To just be so upset about house prices

[spuddy56]

We started looking in December after scrimping and saving for years and its got more and more out of reach with every passing week since then. We've had two sales fall through due to downvaluations, so not only did we need the huge deposit we had saved up for years, we needed 10k on top of that which is impossible for us. We are paying rent and have no family help. We viewed a tiny house that we love and has been on the market since beginning of April with no offers but the seller won't budge on the price. Based on one year of sold prices in the area its about 40k too much, even taking into account the 10% rises over the last 12 months. Theres just no way a mortgage company would lend that much. Been to view another one and it's tiny, has had no offers and is worth a lot less but agents don't think they will go lower. We've had to adjust our expectations down and down despite being what we thought were healthy earners. How are first time buyers managing to buy right now without help?! I'm so so upset at not having somewhere to settle and call a permanent home.

Can't believe he's touting the 95% mortgage thing again. It's like 2008 never happened.

I read that UC stops if you have more than 16k in the bank.

That’s actually another one of his suggestions that are house deposits are ring fenced so they don’t count in that £16,000 of savings which again is not a bad thing. Given that they can be kept in the help to buy lifetime ISA’s that cannot be used for anything else.

Ironically the Natwest which I believe belongs to RBS who was bailed out in 2008 are one of the lenders that will take tax credits universal credits etc income into consideration.

however there is a catch, typically I believe that you could not be earning over 30,000 and be receiving a Penny in government support so let’s say best case scenario somebody can borrow £120,000. Not too many places you can buy a house for that.

Hi OP,

you’re doing the right thing - sit tight right now and keep saving. The housing market is starting to cool and you would be best to wait for the summer to be over and start looking again. Best way to get on the ladder is a liveable renovation job; buy it and do it up room by room next few years - it will be yours and sell it on when the times right x

We want to move house. We have a healthy deposit from the one we have just now due to being here for over 10 years and rising prices. The kicker is that people are offering 20% over the valuation. We don't have enough money to do that. We need to move as have no space, but all we can afford are slightly smaller houses.

It is entirely down to the market Overheating. We viewed one house that was offers over £320 and valued at £330k. Sold for about 15 or 20% more than value. Neighbouring property just come on for offers over £375k and values at £380. It's smaller. That whole estate is now out of our price range.

ECB talk today should see cheap mortgages disappearing fast, great news if you are looking for a price correction.

What you are still not getting is that a rental contract can be terminated, within reason, at any time with a few months’ notice. You can either pay the rent or you can’t. If you can’t, the landlord can ask you to leave.

With a mortgage, the lender is combining your financial prospects with their own for at least 25 years. If all goes well, you pay the capital and interest (and on a 25+ year term loan there will be A LOT of the latter) and they get their money back plus profit in the form of interest.

If it doesn’t go well, and if interest rates rise to the point where you can’t keep paying (a real risk with massive loans) the lender faces having a non-performing loan secured on a depreciating asset if values reduce. Which they would if interest rates are high and fewer buyers are entering the market. So they lose out on cash flow and may not be able to recoup their loan by selling the underlying asset, which is why they’d come after defaulting borrowers for the difference. No lender wants to do that because enforcement and recovery are expensive.

So it makes absolutely no difference whether a landlord has factored boiler repair costs into the rent etc etc. It’s entirely irrelevant because being able to afford rent now does not guarantee that you can afford a mortgage for the next 25, or 30, or 35 years.

As for ‘most people’ finding that a mortgage is cheaper than rent based on a cherry-picked set of numbers: we’ll see whether that remains the case when interest rates go up, shall we?

But are people better off if they're paying a £200k mortgage at 7% interest instead of a £300k mortgage at 2% interest (or whatever)?

They’ve also promised help more quickly for mortgage payers should they lose their job, which sounds like they’re anticipating that could be a distinct possibility for some/many. Preventing people from losing their homes basically so looks like the house price crash is on ice again.

You are dreaming if you think that the government is going to pay people’s mortgages for them if rates go up. Picture it. Petrol, food and utility prices all rising. State pension age increasing. Benefits insufficient,. Councils unable to provide basic services. The public sector complaining about pay rises. NHS waiting lists expanding. Students graduating to find that there are no jobs for them after spending £60k on a degree. Unemployment increasing.

Telling all of those groups to jolly well (I’m doing a Boris impersonation) put up with it because the money is needed to pay the mortgages of homeowners who borrowed too much to buy an overvalued house isn’t going to play well, is it? They will be out of options for propping the market up.

The problems start when loans are extended based on ‘affordability’ in an ultra low interest rate environment. £300k at 7% is where you’d end up if you took on the bigger loan. That’s what’s staring us in the face now.

That’s precisely what the government did in years gone by, they actually introduced a scheme whereby they would pay people‘s mortgage as if they were on certain benefits I actually didn’t know about it which was really infuriating.

between at least 2000 and 2012 you could receive up to 6% mortgage payments so even if the interest on your mortgage was less than 6% I believe ours was 4.5 you could pocket the difference no questions asked. There was no time limit on this and the money was not to be re-paid. I actually know of one person that my friend bought their house from who was on disability allowance and literally the government paid his house off.

Now you could actually argue that that was quite sensible versus paying off a landlords mortgage off for 45 years at least the end was insight and he owned his home in the end. If anything is to be believed from Boris speech today that is the intention to return to that situation instead of handing out 50, million they reckon in housing benefit to private landlords by 2030.

And anybody who took out a mortgage from 2018 which has been stress tested for affordability up to 10%. I know I was.

Sorry 2008 onwards. We are in 2012 became mortgage prisoners because we were given the mortgage in 2008 when we could afford it on paper and when the fixed rate came to an end we were pushed onto the standard variable because we were told we couldn’t afford our own home due to the new regulations that came in as a result of the crash in 2008.
anyway the situation rectified is it self as it always does by increasing house prices.

Best way to get on the ladder is a liveable renovation job; buy it and do it up room by room next few years

Again I’m not sure this is true. Lots of people like doer uppers and are prepared to pay a substantial amount. There doesn’t seem to be a huge gap between a doer upper and a normal house near me.

Now is a great time to buy a flat. They are hugely unpopular and landlords are selling them on because of changes to rental regulations.

Lots of ex LA flats were built to house families in blocks only three/four storeys high with a balcony or communal gardens.

We are about to move into one in a couple of weeks. It is split level, three bedrooms, downstairs loo and lots of cupboards in a really beautiful neighbourhood.

As opposed to the shitty, money pit house in a terrible area, which we currently call home.

It depends on how much of the work you can do yourself. I costed a doer upper and it wasn't worth it because I'm not a trained electrician, builder, joiner.

Oh yes, how many of the people with massive mortgages currently are on benefits? Very few. A U.K. government is unlikely to allow a disabled person to become homeless if he/she loses their job, and can’t pay their mortgage, but that is a tiny minority of cases. Most people who have over-borrowed will be disappointed if they expect the government to step in and pay their mortgage for them.

Face it: nobody on benefits will have a £300k mortgage over 30 years because the lender simply wouldn’t loan them enough. The ‘help’ you are talking up would only apply to a small number of people.

Currently on benefits or will be on benefits in the future, entirely different conversation.

The point being for somebody like myself with 200 K left on a mortgage, if I fell and broke my back tomorrow it would be more cost-effective for the government to pay the 800 odd pounds to the mortgage company to house me and for me to be able to adapt it with loans and grants that it would be to attempt to find me rental accommodation anywhere else.

The government won't just pay whatever the mortgage repayment is. Those that rent are subject to caps ie the government will only pay up to a certain percentage of average local rental rates. Why would that be any different for homeowners? Or do you think the government will pay out a couple of grand a month for those who own but those that rent will be subject to benefit caps?

@Iamthewombat apologies I focused on the disabled element which I see were in agreement with but actually yes it would apply to other groups of people as well as it did previously when my ex was made redundant we had a payment that covered about £900 our outstanding mortgage at 6% and as I say the actual mortgage was 4.5 % so we pocketed the difference. The situation improved after about six months but there was no end date so if we had been so inclined actually what we should’ve done is split up then and let him stay on benefits and look after the kids. Oh well hindsight is a wonderful thing.

Well they did previously so

Yes, affordability in 2008, or 2012, or whenever. When utility prices were lower, and based on the job you had then. Which you might lose.

Having been stress tested for affordability doesn’t mean that you are immune from losing your house if you can’t pay for it. It means that the lender has done its homework. If they want to repossess, they will.

Interestingly I’ve read a few threads on MN where posters say that they are planning to be untruthful for the purposes of the stress test. For example, they planned to go part time or even give up work shortly after moving in. They wanted to know whether they were being unreasonable. Of course they were, but they were greeted with a chorus of approval. I wouldn’t be banking on stress testing by lenders = safe loans that will definitely be paid back = interest rises having no effect on the market.

I don’t want people to lose their homes but pretending that such an outcome is impossible and that the government will look after you come what may is just silly.

@Nothappyatwork

Have they announced they are removing the benefit cap? Apologies if I've missed that.

No they haven’t announced that but there’s ways around the benefit cap Now, you only have a cap Applied if you don’t work.

as I say the cap wasn’t there last time they paid the interest on mortgages so would be reasonable to assume it won’t be there this time let’s wait and see shower.