Housing market collapse on the way

[Whathastheworldbecome]

I see Nationwide and Lloyd’s have tightened restrictions on the “bank of mum and dad.”
There seems to be a degree of speculation that they are tightening the shoe strings as they know a collapse is on its way.

Does this sound likely?

[Skyliner001]

@Whathastheworldbecome

I see Nationwide and Lloyd’s have tightened restrictions on the “bank of mum and dad.”
There seems to be a degree of speculation that they are tightening the shoe strings as they know a collapse is on its way.

Does this sound likely?

I'm an avid watcher of the market as I'm thinking about buying another rental property. TBH at the moment I think there may be a small fall early next year but nothing remarkable. People have been saying for years that the market will plummet. It's so hard to tell. I'm holding back on buying but won't forever.

[Tolleshunt]

I don’t know. The housing market is incredibly resilient. People will still need somewhere to live and in a time where other assets are in free fall bricks and mortar is usually seen as a safe and solid investment.

[OnlyFoolsnMothers]

I’m sceptical of a plummet- a slow down, sure but we have a housing shortage / crisis- I don’t see a plummet in the near future. I’d be happy for a slight dip if it helps those not yet on the ladder climb on.
The housing market is a fantastic example of supply and demand, market slows, less people sell, demand outstrips supply, prices go back up!

[WhereamI88]

measures like that indicate they think there's a bubble and that it will crash. None of us can give a straight answer but I would hold off buying until winter. Millions of people will lose their jobs and they won't be able to get a mortgage or even pay their current one so a fall of some sort will happen. Probably not a full blown crash but I have nothing to base this on other that I do have some faith in the UK economy.

[Skyliner001]

Agree with the PPs 😊

[Reedwarbler]

How could they possibly 'know' a collapse is on the way? Can they see into the future?

[bluebluezoo]

I see Nationwide and Lloyd’s have tightened restrictions on the “bank of mum and dad”

What does this mean and what does it have to do with house sales?

[Apple31419]

Interesting one! Another thing to throw into the equation is the governments recent and controversial relaxation of planning laws. This will add to the supply as @OnlyFoolsnMothers points out. And don't forget we're leaving the EU.....!
There will definitely be a change with more people working from home and also young people more community and climate concious and using public transport. I think there will be moves away from cities but at the same time less Barratt developments in the country next to dual carriageways. I wonder which way it will go!

[spinningaround72]

@bluebluezoo

I see Nationwide and Lloyd’s have tightened restrictions on the “bank of mum and dad”

What does this mean and what does it have to do with house sales?

It means buyers have to proved that they saved for the majority of their deposit and it was not gifted.

[timesareachanging]

@bluebluezoo

They are not allowing desposits (or at least a large portion of) to come from mum and dad as it doesn’t show a long term ability to be able to afford the mortgage because it hasn’t been saved for.

It may have an effect on the first time buyers market who are often young people who rely on mum and dad to help them with their deposits.

[Tolleshunt]

bluebluezoo a deposit gifted by others gives no indication of the assets, income or savings ability of the buyers. It enables buyers to buy properties that are more expensive than they could otherwise afford.

[Dissimilitude]

A slow down or a small dip but probably not a crash. Too many people in the wings who will enter the market if there’s a dip.

There’s just not enough homes to drive prices down.

[GhostofFrankGrimes]

Rising unemployment/recession and end of the stamp duty freeze. What could possibly go wrong?

[AlwaysLatte]

They're tightening up restrictions on deposits from family? I hadn't heard this. My stepson completed on a new flat about 10 days ago, and we've put in a lot of money(more than half of the flat), and nothing was said. He was lucky enough to save £15k on stamp duty with the SD holiday but it seems that where there's help in one corner there's hindrance on another!

[DonLewis]

This bank of mum and dad thing. We saved (years ago) 7k, my family gave us 7k,my dhs family gave us 7k for our deposit.

Our rent at the time was almost £800 pcm and the mortgage £600 pcm. Nowadays, to rent a house like our it would be £1200 pcm and the mortgage is still £600 pcm.

We paid our rent for years, were never, ever late with it. How does them gifting us money show we were unable to pay the mortgage?

[JosephineDeBeauharnais]

@Tolleshunt

bluebluezoo a deposit gifted by others gives no indication of the assets, income or savings ability of the buyers. It enables buyers to buy properties that are more expensive than they could otherwise afford.

This ^^ I don’t understand the rationale. A gifted deposit isn’t in any way an indicator of affordability, and many young people in this situation will be able to demonstrate that they’ve been paying rent equivalent to a mortgage repayment anyway. It makes no sense to me.
DS1 and DDiL will be buying a house next year. Their deposit is made up of their own savings plus a legacy from a grandparent. Is that a “gifted deposit”?

[AlternativePerspective]

This thread comes up at least every six months or so.

I know a couple of people looking to buy and my parents are looking to sell and at the moment property is flying and if anything prices are going up.

So if anything it’s more likely that the prices will come back down to where they’re at now and they’ll call it a crash...

[bluebluezoo]

I thought mortgages were calculated on income and outgoings?

What if a deposit comes from a previous property? That hasn’t been saved for either.

[Bouledeneige]

All year people have been speculating about a crash in the autumn. Certainly increasing levels of unemployment and job insecurity may impact willingness to risk upgrading into a larger house. But demand is still out stripping supply so prices are holding up - having recovered after the election brought more certainty re Brexit (God help us!).

The bank of Mum and Dad measures affect the first time buyers market which has already been impacted by banks raising the deposit requirements - a medium term trend. I guess it is to ensure committed mortgage payers though I would have thought the affordability calculators based on salary would do that job anyway.

I imagine, like Covid, there may be some future dips but in desirable areas with good schools where demand outstrips supply I'm sure it will still hold up since we just don't have enough houses in the market .

[LibrariesGiveUsPower]

We inherited money for a deposit, it enabled us to go from paying £800 p/m rent to £500 p/m mortgage. Rent would now be £1000. We live in a very cheap part of the country mind.

They should assess mortgage repayment ability not where the deposit comes from surely?

[MyPersona]

@Tolleshunt

bluebluezoo a deposit gifted by others gives no indication of the assets, income or savings ability of the buyers. It enables buyers to buy properties that are more expensive than they could otherwise afford.

It only allows someone to buy a more expensive property because the deposit is larger, nothing to do with mortgage size and affordability. Most people do not go straight from their parent’s home to buying a house, with a gifted deposit and no financial history. Income has to be proved.

It enables buyers to buy properties that are more expensive than they could otherwise afford.
Sounds a bit sour grapes tbh.

[nannybeach]

My youngest DD, hoping to buy and that the covid crisis would bring down the price of property greatly, we both live in the SE UK, and prices are still rising. I know people moan "my generation" were lucky blahblah, in 1983 we were paying 16% interest on a mortgage, having increased from 12% in 18 months.

[TableFlowerss]

That’s funny because I work in a high performance bank regarding mortgages and we were told just yesterday, that house prices have increased since covid kick off.

Mortgage business is great and it’s all very positive.

Banks tightening their belts isn’t going to cause house prices to crash. They may stagnate.

It’s the younger ones and first time buyers that will struggle. Not people already in the property market in general

[ChazsBrilliantAttitude]

I think there will be a dip after the SDLT holiday ends. There was a lot of pent up demand which seems to have been released by that. Once that is over I expect people to be cautious until the effect of Brexit and a possible second wave are clearer.

[Bells3032]

I spoke to our mortgage broker as we are buying with a sizeable deposit from my in laws (we are putting down nearly 50% with their help) and this isn't because they are worried. It is because they have been so inundated with applications they need some way to sift them down. I believe that Lloyds have only got rid of one type of mortgage that the parents supply pretty much the entire deposit. I think generally giving your kids deposits is still allowed.

If more banks do this will cause a major issue esp in London - i don't know anyone whose managed to get on the housing market without some support from parents.