• Visitors can check out the Forum FAQ by clicking this link. You have to register before you can post: click the REGISTER link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. View our Forum Privacy Policy.
  • Want to receive the latest contracting news and advice straight to your inbox? Sign up to the ContractorUK newsletter here. Every sign up will also be entered into a draw to WIN £100 Amazon vouchers!

The golden era of home ownership is 'over', says mortgage boss

Collapse
X
  •  
  • Filter
  • Time
  • Show
Clear All
new posts

    The golden era of home ownership is 'over', says mortgage boss

    The new rules, which include tough restrictions on how much a person can borrow, are expected to be enforced next year.

    They evolved after banks were accused of irresponsible lending, allowing home buyers to borrow more than the value of their home and take out interest-only mortgages without providing evidence of how they were expecting to repay the loan.

    Michael Coogan, director general of the CML, said: “The golden age of home-ownership is over, for the moment.”

    He defined the “golden age” as a more stable period in the housing market when demand met borrowers’ aspirations. It was when there was modest year-on-year growth in responsible lending and came before the housing bubble of 2006 and 2007.

    Today, thousands of home owners are unable to find an affordable mortgage and the amount of lending provided every year remains significantly below the long term average.

    Mr Coogan said the new rules would fail to revive the housing market, describing them as “fatally flawed”.

    “Transaction numbers will fall further if the mortgage rules come in,” he said.

    The proposals by the City Watchdog the Financial Services Authority are aimed at ensuring borrowers can afford their mortgage.

    Lenders would be ultimately responsible for assessing whether a mortgage is affordable and ensuring that borrowers’ incomes are properly checked.

    Mr Coogan told The Daily Telegraph that the measures would result in “lenders simply not lending” because loans would be too costly and the regulatory backlash would be too great.

    He suggested interest only loans could disappear and there would be fewer first-time buyers, which help to prop up the rest of the market.

    The new rules would also result in existing home owners being unable to move – so-called “mortgage prisoners”.

    A low turnover in mortgages would see more people renting, while those already on the property ladder would move just once every decade rather than once every four to seven years.

    The warning follows a new low in mortgage lending, with latest figures showing approvals dipping to just over £11 billion in August, the lowest summer level in a decade.

    Some economists predict house prices could drop as much as 15 per cent from the beginning of 2010 to the end of next year.

    A separate study by the CML suggested virtually everyone believes that Britain has housing problems, with young people unable to afford to step onto the property ladder and taking on too much debt to do so as the biggest issues.

    Housing minister Grant Shapps said: “I have made clear that I will support the 1.4 million aspiring home owners whose ambitions are thwarted by a lack of mortgage availability. (AtW's comment: on ffs Shapps - the best way you can support those aspirations is to make sure house prices actually drop to become affordable)

    “That’s why as a Government we're making efforts to tackle the record deficit we inherited, to ensure that interest rates remain low and to bring back a golden age of home ownership.”


    Source: The golden era of home ownership is 'over', says mortgage boss - Telegraph

    #2
    Simple solution.

    Lenders can lend as much as they like.

    However, if the borrower cannot pay the mortgage and defaults on payment, the lender cannot pursue the borrower for the difference between what the borrower has borrowed and what the house fetches at auction. The borrower can hand the keys back at any time and walk away.

    That would be fair and prevent any future housing bubble or over-valuation in property.

    Lender beware!

    Comment


      #3
      That would be fair and prevent any future housing bubble or over-valuation in property.
      AFAIK what you suggest is possible in the USA and it did not prevent house bubble, even though if you look at prices of their HUGE properties they are tiny compared to this country!

      I've got even simpler solution - lender can only lend the money that it has got from shareholders who put their own cash in: no leveraging whatsoever.

      Comment


        #4
        Or we print trillions £££'s and everyone can own the home of their dreams.

        win-win.

        Comment


          #5
          Originally posted by DimPrawn View Post
          Or we print trillions £££'s and everyone can own the home of their dreams.

          win-win.

          Thats why they call you the 'Dim' prawn right?

          Comment


            #6
            Originally posted by AtW View Post
            AFAIK what you suggest is possible in the USA and it did not prevent house bubble, even though if you look at prices of their HUGE properties they are tiny compared to this country!
            AFAIK it's only in certain states and only on certain types of mortgages.
            Coffee's for closers

            Comment


              #7
              Originally posted by DimPrawn View Post
              Simple solution.

              Lenders can lend as much as they like.

              However, if the borrower cannot pay the mortgage and defaults on payment, the lender cannot pursue the borrower for the difference between what the borrower has borrowed and what the house fetches at auction. The borrower can hand the keys back at any time and walk away.

              That would be fair and prevent any future housing bubble or over-valuation in property.

              Lender beware!
              Oh aye, brilliant suggestion! Not!

              So what happens to the saver's money that these institutions who do as you suggest and cannot get their (saver's) money back?

              Obviously, you're not called 'Dim' for no reason! And you talked tulipe on the PCG forums too!
              I couldn't give two fornicators! Yes, really!

              Comment


                #8
                Originally posted by BolshieBastard View Post
                Oh aye, brilliant suggestion! Not!

                So what happens to the saver's money that these institutions who do as you suggest and cannot get their (saver's) money back?

                Obviously, you're not called 'Dim' for no reason! And you talked tulipe on the PCG forums too!
                They'll get the government to bail them out. Kerrrrrrchinnngggg!!!

                win-win.

                Comment


                  #9
                  Originally posted by DimPrawn View Post
                  They'll get the government to bail them out. Kerrrrrrchinnngggg!!!

                  win-win.
                  What a cunning stunt! And where does the Government get its money from to 'bail them out'?

                  Deffo not 'dim' for no reason!
                  I couldn't give two fornicators! Yes, really!

                  Comment


                    #10
                    Originally posted by BolshieBastard View Post
                    What a cunning stunt! And where does the Government get its money from to 'bail them out'?

                    Deffo not 'dim' for no reason!
                    Fast colour photocopying and digital printing for London

                    Comment

                    Working...
                    X