The number of 90% loan to value mortgages available plummeted by nearly 90%. They fell from 245,000 in 2006 to 28,000 in 2009, hitting would-be first-time buyers hard.
A new report by specialist insurer Genworth Financial says the effect was to push around 100,000 first-time buyers out of the market each year.
Genworth says the situation has deteriorated, with increasing limits on mortgages available to first-time buyers.
The Barrier to Home Ownership Report was produced in conjunction with Professor Steve Wilcox, chair of the Centre for Housing Policy at the University of York.
Angel Mas, at Genworth Financial, said the withdrawal of almost all high LTV mortgages had chiefly hit first-time buyers.
He said: “Ironically, there has never been a better time to get on the property ladder as interest rates and property prices are at an all-time low. Yet the current deposit requirements ensure home ownership is kept firmly out of reach for all but a privileged few.”
Steve Wilcox said: “Without some innovation in policies or products, the ‘wealth barrier’ to accessing home ownership is set to become just as important as the income barrier has been in the past.”
Meanwhile, this week the Co-operative Bank launched a 75% LTV shared ownership mortgage, allowing first-time buyers to borrow the remaining 25% from a housing association.
First-time buyers hit by 90% collapse in high LTV mortgages
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Comments
wooden top: thanks for the clear-up. I thought there was something amiss - normally you and I are on a similar train of thought. I would never fall out over a difference of opinion on a particular matter - but the pet lip did come out for a quiver somewhat, mind you... ;0)
PeeBee I don't know what happend here but my post was a reply post to Myra and not for you... er something has gone wrong in EAT system.
My question was directed soley at Myra, how you came to be involved I do not know and I agree with your opening statements in response. Have a nice day old fellow.
Awww, shucks...I'm blushing! I am certain there are more than a few who would disagree with you, however! What's with the 'OLD boy', anyway?? :0) The one thing that I would say, is that despite what is described in my CV as my 'wealth of experience', I still learn every day - and the day I believe that I know it all will be a sad day.
Peebee,
I hadnt covered you in the game - I think you should be number 6 - wise old boy, forgotten more than many have learned and doesnt take themselves to seriously.
Hows that grab you?
Note to players - guessing a number 6 doesnt get you a point,thinking of a number 7 does though
Jonnie
Liam - sorry mate youre not quite there - have another look at the posts, youre neally there with the entries, just got the order wrong..............................
Jonnie
Jonnie: I'm sorry that I overtook you in the 'Unpopular Poster of the Week' award - but I can see that you are the kind of guy who will vigorously defend your reputation, and this will no doubt regain your crown! :0) Just one question - do I come under 6.(all of the above), or 7.(none of the above - feel free to classify as you think fit)?
sorry thats meant to be let me know if i've got it right...
Jonnie...I've had a little think and these are the answers i've come up with....let me know how i've done
1. Daniel
2. Chris
3. Myra
4. Rich
5. Guy Beckington
BINGO!!!!!
.......ive invented a new game and anyone looking at this site can play it..............its called The Same Old Chestnuts Bingo.
All you have to do is look at the posts and spot one each of the following.
1. Cross chap / lady in rented, shouting as loud as they can that prices will fall by 300%
2. The all gob little experience estate agents been doing it for about 10 years (max) and think they know it all
3. The 30 something would be FTB - by definition have never dealt with an estate agent but feel able to make assumptions / have an opinion on us and blame the proffession for the fact they still live with Mum, based on......er, nothing
4. The sofa economist - easy to spot as they spout a lot of cobblers that they picked up from the papers
5. The nothing to say / pointless poster - this lot hang around here like a fart under a duvet, youll spot them as they often just hang on to / slag what others say without adding anything to the debate
Anyway....off we go, fist one to 5 points wins!!
Jonnie
Oi, lads, down here - i've found one of thoose poor souls waiting for house values to half - quick, come and have a look........
Jonnie
wooden top: I have and will never 'attack' an Estate Agent, who adheres to the requirement to act in the best interests of the client! I have spent many a long hour on this and other sites DEFENDING Estate Agents to the HPC brigade and others - and I would have thought that, having been posting on here at least as long as I have, you would have realised that by now!
Anyway - you asked a question. I really don't think for one second you want me to answer - but if I am wrong please let me know and I will happily post twenty thousand words which will barely scratch the surface.
What you have failed to deduce from my post is that I want Estate Agents to succeed. I want Estate Agents to be profitable. I believe that the good Estate Agents WILL prevail through this property recession as they have through several previous. I just fail to see how, when the chips are down, income levels based on greatly reduced transactions at current Fee levels is going to sustain the businesses.
Eric Walker was SO right yesterday. Transaction levels cannot improve dramatically in the current climate - WHETHER OR NOT property values take a tumble. Therefore, you have to work with the tools available. Get best price for those sales you can put together - and maximise on the fees from those and new instructions. If potatoes are scarce, the price of chips go up. They never come back down when we have tatties coming out of our ears, though - do they? The housing market is determined first and foremost by supply and demand - no-one can argue that point. Fees should therefore be commensurate. Buyers are scarce - vendors should pay more for their Agent to find them.
It will never happen, though - as there will always be a percentage of Agents who put less value on their service than others. No sale, no fee; free advertising - all carved deep wounds in the profitability of the profession which will never heal.
Do I speak from experience - or am I just BSing? In short - yes. 1992 - 1995. Awful times for the property world. Transactions down 50%. Great times for putting fees up to compensate reduction in deals done! 1% to 1.75% overnight, thank you. ;0)
Sorry, all, for the long post. Not something that could be summed up quickly...
Given half a chance agents would be happy to under value, easier to sell? The old 10% rule been around since the start of time, for one reason only .... to entice the greedy vendor. Who hasn't heard a vendor tell an agent, their price is to high only to go on with another agent for less! Not a simple world after all.
You seem to always be attacking estate agents. Please can you tell me the answer to getting the right price?
Then try and do it for yourself!
Myra: Don't be so quick to correct Chris. He is equally as correct (...or incorrect...) as you are. You say "price to sell not price to list...". How about, instead, 'Price to do the best job for the vendor'? After all - that is your obligation is it not...? Estate Agents are FAR more poor business folk (and stand far more chance of legal reprisal, may I add...) if they knowingly undervalue in order to move stock quickly than if they overshoot on the initial appraisal. The whole housing market is based on Invitation to Treat. To negotiate; barter; haggle - call it what you want. In effect, initially overvalue in order to establish a mutually agreeable end price that both buyer and seller can accept. Other models are occasionally used - "Offers Over" being probably the most insane but in certain conditions it will and does work - but the vast majority of house sales start with an Asking Price which is negotiated downward. The problem currently is that so much is being made of figures that NO-ONE knows what the actual value is of a particular property now! And as the press is full of reports that prices are still ten; twenty; whatever percent higher than they should be, then whatever price you put on a property is tarred with that very same brush. The downward spiral self-perpetuates - and you are pushing it further and faster. The commercial suicide you refer to is simply that Estate Agents' fees do not currently reflect the amount needed to survive profitably on reduced numbers of transactions to the long-term average. Major rethink time across the board - and I'm not talking cartel here, simply survival... If fees allow sensible marketing practices to take place, you might - just might - find that prices don't have to be as low as you think! Add this concept to Eric Walker's brilliant post yesterday - and it gives everyone food for thought ;0)
Chirs-You can’t blame “greedy vendors”. Blame the agents that do a rubbish job and tell them what they want to hear, but even then its an asking price not sale price. Prices only rise if there’s demand and then, if they do we are doing the best job for the paying client.Only buyers can actually push pices up.
The “profession” is at fault for basically lying- do the job right and get the market moving, price to sell not price to list, the world has changed and you will die unless you do. After 3 years listing to just have stock is commercial suicide and clearly demonstrates how poor business folk many EA are. Get a new job
False Market
It is your false and limited way of thinking that seperates the intelligent informed decision-maker from the sheep who believe that it is ALWAYS a good investment to buy a house. Perhaps you also think that the article above is informative, unbiased and true? Unfortunately you may learn the hard way if you just bought a house or are just about to!
Crash & Burn, estate agents don't care whether house prices are high or low, just as long as they keep selling property. Look at the fee structure and you will understand. The average house price is around £170k with average selling fees in the midlands being around 1.5%. That's a fee of £2550 per sale. Lets say the property prices drop by a huge 10% to only £153,000 for the average house! At the same 1.5% it comes to £2295, only £255 less!
in ten sales it would feel like you have only sold nine properties that month! Big deal.
The reason prices go up is because of greedy home owners. After a number of property valuations, they will often pick the agent that gave them the highest valuation, which is why many agents over-value. To win more properties, but then they often can't sell them without getting the price down, but by then the home owner is trapped in a long contract with that agent, so that over valuing agent may ultimately make a sale before the contract runs out. Sure agents shouldn't over-value, but they do and that's just how it is, but I cannot stress enough that it is greedy vendors that push prices up, not the agents!
Say the house cost £160K at peak. A 5% fall knocks £8K off the price, a 10% fall wipes off £16K, and at 15% -voila- there's the said £24K lost in rent. Now keep extrapolating for 20%, 25%, 30%, 35% price reductions.
You guys are talking out of your arse. The difference this time is that you know you are too.
that should read '50k' leases.
Is desperation setting in? With mortgage approvals of 25000 last month, we are running at transaction levels just ONE THIRD of what they were for years.
If this carries on (which it will) or gets worse (which it will) then, as far as agents are concerned, it will be a matter of 'the last man left standing'.
Those that signed up 5k shop leases in the last few years will not survive this.
So, prices are at an all time low eh? Funny, I thought they were still very close to their all time highs. Does the article refer to the US or Irish market?
Or is it complete nonsense?
If I were Dr Wilcox I would be somewhat upset by this article. Dubious punctuation and formatting seems to have him saying that house prices have never been cheaper - patently not true - when a closer examination reveals the quote is actually from Angel Mas at Glenworth financial. This is worrying enough - that someone employed as a financial adviser could spout such blatant untruth. That it should be published verbatim though in this publication shows very poor standards. Anyway if I were Dr Wilcox I would sue.
If I were Dr Wilcox I would be somewhat upset by this article. Dubious punctuation and formatting seems to have him saying that house prices have never been cheaper - patently not true - when a closer examination reveals the quote is actually from Angel Mas at Glenworth financial.
This is worrying enough - that someone employed as a financial adviser could spout such blatant untruth.
That it should be published verbatim though in this publication shows very poor standards.
Anyway if I were Dr Wilcox I would sue.
false market, I'd love to know which bank will lend you money at 0%, which conveyancer will charge you nothing, and how you would manage not to spend a dime on maintenance for 4 years. This is the only scenario in which you can claim a £24k vs £7k loss. Homeownership costs a LOT
Low returns on their savings????
As house prices plummet FTBs are saving themselves £200 per day by being prudent and patient. The meek shall inherit the earth.
Never been a better time to buy? Tomorrow will be a better time, then the day after that...
When, repeat, W H E N, house prices drop by 60% us FTBers may have a whimsical glance at whats available. Until then, you can forget it. :0)
House prices at an all time low ??? Utter rubbish. Currently, houses are extremely unaffordable relative to wages.
There has never been a worse time to make a house purchase.
For what it's worth, thankfully, the mortgage drought is saving many FTBs from financial oblivion. At least we can thank the banks for that.
With university funding coming under severe pressure, the University of York may like to make some savings by removing Steve Wilcox as he is clearly out of touch and spouting nonsense.
property prices are at an all-time low.? What is this, a scomic ? property prices are at an all-time high because of all-time low rates.
When house prices reach a more affordable level FTB's wont have to save as much for the deposite. Oh Estate Agents rejoiced at the low base rate but now the very same FTB's are taking longer to save due to the low returns. Estate Agents want higher prices so they can get a higher return. Now Estate Agents can suffer like the prudent have been.
Err, Rich, we have a recession because banks over-lent, not because they stopped (well, unless you mean it in the sense of blaming death by falling on the ground for being there...)
mmm Potential ftb been renting now for 4 years cos lenders dont want to know them. 4 yrs x £600 per month = £24,000 loss. Buy house lose 5% at worst on £150k house £7000 loss. Its not rocket science and ftb know this. They want to buy but banks/ govt dont want them to. Why????? should be the media question.
Jesus is no one listening. We would have no recession if banks had not stopped lending!!!!! The tory's must know this. Must be a deeper reason why they are letting it carry on. Media keeps reporting lack of lending to businesses. Who cares?? its first time buyer who control our economy.Let them in!!!!
“Ironically, there has never been a better time to get on the property ladder as interest rates and property prices are at an all-time low." ???? What planet is that then? BOE base rate may be low but lending is still overpriced and as for low property prices, what a load of (OFFENSIVE CONTENT REMOVED FOR PUBLIC DECENCY)