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

[Scam]

So do people think it would even be possible to take up this 5% mortgage guarantee in time to complete before the stamp duty holiday deadline(s)? Seems awfully close, are they just pressurising/trolling buyers into trying to complete for the stamp duty discount?

Interestingly enough, the further stamp duty holiday extension will add a further £1.6bn on top of the £3.3bn cost of the original extension. Yet the 1% payrise given to NHS nurses only equates to £500m a year. Makes it quite easy to see where the government's priorities lie, right?

 

[HACO]

Interestingly enough, the further stamp duty holiday extension will add a further £1.6bn on top of the £3.3bn cost of the original extension. Yet the 1% payrise given to NHS nurses only equates to £500m a year. Makes it quite easy to see where the government's priorities lie, right?

This is the insanity of our priorities. That £5bn could have increased school budgets by 10%, you know, investing in the future of this country. Instead school budgets have been cut by 9% over the last 10 years (in real terms). They could have given nurses a 10% payraise, instead their salaries have been cut by the same amount in real terms.

Unemployment and childhood poverty at record highs in recent memory, our education and healthcare spending are the lowest among modern developed countries. Wages are down over the last 12 years (in real terms).

Our property prices? Highest growth among all developed countries.

Our politicians are very effective, what's wrong is the priorities.

 

[Mark1989]

I cannot see how two people working on minimum wage cannot afford a 80-100k house, or that you've not already done so.

Its just so alien to me to read 80-100k. If i have 200k gross salary, and walk into an estate agents near me, they would laugh me out of the building.

I earn more than minium wage,as do my partner. When I saying living costs I mean a group of things really, the fact we need and have to run 2 cars, childcare fees at one stage which were excess of 600 quid a month

It's easily understandable why many don't have a mortgage or get on the ladder, least I can say am saving, its annoying that people don't save yet moan they can't have a mortgage every bit of saving any one does adds up over time no matter how much it is

 

[platinum87]

I earn more than minium wage,as do my partner. When I saying living costs I mean a group of things really, the fact we need and have to run 2 cars, childcare fees at one stage which were excess of 600 quid a month

It's easily understandable why many don't have a mortgage or get on the ladder, least I can say am saving, its annoying that people don't save yet moan they can't have a mortgage every bit of saving any one does adds up over time no matter how much it is

I honestly cannot comment in detail without sitting down and going over your finances. Anything else is just useless air tbh.

There is room to improve, first step is making a spreadsheet and tracking your spending.. Small things add up.

Rent for £500? Are you being serious? Any place renting for £500 will be a hovel. I pay £650 for a 2 bed house in Central Scotland. Head into any sizeable city and its £800pm.

£650 is very good from my perspective, especially for two people, i certainly would not complain about that.

In the end you need to have ideas, and then make a goal, and work towards it. If you do that you'd not be miserable living on the extremes of frugality.

 

[stuman]

This is the insanity of our priorities. That £5bn could have increased school budgets by 10%, you know, investing in the future of this country. Instead school budgets have been cut by 9% over the last 10 years (in real terms). They could have given nurses a 10% payraise, instead their salaries have been cut by the same amount in real terms.

Unemployment and childhood poverty at record highs in recent memory, our education and healthcare spending are the lowest among modern developed countries. Wages are down over the last 12 years (in real terms).

Our property prices? Highest growth among all developed countries.

Our politicians are very effective, what's wrong is the priorities.

ive not seen the numbers, but can imagine, maybe not on purpose that we find ourselves in a situation where there would be financial ruin far greater, and affecting far greater numbers of people if we can’t sustain / manage the house prices and markets that are influenced by it.

Imagine house prices come down by 20% leaving most people in negative equity. Sensing the risk banks up interest rates to build a buffer and mitigate some loss when people default. Because of negative equity, you can’t remortgage and are stuck with an unaffordable mortgage.This then drives a spiral where banks up their interest rates due to risk, mortgages become even more unaffordable more people lose their mortgages and increase risk to banks, thus driving interest rates. You end up with millions of people homeless and bankrupt.

it’s a very precarious edge we are balancing on.

 

[b0rn2sk8]

Where did you get that most people will be in negative equity?

Some people have bought and borrowed high in the last couple of years sure but most people have owned their houses for a significant number of years and the value will have grown significantly. People who ‘trade up’ often do so with a significant amount of equity.

A 20% drop will only put house prices back a few years on average. They gained 9% in the last year alone.

Being in negative equity is also only a problem if you want to move or need to remortgage because eventually your deal will expire and you’ll be stuck on a poor rate compared to what’s going on the market now. But if you can still afford the repayments it isn’t an issue.

 

[builder22]

I honestly cannot comment in detail without sitting down and going over your finances. Anything else is just useless air tbh.

There is room to improve, first step is making a spreadsheet and tracking your spending.. Small things add up.

how can you possibly know there’s room to improve....you’ve just said ‘I’ve no idea of your finances but there’s room to improve’

 

[HACO]

ive not seen the numbers, but can imagine, maybe not on purpose that we find ourselves in a situation where there would be financial ruin far greater, and affecting far greater numbers of people if we can’t sustain / manage the house prices and markets that are influenced by it.

Imagine house prices come down by 20% leaving most people in negative equity. Sensing the risk banks up interest rates to build a buffer and mitigate some loss when people default. Because of negative equity, you can’t remortgage and are stuck with an unaffordable mortgage.This then drives a spiral where banks up their interest rates due to risk, mortgages become even more unaffordable more people lose their mortgages and increase risk to banks, thus driving interest rates. You end up with millions of people homeless and bankrupt.

it’s a very precarious edge we are balancing on.

If prices never grew at the 10x inflation rate, we would have never been in this place. Now that we are, this needs to be corrected through policy to minimise damage.

Interest rates will have to go up, with all the money printing going on which will result in inflation at some point. All these bandaids will just delay the inevitable. At some point, the government is going to run of options to further inflate the prices and will have to accept a contraction.

We're not the first country who inflated their property bubble for a long time to artificially pretend like their economy is growing, we won't be the last. A day of reckoning always comes. It came for Japan, Spain, Ireland, Poland, the US and Denmark. It will come for us.

Imagine house prices come down by 20% leaving most people in negative equity.

Personally, I'd say let it come. If housing is an investment is has to be allowed to fall, and if it's not an investment then people shouldn't be able to profit from it. You can't privatise the gains and socialise the losses.

If you borrow money to invest, you need to have considered that it may not pay off. If you didn't, it's your own fault.

Homeowners gained 10% just last year alone, nearly 80% in the last 10 years. And it's all been tax-free. A very sweet deal for them, but they're never satisfied and they always want more. A 20% drop will not make millions homeless. Sure, people who just bought on 95% LTV will be screwed, but if you borrowed on 95% LTV to buy any asset, you're screwed if it falls. That's no reason for government to socialise the losses of people who mindlessly borrowed money.

 

[platinum87]

how can you possibly know there’s room to improve....you’ve just said ‘I’ve no idea of your finances but there’s room to improve’

Because there is always room to improve. I said i cannot comment in detail, i could surely write a list of 10 things, and most will help. But then again its all common sense anyway.

In addition i have no idea how to cut expenses while having children, or a wife. And i don't plan to ever learn as i will have neither.

 

[413x]

A 20 percent drop would be pretty disaterous terous.

For myself. That would put me at 0 percent owning my house. Would lock me into a rate current provider dictates and basically would mean no money to spend on 'the economy'

For many it would definitely mean either same or much worse.

Basically erasing the last 10 years of saving for a house etc

At this point the SVR would probably be.. What 6 percent plus? It's 3.6 percent now

6 percent would increase my bill 550 ppm.

Yeah that would be crippling

 

[Rids]

Homeowners gained 10% just last year alone, nearly 80% in the last 10 years. And it's all been tax-free. A very sweet deal for them, but they're never satisfied and they always want more. A 20% drop will not make millions homeless. Sure, people who just bought on 95% LTV will be screwed, but if you borrowed on 95% LTV to buy any asset, you're screwed if it falls. That's no reason for government to socialise the losses of people who mindlessly borrowed money.

But you're not though, if you bought a place to live in, and its value falls... you can still live in it.

I'm probably going to go the 95% LTV route, because I can afford the payments, and as this will be the home I plan to live in until its paid off I'm not concerned about a potential short term drop in value.

 

[HACO]

But you're not though, if you bought a place to live in, and its value falls... you can still live in it.

I'm probably going to go the 95% LTV route, because I can afford the payments, and as this will be the home I plan to live in until its paid off I'm not concerned about a potential short term drop in value.

That's the correct attitude!

 

[Scam]

Imagine house prices come down by 20% leaving most people in negative equity.

That's a pretty massive assumption to make to crowbar your point home! And also entirely wrong I'm sure! Home-buying has been on a massive decline (excluding BTL, second homes etc.) in the last 10-15 years. That's why we have generation rent you know?

I'd imagine the proportion of people to struggle because of negative equity would be fairly small. Let's not forget all the machinations banks can employ to keep people on their books and paying their mortgage 'somehow'. 'Most' people would be fine.

 

[HACO]

A 20 percent drop would be pretty disaterous terous.

For myself. That would put me at 0 percent owning my house. Would lock me into a rate current provider dictates and basically would mean no money to spend on 'the economy'

For many it would definitely mean either same or much worse.

Basically erasing the last 10 years of saving for a house etc

At this point the SVR would probably be.. What 6 percent plus? It's 3.6 percent now

6 percent would increase my bill 550 ppm.

Yeah that would be crippling

For you. For lots of others (new buyers), it will be liberating as they can buy a home with significantly lower payments, money they can spend on 'the economy'. Why should homeowners be bailed out, lol. Average FTB buyer spends 50% of their income on housing payments, average homeowner of 10+ year spends 20%.

For most (people who are 40% equity or more), it will have very little to no effect.

Basically erasing the last 10 years of saving for a house etc

In the last 10 years, properties on average grew 80%. So assuming you've kept up with mortgage payment your equity is already 65% or so, and a 20% drop will not leave you at 0. It will just erase a small amount of the absurd gains of the last decade. Your monthly payments will not increase by any meaningful amount.

 

[Bear]

But you're not though, if you bought a place to live in, and its value falls... you can still live in it.

I'm probably going to go the 95% LTV route, because I can afford the payments, and as this will be the home I plan to live in until its paid off I'm not concerned about a potential short term drop in value.

You will do when you come to remortgage. At 95% LTV the interest will be above better LTV ratios. When your mortgage deal runs its course in say 2 years time, if your house had appreciated in value, the LTV ratio will have improved meaning you can get a cheaper product.

The fact you want to go the 95% LTV would imply you don’t have the money for a decent deposit, so any money saving when it comes to remortgaging would be welcome I’m sure. Unless of course to don’t care about having more money in your pocket, but I presume like most people you do, in which case you don’t understand the implications of what you are saying

 

[413x]

For you. For lots of others (new buyers), it will be liberating as they can buy a home with significantly lower payments, money they can spend on 'the economy'. Why should homeowners be bailed out, lol. Average FTB buyer spends 50% of their income on housing payments, average homeowner of 10+ year spends 20%.

For most (people who are 40% equity or more), it will have very little to no effect.



In the last 10 years, properties on average grew 80%. So assuming you've kept up with mortgage payment your equity is already 65% or so, and a 20% drop will not leave you at 0. It will just erase a small amount of the absurd gains of the last decade. Your monthly payments will not increase by any meaningful amount.

This is it isn't it.

The recent buyers will be the ones shafted.
Basically it would be like wiping 10-15 years of savings out. And would never end up paying a mortgage down.

I'd just chuck it all in to be honest if I went negative now.
Go back home to my parents and work on getting out of the country. No way I'd be able to start again at this age with a few health issues at 35 with nothing to my name.

Hoping I get far enough down the road that it doesn't affect me really.

Obviously someone always loses out in a price crash. Cash buyers win and first time buyers ready to buy.
People near mortgage freedom less impacged
And people releasing equity/inheritance impacted heavily.

But really the ones who mostly lose out are buyers in last 0-5 years.

A lot who will be snapping up the 5 percent thing.

 

[Deleted User 298457]

This is it isn't it.

The recent buyers will be the ones shafted.
Basically it would be like wiping 10-15 years of savings out. And would never end up paying a mortgage down.

I'd just chuck it all in to be honest if I went negative.
Go back home to my parents and work on getting out of the country. No way I'd be able to start again at this age with a few health issues at 35 with nothing to my name.

Hoping I get far enough down the road that it doesn't affect me really.

Obviously someone always loses out. Price crash. Cash buyers win and first time buyers ready to buy.
People near mortgage freedom less so. And people releasing equity too.

But really the ones who mostly lose out are buyers in last 0-5 years.

A lot who will be snapping up the 5 percent thing.

Saw my brother go through this in 2008. If it wasn't for his job he would have threw the towel in.

 

[413x]

Saw my brother go through this in 2008. If it wasn't for his job he would have threw the towel in.

I certainly would throw it in, if it made sense. I'd do some maths, find out if it's worth it. Make the decision. Stick all my cash in btc. Hide the wallet. Declare bankruptcy, Emigrate if possible.

No idea what point that would be.

How did he do in the end?

 

[Rids]

You will do when you come to remortgage. At 95% LTV the interest will be above better LTV ratios. When your mortgage deal runs its course in say 2 years time, if your house had appreciated in value, the LTV ratio will have improved meaning you can get a cheaper product.

The fact you want to go the 95% LTV would imply you don’t have the money for a decent deposit, so any money saving when it comes to remortgaging would be welcome I’m sure. Unless of course to don’t care about having more money in your pocket, but I presume like most people you do, in which case you don’t understand the implications of what you are saying

To be fair, if you fix for less than 5 years at a 95% LTV then you've made a mistake. After 5 years on a 25 year valuation you've paid off circa 15% of the initial capital - so assuming a 20% drop in house prices sustained over 5 years then you're back to a 100% LTV. Sure that means your pretty much locked in to your existing mortgage, and things might be tight but for a couple of years, but even then you're only a couple of years away from being back to a 90% LTV. No reason for that to be the end of the world if you're smart with your money.

 

[Richie]

What if there was a tax on the "profit" of a house? e.g. Buy a house for £200,000 and then, 5 years later, sell for £250,000 so you pay a tax on the £50k difference

Or have a stamp duty on the sellers for houses above a certain value.

These may have the effect of prices being controlled?