Mortgage brokers: Government’s 1% deposit mortgages “a high-stakes gamble and could potentially fuel house price bubble”
by marketrent
Mortgage brokers: Government’s 1% deposit mortgages “a high-stakes gamble and could potentially fuel house price bubble”
by marketrent
16 comments
>could potentially fuel house price bubble”
Because we haven’t had a bubble for the last few decades, have we?
It’s as sad as it is predictable; keep the debt snowballing rather than trying to actually solve the problem
There’s suddenly a massive increase in supply?
Oh… No. I guess not.
• Hannah Bashford: “It’s great to see that first-time buyers are still on the political radar but in practice is this anything more than a bid to try and sway the generation rent vote?”
• Charles Breen: “My worry is that this will artificially drive up property prices again, meaning people are buying high and exposed to negative equity, defaults and repossessions. We experimented with 100% mortgages back in the early noughties and we all know how that worked out. This is pure desperation to stay in power.”
• Graham Cox: “More extend and pretend whose only purpose, aside from cynically buying the votes of the young, is to suck in gullible first-time buyers to prop up house prices, thereby maintaining the profits of the government’s financial supporters, the lenders and house builders.”
• Craig Fish: “This has got political desperation written all over it.”
• Richard Jennings: “Whilst on paper this sounds like a positive move, it will undoubtedly lead to a very high risk of causing another housing bubble.”
• Rohit Kohli: “It almost feels like the plan is to have people paying off their mortgage until they’re 100. We need more than just clever tricks to get by.”
• Riz Malik: “A 1% deposit scheme may work in certain geographical areas but in London and the South, it would be a non-starter, and that’s before we have got to mortgage affordability and the risk of negative equity.”
• Andrew Mortlake: “This latest brainwave comes with more questions than answers.”
• Justin Moy: “We have seen that schemes such as Help to Buy that may have helped many onto the property ladder but a large percentage of those borrowers are now stuck and cannot move. The painful legacy of 125% mortgages still resonates with the previous generation, too.”
• Stephen Perkins: “To introduce 1% deposit mortgages, the Government will either have to fund or severely guarantee lenders for the additional risk, especially in the current economic climate.”
• David Sharpstone: “It’s crucial to consider its potential to once again significantly inflate property prices and increase financial risk for both lenders and borrowers.”
• Peter Stamford: “It’s a high-stakes gamble and could potentially fuel yet another house price bubble.”
In the Netherlands the vast majority of first-time buyers use 100% mortgages with fixed terms of upto 20 and30 years very common. Interest rates are competitive too. I’m not sure why the Dutch can do this and UK not? Or is it just a mindset of the people I’m not sure.
It will fuel house price increases but it’s wrong to call it a bubble, which implies it’s built on market confidence alone. House price increases are backed up by a scarcity of developable land which is a real limiting factor on supply.
Been there done that.. 2007 you could get 110% Mortgages. It might help a few who genuinely can’t save because of the rental trap but it also helps those who haven’t learned money management and don’t save. It will increase demand where there is already a very controlled shortage of supply increasing prices on property most of which will be shit new builds. The only real winners are the land owners selling at silly money and the developers who only build where they have controlled supply for increased profits.
What we need is a government with backbone who will tackle housing head on. Are prepared to be unpopular with land owners and money men and get this under control. – I am not looking at any particular party right now so I don’t see this changing.
its very very silly.
and if this comes in, it will be crazy risky for exactly those who need the most help, who would use this scheme to finally ‘buy’ something and those who, despite of this scheme would still be renting.
even if just half the renters rush to try and buy that will start hiking up prices more, so most of them will simply fail the affordability, while some will still succeed and that will rise house prices. with that will rents rise again putting those renting into even bigger risk.
there wont be any new bubble here, this country IS A BUBBLE
Personally, it’s not a lack of deposit that makes owning a home impossible for me. It’s the prices themselves.
The average price of a 1 bed flat in my area is £530k.
If I empty my savings I could scrape a 10% deposit…. But I’d still need an annual salary of £106k to get a mortgage on it… Not to mention extortionate council tax and service charges on top of said remortgage repayments.
We have been here before and it was a disaster. Will cause a massive bubble and put houses further out of reach for 1st buyers.
Brought to you by the words “no”, “shit”, and “Sherlock”.
With prices high, interest rates high and these schemes having a premium rate on top they’re not going to be that affordable.
If it does work it will stoke house prices, which is terrible for the market but gives the feel good factor the Tories want going into the election.
One trick ponies, soaring house prices good…
Stoking up house price inflation is a key Tory strategy
Potentially ?! I’m sure if you’d been in that meeting, the word used would have been ‘hopefully’.
“Bro we have just got to stoke demand, just a little bit more demand bro. I’m serious bro this time stoking demand will work bro. Addressing supply is for socialists bro please vote for me bro I will make your house value go up. Who cares its literally killing the wider economy think how rich you will feel when your shack is apparently worth a million pounds.”
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This latest idiocy has just broke me as soon as I have finished retraining I am gone, this country does not value anyone under 60.
The problem is if your renting chances are your paying a mortgage anyway its just not yours.
I can see a place for 100% mortgages to get people in long term rented accommodation on to the housing ladder.