Thoughts about Your First Home Scheme

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Announced yesterday. 2.5% deposit + 20% equity loan, newbuilds and FTBs only.

Doesn’t impact me directly as I’m neither a FTB nor interested in newbuilds but I am interested in the impact on the wider housing market and economy.

My feelings are is a thinly veiled help for developers, not help for FTBs. It will artificially inflate property prices just like the original Help to Buy scheme did and people will be unable to repay their equity loans once they start charging interest just like original Help to Buy.

Does anyone think it’s a good thing?

that had

Global yields really starting to crank up now, I think this will be dropped before the budget, or very soon after, they can"t hold back the tide.

Big difference is that back then they were controlling mortgage rates, now they can"t, this is just fantasy economics, which is all they have really?

Yes, I agree sadly. Things are very bleak for those hoping to purchase their first home.

Not really, as global bond yields climb the price of that home is getting hammered down, sure the borrowing costs will be higher but starting with less debt is much more financially savvy as you can make more of a dent later with overpayments.

The issue is the development tap is being turned off and where it’s on, it’s not building properties for FTBs. This would in theory increase the supply if it got demand going again but as mentioned above several times, the interest rate vulnerability is vast. The only way a buyer might be better off this way is if it’s better than paying out huge sums in rent - if they can hang on in there despite periods of negative equity and paying no more than they would have paid anyway in rent then they might be better off. But if they were stuck with an underwater loan and needing to, say, move to find work, then they could be in a straightforwardly worse position.

House prices aren't getting hammered down in my area though, that's the problem. Prices are holding steady while interest rates rise.

A unique area, not governed by the laws of economics? What part of the country is that?

The problem would be though that one of the main drivers of rent, numbers of people flooding into the country, now seems to be in reverse, where the driver of mortgage debt cost, global bond rates, appears to be rising at a fast clip, the mortgage debt seems like the far greater risk to me?

An area of the North West. It's not unique and there are specific reasons why prices are holding well, for the time being at least.

It’s the same where I am in Essex. Down a smidge since 2022 peak but overall rising and continuing to rise.

Is

Sorry, hiccup.

Has net migration turned negative? I thought the rate of increase was decreasing not the population overall. Household size has also been falling for years as well so even if the number of people flatlines, the demand for housing units can keep increasing. Rents aren’t falling whwre I live.

Depends where you live I suppose?

https://www.finance-monthly.com/london-housing-market-strains-22000-unsold-homes/

But that isn"t UK wide, if it was Labour wouldn"t be launching their daft totally out of touch with global economic reality Help To Borrow more than you really should scheme?

London prices might be stagnant but rents aren’t falling.

I have an issue with this scheme in that it will stop developers having to drop their prices but they’ll have bought land etc on the basis of a specific profit margin and will just sit on the land and not build if they’re not in a position to get that. I think this is aiming to stimulate the market but the risk is off the back of those who are the most marginal in terms of affordability. It might get more smaller units aimed at less well heeled buyers on to the market though and that might be a market that is not well provided for currently. I don’t like the level of debt but people are allowed to take on barely affordable levels of rental payments if they have to live in a specific area.

The people this is aimed at though have already twigged that they can stay at home and avoid rent, they are also avoiding student debt for useless degrees more and more now, hopefully the penny has also dropped about the Property Ponzi Scheme run by the government"s pals The Banker, The Developer and the Offshore Interests, they could treat Mum and Dad"s house as "offshore", avoiding the Financialisation of Everything Matrix and save a very tidy sum?

London prices have been falling for years, the big concern for government though (and their paymasters) is the alarming build up of unsold stock, nothing says property crash more than loads of empty unsold units, hence the revamped efforts to get FTB"s into debt for overpriced shoeboxes and skyboxes.