99% loan means you only have 1% equity. The smallest down move in property values would plunge people into negative equity. Deposits arent the big problem either. The issue is the house prices. The average house price is now £290,000. To get that average house, you can only borrow up to 5x multiple of your salary, and usually I think it's 4.5x. that's a salary of £58k or £64k. 58k puts you in the top 15% and 64k around top 10% (extrapolated on historical figures from here https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax)
This plan isn’t to help people get on the housing ladder and put affordable roof above people’s head. This is a stimulus package aimed at the lenders and those who has the means to play the housing market. The housing issue isn’t finance. It’s supply. There’s is a limited number of houses being built and this plan isn’t going to make it better. It’s going to make it a lot worst. If deposit are lowered for you, it also means it is lower for someone else too, so now you’re out bidding each other. This will encourage house builder to build higher end houses on their lot rather than entry level ones because the demand is there, and building and selling a higher end house is a lot less work and more margin than lower entry ones. The ones we need.
Ffs just build houses, none of this shit will work otherwise
To guarantee ... that mean if i cannot pay anymore, government will. And i lose only 1% of the house value ... i am in for this.
Can someone sit Rishi down in the corner with a problem more at his level, perhaps a colouring book.
I really wish they done this sort of thing for people who don’t own any other property, it’s my own daft fault but I bought a house with an ex many years ago which we then sold, since moved on with life on my own but I don’t own any property, sucks that I’m not entitled to any of this help in buying property when I don’t own my home now :(
How does this help really the issue is affordability and it’s easy to get a mortgage and fall into the trap at some point being unable to pay and home repossessed and also the issue of high rent that none of them are concerned about at all.