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

[Deleted User 298457]

I'm not hoping anything.

I could hope for the housing market to correct itself, but vested interests will ensure it doesn't.

I'm not hoping anything, and the action I will be taking (in the mid-term) is to leave a country where self-interest is the only game in town. I find it so depressing. People in this country have no social conscience at all. Not even a little.

Some people even think we pay a "lot of tax" and should have less taxation and more deprivation. Because everybody who has nothing has "only themselves to blame". Just pull yourselves up...


Yes of course I just bum around all day.

That's literally what all council workers do, isn't it?

How much do you earn? How much do you think you should earn? Why do you think you underperform the 'average' (median would be a much more useful figure imo). Do you think you contribute to society a disproportionate amount to the rest of us? I probably pay more in tax than you earn, does that make you or me the worse human in terms of societal contribution?

 

[FoxEye]

How much do you earn? How much do you think you should earn? Why do you think you underperform the 'average' (median would be a much more useful figure imo). Do you think you contribute to society a disproportionate amount to the rest of us? I probably pay more in tax than you earn, does that make you or me the worse human in terms of societal contribution?

I have more issue with a basic requirement for stable living - a home - being a luxury item only "affordable" by the top 50%.

We're not talking "free mansions for the poor" as some people have tried to frame the ask.

We're talking going from a situation some years ago where a modest income could buy a modest house, to plummeting home ownership year-on-year.

If "nothing is wrong" and these trends continue, then I guess more and more people just don't want to own their own home, right? They'd rather pay more in rent

Btw it's not uncommon down here for rent to be >55% of take home earnings. In some cases in excess of 70%.

You could call it a "poverty trap", but that might be considered "a bit communist" by some

 

[dowie]

Not sure about this, my gut response is I don't like high LTV being available especially in a period of economic instability, arguably part of the last financial crisis was due to 'bad debts' like at Northern Rock etc. That said, maybe having a guarantor de-risks this a bit (or does it, if the state is underwriting it...?)

Yup they need to be careful with affordability, the previous financial crisis had more than just low deposits to blame - there were liar loans, mixing in risky mortgages with others to spread around/disguise the actual risk. There was a bit of early wokeness involved too - pressure to increase loans to African Americans etc... even though they weren't necessarily affordable.

This is just dealing with the deposit hurdle - a common complaint people have is that they have been renting for years, paying as much in rent as they'd be paying for a mortgage, never missed a rent payment and yet can't get a mortgage thanks to lack of deposit.... ergo are, in their eyes, throwing money down the drain. This removes that hurdle, of course, they then do need to appreciate that they will be the ones taking on actual risk re: house prices too but the choice is there for most people - they can actively choose to carry on renting or to buy, they're not forced into just renting and claim to be "throwing money down the drain", they're now actively paying someone else to take on that risk and for them to have a bit more utility in being able to move more easily etc...

So, it's a terrible idea then yes?
No, we have a much bigger deposit than 5%. I certainly would never entertain the idea of taking on a 95% LTV as a FTB.

So you currently find some utility in renting - your landlord is actually providing a useful service to you?

You have a bigger deposit than 5% but have chosen not to buy right? I got the impression in other threads that you were a bit bitter about handing over money to some landlord yet you don't seem to be willing to take on that financial commitment yourself either?

I'm not hoping anything, and the action I will be taking (in the mid-term) is to leave a country where self-interest is the only game in town. I find it so depressing. People in this country have no social conscience at all. Not even a little.

Seems like a lot of projection there tbh... and a bit of entitlement re: where you think house prices should be, they're expensive in your area because lots of people want to live there.

I mean the obvious solution to this would be to simply look beyond your current town or county, moving to an entirely new country comes with its own set of issues, expenses but fair play if you actually do it.

 

[Deleted User 298457]

I have more issue with a basic requirement for stable living - a home - being a luxury item only "affordable" by the top 50%.

We're not talking "free mansions for the poor" as some people have tried to frame the ask.

We're talking going from a situation some years ago where a modest income could buy a modest house, to plummeting home ownership year-on-year.

If "nothing is wrong" and these trends continue, then I guess more and more people just don't want to own their own home, right? They'd rather pay more in rent

Btw it's not uncommon down here for rent to be >55% of take home earnings. In some cases in excess of 70%.

You could call it a "poverty trap", but that might be considered "a bit communist" by some

Right but not withstanding the desirability of an area being the biggest driving force of cost, people shouldnt ideally be staying at 55-70% of their income as they would likely begin to be more productive to society and earn more, pay more tax, add more to society?

How much risk is involved in your job? Can you sleep easily at night that if you lost it you could find another income/job and your livelihood wouldn't be in absolute tatters? Most high earners don't have that privilege. Risk/reward economics...you chose no risk, you get low reward. Simples.

 

[FoxEye]

Right but not withstanding the desirability of an area being the biggest driving force of cost, people shouldnt ideally be staying at 55-70% of their income as they would likely begin to be more productive to society and earn more, pay more tax, add more to society?

How much risk is involved in your job? Can you sleep easily at night that if you lost it you could find another income/job and your livelihood wouldn't be in absolute tatters? Most high earners don't have that privilege. Risk/reward economics...you chose no risk, you get low reward. Simples.

That second paragraph (especially) makes no sense to me at all.

The more you earn the more your life would be in tatters if you lost your job?

That does not resonate with the reality of low earners. They are less likely to have any savings at all, for one. Less likely to have assets they could sell for another. Lastly, will likely have more difficulty finding another job...

So what you said appears the exact opposite of what I would expect.

In fairness I've read the first paragraph three times and can't for the life of me make sense of that, either. You seem to be saying people should just "choose to earn more". Which I'm sure makes sense to you.

 

[englishpremier]

I agree with some other posters in that a deposit probably isn't a massive issue. I could get together 20k without much of an issue, but a mortgage of £130k at 3+% would see me paying over £800 on the mortgage, plus bills would see it over £1000 a month.

To put that in perspective, the one bed flat I was renting in Norwich was probably worth about £150k but my rent was only £450 a month. Cheaper to rent and spend the rest on hookers and blow.

 

[Deleted User 298457]

That second paragraph (especially) makes no sense to me at all.

The more you earn the more your life would be in tatters if you lost your job?

That does not resonate with the reality of low earners. They are less likely to have any savings at all, for one. Less likely to have assets they could sell for another. Lastly, will likely have more difficulty finding another job...

So what you said appears the exact opposite of what I would expect.

In fairness I've read the first paragraph three times and can't for the life of me make sense of that, either. You seem to be saying people should just "choose to earn more". Which I'm sure makes sense to you.

A humans productivity should increase over time. You seem to have stagnated well before your time and chosen not to better yourself or ask for more. You are now disenfranchised 'cause society doesn't give a crap that your a bit washed up and now you've said you're already checked, care less at all.

And yes, high earners will find it harder to find another high earning job and likely have much bigger outgoings. Someone sacked from Starbucks can cross the road and join Costa.

 

[Deleted User 298457]

I agree with some other posters in that a deposit probably isn't a massive issue. I could get together 20k without much of an issue, but a mortgage of £130k at 3+% would see me paying over £800 on the mortgage, plus bills would see it over £1000 a month.

To put that in perspective, the one bed flat I was renting in Norwich was probably worth about £150k but my rent was only £450 a month. Cheaper to rent and spend the rest on hookers and blow.

You should do your maths again. For one, I doubt you'd be paying 3%. Secondly, 450 of nothing is still 450. Balance sheet =! Cash flow.

 

[FoxEye]

And yes, high earners will find it harder to find another high earning job and likely have much bigger outgoings. Someone sacked from Starbucks can cross the road and join Costa.

If you say so. I think it's complete baloney, btw. As in, what you're saying is the complete opposite of reality.

In reality, a lot of low earners will struggle to find a new job, whereas the high earners are much more likely to be actively head-hunted when they leave their current employer.

The idea that high earners have more trouble finding a new job is quite hilariously wrong.

And you completely ignore the points that low earners will have little/no savings and no assets to sell.

The high-earner has higher outgoings but can reduce them at will.

The low earner can't reduce their outgoings as much because they had far lower luxury expenditure in the first place.

 

[englishpremier]

You should do your maths again. For one, I doubt you'd be paying 3%. Secondly, 450 of nothing is still 450. Balance sheet =! Cash flow.

I didn't bother doing the maths, since I'm not looking to buy anything. Just threw some numbers into MSE calculator it that is what it spat out.

Yes 3% is unobtainable. Nationwide would offer $150k at 3.4% around £740 per month.

EDIT: £ not $. Bloody US keyboard

 

[Deleted User 298457]

If you say so. I think it's complete baloney, btw. As in, what you're saying is the complete opposite of reality.

In reality, a lot of low earners will struggle to find a new job, whereas the high earners are much more likely to be actively head-hunted when they leave their current employer.

The idea that high earners have more trouble finding a new job is quite hilariously wrong.

You really are living on cuckoo land. Out of interest what do you define a high earner? How would a staffing pyramid work if there were more generals than troops?

 

[Puzzled]

If this helps people who can afford the monthly payments but can't save a deposit then I guess that is good but I feel this will just encourage people to borrow even more and stretch the affordability even further.

The real problem though is why on earth is it so expensive to have a roof over your head in this country. Even before we get to bills / council tax / food etc we place such a massive financial burden on people just to have some bricks and mortar, I find it odd as why more people don't question why it has to be so expensive for the most basic of human needs. I don't think its good for us as a society either, the ever increasing house prices has led to people staying at home longer, having families later, not saving enough for retirement and simply having less disposable income which could be boosting other areas of the economy.

No wonder so many people are looking at alternative living when your faced with giving up ~30% of your income for the next 30 odd years. I wish we'd allow a bit more freedom on self builds as well, get a bit of variety rather than the same looking new builds popping up all over the country.

 

[Deleted User 298457]

If this helps people who can afford the monthly payments but can't save a deposit then I guess that is good but I feel this will just encourage people to borrow even more and stretch the affordability even further.

The real problem though is why on earth is it so expensive to have a roof over your head in this country. Even before we get to bills / council tax / food etc we place such a massive financial burden on people just to have some bricks and mortar, I find it odd as why more people don't question why it has to be so expensive for the most basic of human needs. I don't think its good for us as a society either, the ever increasing house prices has led to people staying at home longer, having families later, not saving enough for retirement and simply having less disposable income which could be boosting other areas of the economy.

No wonder so many people are looking at alternative living when your faced with giving up ~30% of your income for the next 30 odd years. I wish we'd allow a bit more freedom on self builds as well, get a bit of variety rather than the same looking new builds popping up all over the country.

'give up your income'? You end those 30 years owning an asset that has hopefully appreciated, that you then sell, release the property to the next generation, buy somewhere smaller out of town and use the equity to buy Volvo's or worthers original or whatever old people do. It's like a savings account.

 

[Semple]

I have more issue with a basic requirement for stable living - a home - being a luxury item only "affordable" by the top 50%.

We're not talking "free mansions for the poor" as some people have tried to frame the ask.

We're talking going from a situation some years ago where a modest income could buy a modest house, to plummeting home ownership year-on-year.

If "nothing is wrong" and these trends continue, then I guess more and more people just don't want to own their own home, right? They'd rather pay more in rent

Btw it's not uncommon down here for rent to be >55% of take home earnings. In some cases in excess of 70%.

You could call it a "poverty trap", but that might be considered "a bit communist" by some

Is this not just a consequence of growing population, aging population etc.

Home ownership will eventually (if it hasn't for most) be a luxury that not everyone will be able to afford, it's no real difference than expensive cars.

Yes i'm definitely more favourable to things like rent controls, long term leases, no fault evictions etc. And maybe if the government did push for these policies then the desire for home ownership might drop significantly.

It's putting it bluntly, but if you can't afford home ownership, then it's a luxury that you cannot have. Home ownership is not a right.

 

[englishpremier]

No wonder so many people are looking at alternative living when your faced with giving up ~30% of your income for the next 30 odd years. I wish we'd allow a bit more freedom on self builds as well, get a bit of variety rather than the same looking new builds popping up all over the country.

Yes, UK homes are some of the ugliest of any Western Nation. Just look at the opening of Coronation Street and see all those ugly red/brown tiny picked terraced houses and compare it to houses in Austria.

 

[Deleted User 298457]

I didn't bother doing the maths, since I'm not looking to buy anything. Just threw some numbers into MSE calculator it that is what it spat out.

Yes 3% is unobtainable. Nationwide would offer $150k at 3.4% around £740 per month.

EDIT: £ not $. Bloody US keyboard

With no deposit over 25 years, not bad going.

Edit: did the maths for you. With your quick to get 20k and a crap rate you'd only be paying an extra hundred quid a month. And have the property at the end of it. Really important to do the maths.

 

[FoxEye]

The real problem though is why on earth is it so expensive to have a roof over your head in this country.

Because housing in this country is a speculative asset, from which investors (and homeowners) expect returns.

Residential property is open to all to buy/invest in, including foreign businessmen and corps.

Because we won't regulate in favour of tenants, preferring to treat them as 2nd class citizens.

There's other reasons, but it all comes down to our values.

We value opportunities to make a profit more than the welfare of society as a whole. Everybody for themselves.

 

[Deleted User 298457]

Because housing in this country is a speculative asset, from which investors (and homeowners) expect returns.

Residential property is open to all to buy/invest in, including foreign businessmen and corps.

Because we won't regulate in favour of tenants, preferring to treat them as 2nd class citizens.

There's other reasons, but it all comes down to our values.

We value opportunities to make a profit more than the welfare of society as a whole. Everybody for themselves.

Have you ever left the UK? In Bangladesh and India you see lots of half built houses. Know why? Because they trust bricks and mortar more than the bank. Rather than have 6k sit beneath a mattress they do another part of the extension, foundations, walls, roof, etc. Surprised your not cross at the price of gold, too.

Owning a house is a luxury. Resting on your laurels in a cushy public sector (council no less) role whilst being mad at the world is very unbecoming.

 

[Puzzled]

'give up your income'? You end those 30 years owning an asset that has hopefully appreciated, that you then sell, release the property to the next generation, buy somewhere smaller out of town and use the equity to buy Volvo's or worthers original or whatever old people do. It's like a savings account.

Tying up would a better phrase, I take your point.

Downsizing is good in theory but many struggle to give up the extra space as you still want family to visit / gran kids etc. Plus the majority don't end up buying some big "forever" home, they stay in a modest sized house which doesn't really allow downsizing. Moving somewhere cheaper maybe but at that age you'll likely want to be near people you know.

The reality for most people is that you either end up in a care home and the house is sold to pay for it or you die and your kids inherit whatever is left after tax. So given the choice between having that at the end of your life or more disposable income during your better years, I think I can guess what most people would choose.

 

[Deleted User 298457]

Tying up would a better phrase, I take your point.

Downsizing is good in theory but many struggle to give up the extra space as you still want family to visit / gran kids etc. Plus the majority don't end up buying some big "forever" home, they stay in a modest sized house which doesn't really allow downsizing. Moving somewhere cheaper maybe but at that age you'll likely want to be near people you know.

The reality for most people is that you either end up in a care home and the house is sold to pay for it or you die and your kids inherit whatever is left after tax. So given the choice between having that at the end of your life or more dispoabale income during your better years, I think I can guess what most people would choose.

Well quite evidently, the latter. Leaving an inerhitance to your kids or paying for your own care isn't a dishonourable thing.