Mortgage Help Scheme starts next week with 95% loans :)

[PlanB]

http://www.bbc.co.uk/news/uk-politics-24319583

[Riz]

Re: Mortgage Help Scheme starts next week with 95% loans

Here we go again, then......

[SXGuy]

Re: Mortgage Help Scheme starts next week with 95% loans

Oh great, not really what we need. Doesnt help anyone in the long term.

[Riz]

Re: Mortgage Help Scheme starts next week with 95% loans

At least when it all goes tits up again, this time as they are government back they can carry the can directly, rather than having to bail the banks out.

[Rockybeach]

Re: Mortgage Help Scheme starts next week with 95% loans

Nothing unusual with 95% mortgages, they were fairly common in the late 90s, I bought a place in 98 with a 95% mortgage.

The problem was caused by high LTV mortgages but by the subprime ones that started at a very low rate, fixed for 2 or 3 years, then doubled or trebled. Mine was with a mainstream lender (the now defunct Bradford & Bingley), plenty of high street lenders offered 95% mortgages.

Another problem were the self-certs, which allowed people to borrow virtually without limits, regardless of income. Add that on top of the high rates after the fixed rate period ended, and the fact that most were trapped due to being ineligible for mainstream mortgages, and you have the reason for the mortgage crisis. It wasn't to do with 95% mortgages.

[SXGuy]

Re: Mortgage Help Scheme starts next week with 95% loans

Hold up, 95% mortgages means, that you have equity of 5%, you relate the crash to the sub prime market etc which is true, but what about the result? prices hitting rock bottom, so if your 5% equity gets eaten up by a crash in house prices, your no better off, you cant move, you cant change your mortgage.

With a government backed scheme, its 0% interest for 5 years, then what? whats the interest rate after that? will you afford it? can you switch to another mortgage? will a lender accept you if you have a government backed scheme?

We all know house prices are increasing in a fake housing bubble its only a matter of time before they crash, lets see how 95% mortgages worked for people then.

[PlanB]

Re: Mortgage Help Scheme starts next week with 95% loans

With a government backed scheme, its 0% interest for 5 years, then what? whats the interest rate after that? will you afford it? can you switch to another mortgage? will a lender accept you if you have a government backed scheme?

We all know house prices are increasing in a fake housing bubble its only a matter of time before they crash, lets see how 95% mortgages worked for people then.

Really? I'll be back tomorrow with my take on this.

In the meantime SXGuy would you like me to polish your crystal ball

[PlanB]

Re: Mortgage Help Scheme starts next week with 95% loans

not really what we need. Doesnt help anyone in the long term.

Surely if more people are able to buy their own homes that will relieve the pressure on the dire shortage of social housing.

[PlanB]

Re: Mortgage Help Scheme starts next week with 95% loans

Another problem were the self-certs, which allowed people to borrow virtually without limits, regardless of income.

I agree. The problem wasn't caused by sub-prime lenders it was caused by sub-prime borrowers

[PlanB]

Re: Mortgage Help Scheme starts next week with 95% loans

At least when it all goes tits up again, this time as they are government back they can carry the can directly, rather than having to bail the banks out.

Exactly. And since the next General Election is in May 2015 this is either a high risk strategy or a last throw of the dice

[Rockybeach]

Re: Mortgage Help Scheme starts next week with 95% loans

Hold up, 95% mortgages means, that you have equity of 5%, you relate the crash to the sub prime market etc which is true, but what about the result? prices hitting rock bottom, so if your 5% equity gets eaten up by a crash in house prices, your no better off, you cant move, you cant change your mortgage.

With a government backed scheme, its 0% interest for 5 years, then what? whats the interest rate after that? will you afford it? can you switch to another mortgage? will a lender accept you if you have a government backed scheme?

We all know house prices are increasing in a fake housing bubble its only a matter of time before they crash, lets see how 95% mortgages worked for people then.

You can never be certain of the future but one thing we are all certain of is that it's not easy to save up for a large deposit, and if there is a crash like you predict, even 10% or 15% could be eaten up, so what's the difference?

The banks were happy to fuel the bubble and some were lending up to 125%. The argument for that was that there were always additional expenses such as surveys, legal costs, moving costs, etc. on top of the purchase price and first time buyers would have to buy furniture and white goods as well, so instead of using your credit card at a rate of, say, 20% or your 29% storecard, you'd borrow at the much lower mortgage rate. From that perspective it made perfect sense, however, the 125% also put you instantly in negative equity. It all depends on which way you look at things.

[Rockybeach]

Re: Mortgage Help Scheme starts next week with 95% loans

Surely if more people are able to buy their own homes that will relieve the pressure on the dire shortage of social housing.

That was caused by council housing being sold under the right to buy at heavily discounted prices, only for the ex-council tenants to put the place on the market as soon as the required 3 years were up, sell at market prices and move out of council housing, while the ex-council properties were then largely snapped up by BTL investors.

[PlanB]

Re: Mortgage Help Scheme starts next week with 95% loans

That was caused by council housing being sold under the right to buy at heavily discounted prices, only for the ex-council tenants to put the place on the market as soon as the required 3 years were up, sell at market prices and move out of council housing, while the ex-council properties were then largely snapped up by BTL investors.

Too right. I blame both Margaret Thatcher and the Daily Telegraph for that

http://www.telegraph.co.uk/news/poli...il-houses.html

* am I taking this new "Housing Expert" thing a little too seriously

[SXGuy]

Re: Mortgage Help Scheme starts next week with 95% loans

Whatever the argument, whether you agree with me or not, anyone who has to take a 95% mortgage, must be prepared for the worst if and when it happens. Yes everyone has a right to own a home, but not everyone is in a sensible position to own one. Im sorry but I do not buy the argument that it gives people the chance to own a home. What it gives is government and lenders the chance to snatch back your house when you suddenly find yourself unable to afford the mortgage.

I lived at home with my mother, for 2 years longer than I wanted, so I was able to save up a deposit with my partner. I had to move 30 miles out of London just to be able to afford a house. I had a 85% mortgage. If all I could get was 95%, then im sorry, id of carried on renting until the market dipped, or stayed home longer.

Increasing the lending is not the answer, sorting out the crazy inflated house prices is. Build more houses, that's the only way, not increase the borrowing.

It suprises me quite frankly, that a site such as ours which tries to address debt, is in favour of MORE borrowing.

And im still yet to hear from anyone who can tell me what the % rate will be after 5 years of a government back borrowing scheme. May all seem great now, I just prey it doesn't mean people will find themselves under a repo order 5 years down the line because they cant afford to repay that as well as a mortgage.

Not to mention if interest rates go up along side it.

[MrsD]

Re: Mortgage Help Scheme starts next week with 95% loans

agree SX, the British people have this thing about owning your own home, we need to forget it for a while, and consolidate. We bought when we were young, we lived through the exit from the exchange mechanisim, think the rates went up about 10% in a day, we had to pay that, our endowments went down the toilet, we paid that, council tax had increased, fuel has rocketed, insurance has rocketed salaries haven't and pensions haven't because a lot of them were invested in property and two of mine went bust. All in all I would be saying to the youngsters, don't put a millstone around your neck, don't stick yourself firmly in the targets of all these financial shysters who are only interested in making excessive profits out of you, let someone else take the risk for a few years, you don't need a perfect credit record to live your life. The government shouldn't be encouraging this, they should be building more houses and doing something about the situation in London and the home counties where there is a bubble. Can assure you there ain't no bubbles here