To worry how the next generation will afford homes with 20% deposits

[vkocy]

Now 20% deposits are apparently the norm, how on earth will anyone save that much??

Why are 100% mortgages allowed? If someone can prove they've always paid their rent then they will be able to pay a mortgage which will be less!

Not allowed!

I know it's to do with risk but surely the housing market will stop if this carries on. Typically families need to move to bigger homes and FTB buy their homes. If no one is buying these then the chain will stagnate?!

Hopefully it won’t be forever. It’s such a lot of money isn’t it? We’d have still been saving now if we hadn’t have bought two years ago. We only had 6.5% saved. We also had a perfect renting record which is so frustrating and were 35 and 38 at the time of purchase. I feel for people.

The wealthy will inherit.
The coddled will live at home with their parents until they're 32.

The rest will be fucked.

I don't think that's quite true -I know people who are getting 90% mortgages, ftb's included, but it's still a crazy amount of money to try and save up. I guess there will just be more htb schemes, although I don't think that's the best solution long term. Don't know what is!

Totally agree. I've paid London rent rates for over 10 years and never once missed a rental payment ever. Mortgage repayments would be considerably less than I'm paying now in rent.

People have been struggling to save 10% deposits, it’s going to be even harder (obviously) to save 20%. It’s really hard to get on the property ladder as it is. Hopefully, this won’t carry on long term.

Banks don't give mortgages out of the kindness of their hearts.

It's a moneymaking business.

If you can only borrow 80%, that's because the bank has concerns that property values might fall - but fairly confident they won't fall as much as 20%.

@EmbarrassedUser I'm in a similar situation. We're in our forties and lived overseas with company accommodation in our thirties and couldn't afford to buy when we returned. We have a joint income of £80k and can't get a mortgage now because we only have 10% deposit. We had AIP prior to lockdown and had started house hunting but because we were both furloughed none of the lenders offering 90% will touch us, even though we're both back at work. I'm sick to death of having to put all of our spare cash in savings, its relentless and draining. There's a new lender about to hit the market offering low deposits and long term fixed rates so ive pre registered for when they launch. If that doesn't work I'm giving up.

We went at a new build house as we are currently renting as it's not to far from where we are now as we want some stability in a home. Wish we'd not bothered. Even with the help to buy schemes we still need £70k deposit for the smallest property type on the site. A 3 bed town house with no garage And box garden! We're a family of 3 (DP, DSD and I) and both of us work from home (precovid) so space will be limited in there let alone if we decide have child. Most non new builds need a lot of work where we live and realistically we aren't DYI minded so would cost a lot more to have tradespeople in. Slowly giving up on the idea we'll be able to buy.

@EnglishGirlApproximately

Who is the new lender, English? - if you don’t mind.

The housing market is ridiculous. I blame housing benefits and thatcher selling off council houses. Now everyone with a 25% deposit thinks they're a landlord and are charging ridiculous rents which are essentially being pay for by the government in the form of housing benefit. So rich people getting richer at the governments expense. It's broken.

We got approved a 100% Family Boost mortgage (Halifax), and their 95% FTB mortgage deal, right before lockdown.

I understand that they pulled all those products after we got approved and we were lucky to get our mortgage and purchase completed. However house prices are remaining generally stable, so I doubt it will be long before these products do make a return. There may be conditions attached (our credit rating had to be about as good as you can get), but they won't disappear forever.

@DonnaQuixotedelaManchester they're called Perenna mortgages. They have a FB page and a website where you can register your interest. If you Google them you'll see the credentials look good enough so worth considering.

Definitely hard, especially for young people. Garden buildings complete with electric and plumbing are getting pretty popular at the moment. Adult DCs can at least have some semblance of independence.

Just keep renting...

Cheers @EnglishGirlApproximately will take a look

They stopped allowing 100% mortgages after the crash. Firstly because banks are subject to regulations which means they can only have a certain % of the mortgages they grant as high LTV ones. Secondly, it’s a bad idea for the banks because if house prices fall more than the amount of equity the borrower has in the house, then they have to take a hit too which they obviously don’t want to do. I imagine that once the economic fallout from the pandemic has cleared a bit, they will offer mortgages with 5% or 10% deposit again, they are just covering themselves at a time when they can’t be sure what will happen to prices.

Basically if they granted lots of mortgages with small deposits and then prices fell, banks would make a huge loss and go bust. Which would be bad for everyone, as we saw in 2008.

Well, if the house prices materially fell, the 10% mortgage could become 20% but that's a very controversial opinion on here because saying that house prices can't and shouldn't rise forever at this rate is equivalent to saying 'let's torture small cute animals'.

We bought our first house with a 110% mortgage in 2002, it was the only way for us to afford a house.
After the crash in 2008 the bank (northern rock) went under And everyone realised what a bad idea that type of lending actually was.

Not arguing it will be difficult but a lot of people nowadays expect their first house to be their 'forever home'.

We bought ours 2 years ago for £65k. It's not a fancy house but it's perfect for what we need. We're working our way through it, doing little bits at a time.

A lot of people I know/know of want 3/4 bed detached houses in the best part of town and that's now how it works!

20% will be a struggle for some people, but it won't be forever. Keep saving, ltv requirements will reduce.

Would young people be prepared to live in cheaper areas?
A great way of bringing about regeneration in such places. Home working will add to the flexibility to do this.

In parts of the NE for instance, 20% is as little as £6,000. Buys a two bed terraced starter home.

House prices will fall if nobody can afford them and that is a good thing.