AIBU to think a 2.5% deposit scheme will not help?

[Lugol]

DS told me yesterday about some mortgage scheme the Government have come up with where the deposit is 2.5%.

I'm just wondering how any young people are going to be able to take advantage when the Government have made them virtually unemployable and there are no jobs.

Surely if they want young people buying houses, or anyone buying houses for that matter, then the Government need to create an environment where people can afford to.
The CoL is off the charts and only getting worse if this 25% increase in energy costs is going ahead in January. Fuel at the highest it's been.
The housing market is totally stagnant.

They keep building whole estates of houses (not even starter houses either) and I keep wondering who the fuck is going to buy them.

Because it's not young people.

YABU - Don't be daft Lugol, All of the young people will magically find jobs and buy houses
YANBU - the country is fucked

I’d prefer more social housing - if there is enough housing then prices will level out naturally.

Interest rates fluctuate according to market forces and inflation driven by things we can’t control and that obviously affects house prices. Not everyone needs to move house and buy and sell all the time.

Most people selling a house do have the option to sit tight - if they don’t, and they’re upsizing in a falling market, they may get a bit of a bargain.

I think a 10% deposit is probably the lowest that should be used, for decent lending rates and risk assessment. I’ve been in negative equity so I just overpaid and didn’t move house. Annoying but not the end of the world.

I'm just wondering how any young people are going to be able to take advantage when the Government have made them virtually unemployable and there are no jobs
Both my kids have jobs, their friends have jobs, my friends kids have jobs, all in their 20s.

They'd love to buy a flat and what is holding things up right now is not being able to save because after rent and bills, they don't much left to save, so yes, that would be ideal for them.

No I didn’t, I thought I did. It’s on me for not researching it better but I do think they should have explained it and I worry a lot of young people might do the same. I had the money so should have not used the HTB but they said I might as well get the interest free few years and keep the extra to one side as a ‘just in case’ fund.

I ended up paying £7000 extra to HTB (on top of the loan taken), if the sale hadn’t have dragged on it would have been £5000 it was the revaluation that cost the extra as the house had increased in value in that time. I still sold it for the same price.

My brother is thinking of doing it and I worry that he will get used to the mortgage repayments and then once the loan repayments start it will be hard for him to manage. I’m 50/50 on the scheme it has its uses but people really need to go in with their eyes wide open as it’s not as good as it sounds.

I don’t understand the point of it. You can already get 0% mortgages. Skipton offer one. YBS offer a £5k deposit mortgage up to £600k

This is different because the government are lending 20% for the deposit and the buyer pays 2.5% so the total deposit is almost a quarter of the property’s value.

But it is easy enough to add some charm to them and decorate to your taste. Also, they are covered by extended builder warranty and are energy-efficient.
I bought a 1930s house and it took a lot of effort and money to deal with historical problems and "interesting" decisions made by previous owners. There is also a restrictive covenant on the land and a couple of alterations made which lack planning permission and are in breach of covenant - most of which made 20+ years ago so the covenant is likely not enforceable. And it is pretty sterile looking as previous owners stripped it of all historical features (which I am slowly adding back in). So I have an older house with "potential" but it has a lot of issues a newbuilt wouldn't have for the next 50 years.
Don't discount the newbuilt. The energy savings alone would make up for any lack of "soul".

Latest in a long line of government intervention to try to keep house prices high rather than allow them to fall to become more affordable to ftbs.

In fact what it really does is boost house builders profits and supports high prices in existing properties.

Is anyone really surprised by this ?

I have a new build and I love it. No dealing with other people’s left behind dirt. Love sterile. Well insulated. Solar panels on roof. Amazing price. No problems.

Second this! We just got ours with skipton and no deposit!

My brother is thinking of doing it and I worry that he will get used to the mortgage repayments and then once the loan repayments start it will be hard for him to manage. I’m 50/50 on the scheme it has its uses but people really need to go in with their eyes wide open as it’s not as good as it sounds

@Chocolatecustardcreamsrule He would also be likely hit with fleecehold charges.

This scheme is for suckers.

I think the big issue here , and I’m very pro schemes that do help by the way is that this will only be a help in cheap areas whereby people can then get big enough mortgages needed - it’s not much help in most of the south east and lots of the south west or for single people. My son for instance could easily have this for a £320k flat in greater London on his own - he wouldn’t however get a £300k mortgage !! Shared ownership works better in his situation but even then it’s difficult as the rent side is still high plus in many areas it’s all flats so high service charges - until leasehold laws change he isn’t doing it.

we ourselves bought under DIYSO which came in under Tony Blair - now this was brilliant but simply too popular- I was pregnant at time so we were high up list - basically do it yourself shared ownership on open market - not just new builds - we bought a big 1 bed shared freehold flat just off Crouch End broadway - this was 1998 . Too much demand- pissed off all the builders- !! That would help an awful lot more and not just young first time buyers, self employed , divorced etc . Being imaginative I would bring it back!!

not everyone is based in midlands or up north and can get mortgages whereby this scheme would be a big help and lots of people too don’t want new builds

It's basic supply and demand. They need to massively reduce demand (immigration) which pushes up home prices. There is no point in building hundreds of thousands of new homes if they will just be filled up immediately (and many of them will just be reliant on housing subsidies of some sort such as housing benefit/housing element of UC as we have very few people coming to the UK who are net contributors), so we build houses and have the taxpayer subsidise their cost - it all ends up back in the pockets of landlords at a great cost to the taxpayer. And if they build more social housing this won't solve the problem either for the young as they are not prioritised so they still won't get a look-in. Things look very bleak for young people in this country and I am advising my children to leave asap.

To be honest it is a bit of a strange way to loo at it.

if course this isn’t aimed at unemployed young people. They can’t get mortgages or save 2.5%

but plenty of first time buyers to be are employed, and this will help them buy a house

How has immigration caused this when the lack of supply is a problem that’s been in place for 50 years?

hosue prices are reducing now. When they rocketed from 2010 onwards, how was that immigrants? Big increase in 2020- we really haven’t got back to those levels since

Increasing supply is the only thing that will fix the cost of housing. Almost everything else just pushes prices higher

The problem isnt the deposit.

a 2.5% deposit on even an average flat in my area would leave mortgage costs of £1900 a month. My wage is £1700 a month.

house buying is unaffordable.

In my county the population has barely increased. Its the rise of single person housholds due to older people living longer that has raised housing requirements

Like The immigration issue, this seems an outdated conversation. Immigration numbers are falling. House prices are cooled and falling.

it seems like we are struggling to move on from this long discussed topics.

Might help people who either earn more or are in Cheaper areas though

It will help, but the devil will be in the detail. Who can have it, what they can buy, what the repayment plan will be.
There are jobs out there, but high housing costs prevent people from moving to where the jobs are. If you're a young person in an area with no prospects you're screwed, especially if you can't drive/ afford a car. Wages need to go up too.

This is pretty well established. It’s just a mortgage product.

So good to hear someone saying this.
I get deeply frustrated by the "magic wand thinking" that has become the stuff of British politics and has lead to instability.

If a government does not instantly solve a problem then out they go! But this does not reflect the real world.

A prime example is AB's statement that he plans to tackle the care crisis. He has been clear that he wants to engage in cross-party talks about this and to properly research the options before presenting the country with a plan. Makes perfect sense to me but so many people are seeing it as a cop-out and are grumbling.What is he supposed to do? - put together a half-baked plan at speed?

@Crikeyalmighty In that hypothetical situation your son wouldn’t have a mortgage for £300k, it would be for £248k, and stretched out over a long repayment period it would be doable for someone on an average London salary.

Immigration is an absolute red herring - how many recent immigrants are out there buying houses apart from areas that are cheap- not that many I suspect , with maybe the exception of the Hong Kong emigrees. However what I think we need to bring in is no overseas buyers unless resident and resident for tax purposes here for at least 5 years- plenty of countries have similar rules on this - stops all the overseas ‘investors’ buying up places to rent out at over inflated rates including student housing or just leave empty for investment purposes and in many areas there would be some price adjustments on this-

House prices in some areas are static or falling. This does mean some people taking advantage of these schemes might find themselves in negative equity. In the 1990s this was a massive problem and can impact house prices throughout the market. I would be cautious before using these schemes.