Budget 2021: Mortgage guarantee to help buyers with 5% deposit

[platinum87]

As for people getting their wish, a crash would have happened long ago if it wasn't for government interventions. Capitalism needs their boom/bust cycles and artificially avoiding/postponing a bust will only work for so long. We're following, to the letter, Japan's 1980s fiscal, monetary and housing policies in their attempt to postpone their bust cycle. We also know how that ended.

The reason we don't have a crash is because central banks are creating money, and using that money to buy government bonds.

The free market thinks interest rates are too low, so bonds are sold, that means the yield of those bonds to go up, the central bank is buying the bonds with money they create to prop up the price.

The central bank of Australia has doubled its daily purchasing of bonds. Soon the US will double its daily purchasing also, along with all other central banks.

I am unsure if you are against capitalism or not? Boom/bust will occur in every system, manipulation will exacerbate the boom/bust, but it does not prevent anything.

 

[dowie]

£260k is median property price though, not a 3 bedroom house. To buy the median property, you need to be a dual income household.

So? What is your point? I think that is generally going to continue, to have a family home you're probably going to need to be a high earner or at least have a partner working part-time even if we do increase housing stock significantly.

15 years ago price-to-income ratio was about 6.5x, now it's almost 10x. Last time it's been this high was 1875.

Interest rates are rather low too - if people can afford to pay these prices then they'll stay high, I suspect they could dip a bit in the near future though.

Or maybe, I know it's crazy, we should have built enough houses to keep up with increase in population and demand, so that the increase in productivity by more women working wouldn't go into the pockets of land owners and developers, and instead would go into the pockets of the people.

Well it's not crazy now is it so no need for sarcasm, it's not going to solve anything for the people who want to live in some given area, so long as there is high demand for any location then people will compete and the losers will grumble - there were people moaning about house prices online well over 15 years ago... I remember reading forums in the early 00s and people were adamant that houses cost too much and the market was bound to crash soon as it wasn't sustainable etc.. yet here we are, 20 years on...

It isn't like there aren't affordable areas in the UK right now even - the trend perhaps will be towards more remote work post-pandemic. People can sit and moan or they can look at moving or getting a job where they can work remotely or changing their skill set etc..

This is a return to Feudalism.

LOL

 

[HACO]

The reason we don't have a crash is because central banks are creating money, and using that money to buy government bonds.

The free market thinks interest rates are too low, so bonds are sold, that means the yield of those bonds to go up, the central bank is buying the bonds with money they create to prop up the price.

The central bank of Australia has doubled its daily purchasing of bonds. Soon the US will double its daily purchasing also, along with all other central banks.

I am unsure if you are against capitalism or not? Boom/bust will occur in every system, manipulation will exacerbate the boom/bust, but it does not prevent anything.

I'm against capitalising the gains and socialising the losses, which our housing market has turned into.

If housing is a capitalist, for-profit, investment, then it should be allowed to fall without government intervening.
If housing is an essential service and shouldn't be allowed to fall, then people shouldn't be allowed to take profits from it either.

Interest rates are rather low too - if people can afford to pay these prices then they'll stay high, I suspect they could dip a bit in the near future though.

Coupling mortgage interest rates to the base rate is another scandal, it's so insane no other country in Europe does this, and neither does the US.

Well it's not crazy now is it so no need for sarcasm, it's not going to solve anything for the people who want to live in some given area, so long as there is high demand for any location then people will compete and the losers will grumble - there were people moaning about house prices online well over 15 years ago... I remember reading forums in the early 00s and people were adamant that houses cost too much and the market was bound to crash soon as it wasn't sustainable etc.. yet here we are, 20 years on...

Don't you think you're forgetting something? Something that happened in the late 2000s? People refer to it as the Global Financial Crisis? Don't you forget what caused it? And don't you see we're exactly repeating those same steps?

LOL

It isn't like there aren't affordable areas in the UK right now even - the trend perhaps will be towards more remote work post-pandemic. People can sit and moan or they can look at moving or getting a job where they can work remotely or changing their skill set etc..

The good old "uproot your life so you can afford a roof over your head" argument. Funny, if everyone does that, those so-called affordable places won't remain affordable. And when there's an influx of London workers into remote areas, the locals in those areas are going to get priced out. Or maybe they now need to uproot their lives and move somewhere else.

You can't solve a massive, multi-million housing shortage by relocating people.

 

[Surveyor]

I'm quite liking the look of this scheme - could be a real boon for us as we are looking for a second home and this scheme does not appear limited to first time buyers which is surprising tbh!

The full details of the scheme haven't been announced yet but the Chancellor's budget speech suggests it's not to help people buy second homes.

Even with the stamp duty cut, there is still a significant barrier to people getting on the housing ladder – the cost of a deposit.

So I’m announcing today a new policy to stand behind homebuyers: a mortgage guarantee.

Lenders who provide mortgages to home buyers who can only afford a five percent deposit, will benefit from a government guarantee on those mortgages.

And I’m pleased to say that several of the country’s largest lenders including Lloyds, NatWest, Santander, Barclays and HSBC will be offering these 95% mortgages from next month, and I know more, including Virgin Money will follow shortly after.

A policy that gives people who can’t afford a big deposit the chance to buy their own home.

 

[Will Gill]

Fair warning to everyone, this thread will also be closed if it turns into another echo chamber / circle jerk.

 

[HACO]

Fair warning to everyone, this thread will also be closed if it turns into another echo chamber / circle jerk.

How about a warzone? That's what the other topic was

 

[Will Gill]

The other thread went way beyond its sell by date, we were too lenient

A decent discussion is the raison d'être of this forum, but when a thread just blackholes into bickering with two obvious sides giving no quarter, that's when the 'fun' stops

 

[Fubsy]

In those threads, is there a way to auto-play Skyrim battle music whenever you enter them? Will give people advance warning what they are getting into.

I personally love those types of threads, they are active, adversarial, really get down to the details and I like being part of a forum where people have so much free time that they can spend hours on end over multiple days arguing the same subject to death as if their lives depended on it - please don't kill that

 

[FoxEye]

The idea that only dual income households deserve to be homeowners is absurd, this is only the result of the last 15 years where wages remained stagnant and property prices more than doubled.

UK median price-to-income ratio is almost 10x now (London nearly 15x), so not affordable even for dual income households anymore.

It's quite a common theme here (and among the wider populace) that there's something entirely wrong with long-term singletons, and they don't deserve anything but the tiniest of cupboards to live in. Certainly not a house!

We shall put our non-couplified plebs in cupboards and even those 0.5 bedroom (which is also the kitchen/loo/living area) cupboards will cost >£150k.

 

[jaybee]

It is not the deposit that is the issue. It is the fact, lender will only times your income by 4.5 or 4.75, it depends on the lender. Houses are too expensive and when you multiple the person income, they won't get enough mortgage to buy the house. The only way out of this is for the person to have a good deposit and that is years of saving. This scheme will only drive house prices up. Unless you have a very good income that will get you the house you want, this scheme will suit you but houses are too expensive, even with a joint income, you will be struggling to get a decent mortgage. Where I live, average 3 bed house ranges from £260k plus, so you would need atleast annual income of £55k per year to get a mortgage like that. The average salary is too low especially against home prices. One day, I will buy my own home, but its not possible right now so I will continue to save for a deposit.

Yep. Houses round my way are up to £400,000 for a 3 bed semi depending on area. Let's say you can get one for £350,000. On a 95% mortgage you'd still need to be earning a combined income of £73,888 per annum @ 4.5 times your salary. The average household does not bring that in.

 

[FoxEye]

In those threads, is there a way to auto-play Skyrim battle music whenever you enter them? Will give people advance warning what they are getting into.

I personally love those types of threads, they are active, adversarial, really get down to the details and I like being part of a forum where people have so much free time that they can spend hours on end over multiple days arguing the same subject to death as if their lives depended on it - please don't kill that

Try having ~70% of your take home pay taken as rent. It's a heated topic because we're sucking the life out of the low paid just to put a roof over their heads (often not even a particularly nice one).

And for everyone else, the pain of getting on the ladder is so great, that once on, they start wanting house prices to climb and climb regardless of how healthy that is for society overall.

 

[jaybee]

It's quite a common theme here (and among the wider populace) that there's something entirely wrong with long-term singletons, and they don't deserve anything but the tiniest of cupboards to live in. Certainly not a house!

We shall put our non-couplified plebs in cupboards and even those 0.5 bedroom (which is also the kitchen/loo/living area) cupboards will cost >£150k.

Yeah, I don't understand this whole obsession with your house increasing in value though. So what it doubles over 10 years...and? If you want to move house everywhere else has gone up too. You only gain if you own multiple properties or downsize. I bought a house to live in. If it halves in price, my only concern is whether I can keep living there due to negative equity.
How on earth kids of today will ever own a house... seems unsustainable.

 

[Puzzled]

Again, it's absurd to celebrate women in the workforce, only to pay all that extra income for housing. Every family would be significantly wealthier if the cost of housing had only increased with inflation over the last 50 years. E.g. Singapore has a higher % of female labor force participation than the UK, with most of that progress happening in the last 20 years, their house prices didn't increase over the last 30 years above inflation.

After accounting for housing, the average dual income household now has less purchasing power than the average single income household 30 years ago. This is a return to Feudalism.

It does seem strange how your average household now has 2 people working full time and yet still struggles financially. How on earth did people cope with one just one breadwinner in the past, for most its just not financially viable for one parent not to work and ends up with childcare being passed on to grandparents.

No one would argue that women being an equal part of the workforce is a bad thing (well some would but we ignore them) but when you simplify it down to 2 incomes now vs 1 in the past, shouldn't families be much better off? Or have living costs risen to counter that rise in joint income, leaving single people even worse off.

 

[FoxEye]

Yeah, I don't understand this whole obsession with your house increasing in value though. So what it doubles over 10 years...and? If you want to move house everywhere else has gone up too. You only gain if you own multiple properties or downsize. I bought a house to live in. If it halves in price, my only concern is whether I can keep living there due to negative equity.
How on earth kids of today will ever own a house... seems unsustainable.

Which in itself wouldn't be the end of the world, but..

..what we have is a combination of millions being unable to get on the property ladder *and* a completely broken rental market - where rents of 70% of your take-home earnings are not uncommon. The rental market in the UK simply exists to re-distribute wealth from the poor (and the taxpayer) to the well-off.

 

[skiersteve123]

Im not sure if this is everywhere but essex and hertfordshire is getting a ton of houses built but they are so expensive, harlow where I live has/is getting houses on every bit of land they can build on but new build flats start at 240k for a tiny 1 bed >< and houses start a fair bit higher than that, everything sells though its nuts are people really buying the shared ownership? I checked that out but it looks horrible? ..... just a few more years of saving and ill get there eventually....

 

[FoxEye]

No one would argue that women being an equal part of the workforce is a bad thing (well some would but we ignore them) but when you simplify it down to 2 incomes now vs 1 in the past, shouldn't families be much better off? Or have living costs risen to counter that rise in joint income, leaving single people even worse off.

Perhaps some of that stems from a wealth divide that is getting more and more stark every year. It's not unforeseeable that we could return to mass poverty whilst the at the other end of the table, the global elite own just about everything. Of course that tends to end in civil unrest (again, not out of the question even here in the UK).

Then I guess you've got the whole "aging population"/increased life expectancy/"pensions black hole" problem. Which various governments wanted to "fix" by simply growing the population as fast as possible (which predictably has come with its own set of problems).

The trouble is that for a lot of the time the UK is governed by a government that has no ideological problem with the poor losing out/losing everything. Who hate social safety nets. Who detest state-owned housing. Who want to stoke up class division, want the middle-classes to blame the poor for their own problems, whilst at the same time encouraging the middle class to become BTL, buy 2nd homes, etc*. Who want everyone indebted to the banks for most of their lives.

*Amusingly (or not), central govt a few years back said they were "concerned" that not enough 2nd homes were being built in Cornwall to meet the demand. Just LOL at how out of touch they are.

 

[Fubsy]

Try having ~70% of your take home pay taken as rent. It's a heated topic because we're sucking the life out of the low paid just to put a roof over their heads (often not even a particularly nice one).

And for everyone else, the pain of getting on the ladder is so great, that once on, they start wanting house prices to climb and climb regardless of how healthy that is for society overall.

I'm pretty certain I was moaning about this sort of stuff back in 2009, nothing has changed and it's got worse. I've just been lucky to find a partner and we've pooled funds. If we ever separate I'll likely be screwed.

Hell, I even moved to an area with higher prices (NW to SE) in order to escape having no prospects but endless retail work. Renting sucked, but we never had things wrong with the places we stayed at, but this was relative to what we paid - crap places were cheap and we accepted things didn't work or didn't look nice, good places were pricier. Sometimes I miss the simpler times of renting as sucky as it was - boiler, fridge, washer/dryer broke? It got fixed pretty quick at no extra cost. House in the roof? Fixed. Front door broken? Fixed. It all mounts up when you own your own place as we've found out.

Owning so far has sucked only slightly less so, and looking to move atm with our house NOT increasing in value while every other one in the areas we've looked at have is irritating but one of those things. This is thanks to good rates only available to those with hefty deposits or equity, properties available in the starter range can be money sinks in terms of maintenance (we can't all get new builds or fully refurbished flipped homes), higher initial purchase prices, getting work done on plumbing, electrics, brickwork, roof etc isn't exactly affordable when 50%+ is going out on mortgage.

At least at the end of it when I'm old, wrinkly and no use to the nation as a worker I'll be able to pay for someone to wipe my bottom, which I think is the real reason the market is protected and nothing is done to sort funding for that area.

It's life, I'm letting it wash over me or I'll be incredibly unhappy for the entirety of it like I was in my early years.

 

[FoxEye]

It's life, I'm letting it wash over me or I'll be incredibly unhappy for the entirety of it like I was in my early years.

It's life in the UK

Other countries aren't so obsessed with creating and maintaining a housing price bubble, to the exclusion of all else.

 

[Deleted User 298457]

And the circle jerk begins...

 

[Fubsy]

It's life in the UK

Other countries aren't so obsessed with creating and maintaining a housing price bubble, to the exclusion of all else.

You've already announced you intend to leave. You have form for intending to do things and then don't do them though.

Just be at peace with that decision, leave, make something of your life (or don't) and do what everyone else I've know that has done it does, come back with your tail in between your legs admitting the rest of the world is just as ****.

The UK isn't for everyone, but I've seen enough romanticising of other countries to know that most of the time it's foolishness. No matter where you go in the world there is a group of people in that country that will be **** on from a great height, how sure are you that it won't be you when you get there?