Mortgage lenders, house builders and industry leaders are being summoned to an emergency meeting to discuss the plight of first-time buyers.
The meeting is being called by the Government which says that first-time buyers have been frozen out, impacting the whole of the rest of the housing market.
Deputy prime minister Nick Clegg said that the crisis is ‘hampering social mobility’.
The summit will be held in London on February 15 and chaired by housing minister Grant Shapps.
Problems faced by first-time buyers include the large debts with which they leave university, the high deposits routinely required by lenders, and the increasing likelihood of interest rates rising.
According to the Council of Mortgage Lenders, the proportion of first-time buyers under the age of 30 who are able to buy without parental help has fallen from 63% five years ago to 17%.
In the last three quarters of 2010, the proportion of mortgages granted to first-time buyers with deposits of less than 10% fell to two in 100, down from almost six out of ten in 2005.
The average age of an unassisted first-time buyer is now 37.
Treasury spokesman Lord Oakeshott accused mortgage lenders of being virtually ‘on strike’ when it came to lending to first-time buyers.
He said: “The bankers’ doors are shut to first-time buyers without a big helping hand from the Bank of Mum and Dad.”
Comments
Dan1el: Please enlighten me.
Do you prefer Edit > Cut > Edit > Paste when you spread this drivel all over the net, or do you use fancy shortcuts.
I see you as a shortcut man, myself...
Also: Why do you type. In such short sentences. [Using these brackets]?
IF, as you suggest, FTBs do not like being robbed, then they have the answer in their own hands. DO NOT BUY! But that is not the case. They WANT TO BUY - but find themselves unable due to factors that I am not going to engage in trivail argument with you about. You simply want to show everyone that your Economics GCSE was worth the wait and several re-sits so that you can use all the buzz-phrases.
Pity you don't comprehend or appreciate the HUMAN aspects of house selling and purchase - the factors that guarantee that Estate Agents will ALWAYS be a part of the process, as they are worth their weight in gold when the brown smelly stuff is hurtling toward the electrically powered ventilation device.
Who knows - one day, you might even find that out for yourself...
Lloyds now owns over 33% of the UK's residential mortgages. Acquired from HBOS. [Of which up to 80% were basically liar loans. Self Cert mortgages according to senior insiders and whistleblowers at HBOS]
Its immaterial what the banks will be sold for, or what they were bought for. [Before one of you bright sparks mentions that.] Although HBOS and Lloyds SP crashed spectacularly post 2007
[It is certainly completely unfair, and criminal, that the UK taxpayers who do not own property, should have to pay to recapitalise Lloyds via the bailouts. Without this recapitalisation, property prices would have plummeted back to their long term average affordability. Which would mean over 50% falls. So by stealing our Taxes, QE, keeping Interest Rates at the lowest they have ever been, we are in effect being forced to pay to keep everyone else's property massively overinflated. Keeping millions who are not on the housing ladder yet, from being able to afford their own property. That is complicated thievery. Implemented by Labour Party policies.]
There is still the risk that the banks may be broken up. Monopolies commissions etc.
[The HPC website receives approximately 546,000 Page hits per week. FTB'ers do not like being robbed. Which is what is happening. Would you sit for this? Of course not.]
You EA do not bother me frankly. [Those of you who will still be around....]
60% reductions same as other countries will happen, or we will see wage inflation.
Ta ta for now. :0)
whoops bugger! wrong forum,
Err sorry, please mods get rid of all my posts.
Advice required.
I have a pimple on my bum and its getting bigger what should I do?
Oooow steven, Do you work for rightmove ? what are you a £5/hour replacement for a spambot to get around EAT's technically challenging spam preventer.
Quick Ros change the sum to be more than 20, this one can use his toes!
Listen matey, TDPG is a far sounder investment for your advertising spend than Rightmove. Go and troll somewhere else or wait till your point is relevant.
Advice required.
Should I continue to advertise in the local newspaper? I feel it is a waste of time as Rightmove is bringing in a lot of the leads.
I already stopped advertising in findaproperty group and zoopla and this hasn't affected my business at all. I think Rightmove is all that is required.
All i do know is postings get busier on here as the market gets quieter....watch out!!
Dan, take a look at today's article - "Mortgage approvals drop to new record low".
Currently there are 1,500 mortgages approved on a daily basis, as opposed to 4,000 in 2006.
This still shows there is a demand for mortgages at the current house prices. If the approvals drop to a record low, this represents a substantial number being rejected.
I know a guy who had a 50% deposit and was turned down due to a question mark on his credit rating. Just a question mark, no bad history.
There are many factors stalling the housing market - it can't all be put down to current prices. People are still buying/looking to buy in the current market.
@AceofSpades
I agree that sellers would be unwise to realise a loss if they can help it. However the majority of homeowners are not sitting on a loss (yet) so it doesn't matter to them.
The two "facts" that you quote are wrong. There may be fewer transactions but houses clearly still sell as prices fall. It's happening now, did in 2008/09 and has done many times before.
I maintain that realistically priced stock will sell quickly(as Outbid of Devon can testify) and talk of a mortgage famine is a red herring.
Time will tell. Good luck in your endevors.
I guess us first time buyers will just have to give up buying then if sellers won't be realistic. We were just shown a report talking of removing our London weighting payment and the end to overtime. With inflation eating our wages we have even less money to buy. Who will be able to afford tobuy in the future even if we have 25% deposits and mortgage offers. Mortgage transactions are at a historical low and set to continue falling all because prices are too high.
Without ftb the Market dies, interest rates I reckon will force sellers hand, they won't get 2007 prices for a decade.
Here is a tale from Devon, I have my 25% deposit ready to go, found a property with an asking price of £125,000. It has been on a while and gone to multi agency.
Initial offer £115,000 "given serious consideration"
Go to £119,000? alright then, let's instruct solicitors.
Another offer comes in at £122,000, another at full asking price and it is now instructed at £132,000.
Some falling market!
The Agent was a star but I lucked out! perhaps these blokes were right before Christmas after all. Perhaps we FTB's need to listen!
Well said, Kate. Someone with common sense :)
Couldn't agreement more with your "entitlement" comment - a massive issue today, which we see on this site now and again.
Daniel,
You expect the value of a home to drop substantially, for you to profit and the seller to make up your losses. Why will the seller, sell? Why should they take a loss, to deliver a gain to you?
The fact you find a house too expensive, does not mean that others do.
Improving the lending system would certainly increase the number of transactions we are currently seeing. Again, there is no rule as to what houses should be.
Houses were selling in and around today's price brackets, over 5 years ago. The problem now is that it is tough to borrow the money.
IF houses were as over-priced as you suggest, NO houses would sell, none at all. But sales continue to go through, day by day, week by week.
If you got your wish of massive price reduction on all property, you would have nobody selling houses (fact) and the rest not physically being able to (fact).
In all honesty, get a good deposit together and set your sites on an affordable home.
I do hope you act correctly though, the prices you see today WILL be higher in the future.
@Kate
Don't you just wait for 3 months until they come back to you with their tail between their legs? Being a professional is not about telling people what they want to hear.
I think there are so many factors contributing to the problems that it's nigh on impossible to suggest an outright solution.
Overpricing is clearly an issue in some areas but as AceofSpades points out no-one is willing to price their property 'realistically' if it means they are making a loss. And do any 'industry outsiders' know how hard it is to get a vendor to price according to your valuation if the previous agent's valuation was £10k or £20k higher? I've had three potential vendors in the past week who have declined to market their property at my suggested price - what am I meant to do about that?
Finally I agree that part of the problem is the overwhelming feeling of entitlement in our society these days. Being able to own your home is indeed a privilege not a right, as is being able to have a three year piss up and get to whack a few letters after your name at the end of it. The situation we're in at the moment is that you have to save for a deposit and buy a house that you can sensibly afford.
This country is going down the drain when Liverpool is paying £35 million for Andy Carroll!!
Having read most of the posts on this subject I think that most are from FTB's or possibly failing estate agents and they are talking rubbish!
Sorry everyone. Wrote that on my iPhone. Hence appalling spelling.
House prices will be artificially supported at their current level or thereabouts by additional QE. The boe can't allow tha banks to lose anyore money becos they can't risk them failing. So interest rates will only rise when the exonomy starts growing again. The only growth in the economy and house prices over the past 2 years has been artificially produced by the BOE. the sadfact is that our coming is broke and we are likely to follow japan which has had rock broom onterst rated for 20 years despite many stimulus measures. This mean we have to adjust our expectations somewhat. Ftb s from now on will be the in the minority indeed activity in the housing market will be patchy
for many years, property
will be passed on through the generations as the only possible route to the top
of the ladder.
Big problem with banks lending now is our elected dictatorship want them to have more cash reserves in case they get into difficulty as they will not be bailed out again.
Then we have the scared to lend in case it happens again attitude and the solution is lets put the deposit required up to say 25% and we wont get the enquiries.
Follow this with on line application forms being doctored so that they cant be completed and hey presto they can then proudly announce we are not getting the applications in.
The whole thing is a mess so what good will a summit do? Nothing it will be like all political meetings - lots of hot air and nothing sensible introduced.
I like the untouchables bit and agree with the stamp duty holiday wont do a damn thing. I like lots of others will not be holding my breath for some wonder solution.
Us estate agents are all at the sharp end of selling property and know what is needed to move the market onwards but who gives a rats as to what we say cos clearly we dont know nuffin!
I used to pretend I was an industry leader - never was of course - and, with only one branch, what the hell do I know anyway!
If Mr Shapps were to invite me to his summit, which he won't , I'd tell him to ban all remortgaging and further loans, make building extensions and going in to the loft illegal, drop stamp duty, increase the ceiling for tax-free spare room letting (and not for just one room either). and repeal the Window Tax.
While he's at it he might like to consider some for of pre-sale pack including lots of useful information for buyers like that invaluable EPC so important for prospective purchasers to inspect minutely. The pack would also contain a much less useful £10,000 in folding to help with the deposit., and an inflatable Kirstie Allsopp/Phil Spencer to choice. Big T - always got his finger on the pulse.
Although transaction levels have halved in recent years, the demand for housing has risen and will continue to do so
Builders are not building enough as there are no incentives for them or their shareholders to do so, having paid over the odds for land, by speculating on future price rises when actually prices fell
Supply and demand will help to support house prices.
Unfortunately anyone who wants to sell their first house now who bought within the last five years will realise that they cannot get a mortgage on their second house so they will not sell - thus creating an even greater shortage of affordable houses
And so on and so on
If the BOE are stupid enough to tip the wider economy into total meltdown by rasing interest rates then we will have what the HPC lot want - however, inflation and tax pressures are doing a better job than interest rates right now (poor savers)
It's on a knife edge and will take years to eak out a solution
Here! Here! Gourmand!
Computer History of spending , average income, average spend. It is all there at the touch of a button.
The mortgage test is pick up the phone to the bank .
If they say Good evening sir or madam or you have the DDn for the branch you stand a chance of a mortgage.
If you only have the 0845 number give up before they even get chance to Wadderyer Want?
The 20/25% deposit is required from First time buyers for one reason only. It is a simple test of financial prudence. At 5 and 10% deposits it is possible to whack the deposit on a credit card or overdraft. Effectively giving the bank little chance of recovering anything from purchaser with a cavalier attitude of personal debt and often a whimsical new relationship motivation towards buying a new home.
Big deposits weed out people who are not in a realistic position to buy a property.
Additionally the banks know that inflationary pressure is mounting and that inflation is going to be controlled by interest rates. The banks simply do not want mortgagees who have little or no self-discipline at a time when mortgage interest is likely to at least double for new lending but triple quadruple or in some cases Hex tuple (x6) for existing borrowing.
New borrowers are paying the price of Mr Blair and Mr Brown’s spend to stave off recession policy. The banks know how much most of the people wanting mortgages are currently blowing each month. They are watching £50k a year applicants simply squandering their money. Is it any wonder why anyone wandering into a bank or Building society after a few loved up weekends in Hotel Du Vin with their latest intended is told to bugger off?
Genuine FTB’s need to be polite and respectful to their parents. MaD (Mum and Dad backed) mortgages are the only ones they can realistically look forward to for a few years to come.
@AceofSpades
Sorry for the bullet points but I have to go:
1. I agree that homeowners facing a loss would do best not to convert that paper loss into a real loss but, whatever your opinion, the majority of homeowners bought longer than 5 years ago so won't have a problem. In fact, I think you'll find that most homeowners bought so long ago that they are even mortgage free. I think the BoE have stats on that.
2. Why would anyone want prices to rocket? That is precisely why we are in the current predicament and people are struggling to move up the ladder. The higher prices go, the further appart the rungs get and the more money you need to borrow from the bank. Money that they are unwilling to lend.
3. Sell your house for £40k less than what? What it was once nominally "worth"? That'd be up to you and how long you're happy to stay put and have your money tied up in a depreciating asset. Could be a while if real terms falls are on the cards for several years to come.
4. If your house is worth £40k "less" then the one you move to should also be worth less.
5. I'm not moaning. You'll find that it's the industry doing most of that. I'm simply giving my view in a comments section.
6. Talk of jealousy and the cost of bills is childish and does you a diservice. Idiot.
7. Goodnight all.
@HD
There'll be plenty left for FTB then.
If I want a dark prediction of the future I like to look to the US where price drops are accelerating again after several years of falls. From todays Wall St Journal:
"Falling prices are a reflection of weak demand and tight credit conditions that reduce the number of potential buyers.
There are just not a lot of renters with confidence, with a down payment, with good credit, and without a lot of additional debt,"
Sound familiar?
Daniel, Sir.
There is absolutely no written rule that people cannot lose money in a property transaction - I never suggested that. I know lots of people who have.
What I DID say, is if a property sale is going to represent a substantial loss, who could afford to proceed with the sale and why the hell would they? Or does your theory revolve around home owners that don't have any common sense?
You are ignoring this key fact. It DOES NOT MATTER what it was, is or will be worth, but why would anyone take on a debt, when they can just stay put for the time being without being hit with a loss. A seller owes you NOTHING.
Once you finally get your grubby little mits on a property, you will be desparately wanting the value to rocket, you and all of your HPC buddies.
You say a house price crash would affect a "tiny proportion" of the market. A) thats rubbish. B) Why would I sell my house for £40k less now, when I know long term the price will exceed its current value? Like I said, (in my opinion) its not about profit, its ensuring that you do not make a stupid loss and it is viableto sell - there is no arguing that point.
I'm sensing a sour taste of jealousy in your motives.
"Not willing to pay what is being asked" - that's your problem, live with it.
"Unable to afford what is being asked" - Then you will have to lower your expectations and/or make other arrangements, such as letting.
I would think twice about buying if I were you. The council tax, utilities, telephone, broadband, tv bills and b&c insurance (Sure you would cut back on that one though) would probably send you over the edge. Stay with the rents for now.
TO Dan: Well as I'm in London maybe things are different. I didn't actually say that cash buyers would buy ALL the properties, I said All Cash buyers would snap them up.
Over Valuing does help the market, but the main reason is the lending. Prices are back to around 2006 and people were willing to buy properties at that price, and if buyers could buy with a 10% Deposit it may make things easier.
Problem I perosnally have with a lot of FTB is that instead of liking a property, they want to know what its going to be worth in five years so they can make a profit. Those days are gone. I wish I did have acrystal ball so I could Predict the future.
Amuses me all the theories in these comments as to why house prices cannot fall. Obviously history is not a strong point around here.
House price bubbles form every 20 years or so. We have had 3 since WW2. Early 70's, end of 70's (shortened cycle due to high inflation of 20%) and early 90's. The 90's bubble is a good example. Around my way prices DROPPED 33%. I tried to sell my modern build detached for 82k, and still didn't. Peak price was 125k.
For all the reasons I read here, prices still DROP. There are no where near enough cash buyers to support the market. Supply and demand has nothing to do with it if you cannot afford to buy in the first place.
The killer will be interest rates, and these WILL have to back to the norm of 5% some time.
I hope they will discuss the blindly obvious problem.
Prices are way above the value they should be.
The average house price should be about 90k, and not 162k
Interest rates of 5% will sort the problem, and give savers a proper deal.
AceofSpades & HD
The written rule is that property (or any other asset) is worth what somebody else is willing and able to pay. The current pitifull level of transactions is obviously a symptom of over-pricing. People are simply not willing and/or able to pay what is being asked. The only vendors at risk of losing money are those that bought within the last 5 years. Or those that expect the house sale to clear all their other debts at the same time. These people represent a tiny proportion of homeowners and so what they decide to do makes no difference.
You seem to be suggesting that there is a written rule that nobody can lose money on a property purchase because all they have to do is refuse to sell. This is clearly nonsense.
The idea that cash buyers will snap up ALL the property is just as laughable. Think about it. With average prices of say £150k, there would need to be around 50,000 people willing to spend that amount of money on falling assets each and every month. Not round my way there isn't.
PeeBee & AceofSpades,
To right!
Not many others giving much thought to the problem
To all First Time Buyers out there, if prices did have a big drop, you still wouldn't get a look in as all those Cash buyers will snap them up
Haha! Just noticed my typo (probably one of many before the spelling police give me a ticket).
I can assure you that I meant "assets" not "asses".
There is no written rule to what prices should or shouldn't be. If you go back to historical prices, perhaps you could say prices were too cheap? They certainly were 15 years ago.
Those who offer the suggestion that the prices should be dramatically slashed are fools - this is property we are talking about. Although, if your playground talk was referring to Mars Bars about to go out of date, THEN you would slash the price.
Many are loosely using the supply and demand rule. This DOES not work with private individuals selling their biggest asses. Who is stupid enough to sell their house if they are going to make a big loss? Don't get me wrong, a house purchase is a home, not a business investment, but your idea would not ALLOW anyone to sell, even if they stupidly wanted to sell their house for 50% of its current value.
Petrol has now doubled in price over the past 3 years. Again, no written rule as to what it should or shouldn't be. It is what it is.
You see, the problem is, if you did slash the prices in half, or however much you want it to go down, NOBODY would sell. Why does that not sink in?
These points that the HPC brigade bring to the table create the impression of you just being tight and not wanting to part with your cash.
A house purchase is a privilege, not a right.
It's far too high asking prices which are the barrier to us first time buyers not deposits or mortgages. Why can't people get that. With wage freezes and higher costs in living the overpriced housing is the key problem stopping us buy. Lower prices need less deposit and lenders with less risk to issue mortgages.
You don't have to be a rocket scientist to know that house prices are over-priced. Fiddling with stamp duty, deposits etc are all short-term fixes attempting to wring the last drips of cash (or debt !) out of the 'current' market.
The situation is that serious now that the debate has becoming a hot political issue. In short, are there more votes in appealing to people fearful that there lifes investment might be damaged ? Or are there more votes for people fearful that they will never get on the ladder ? Clearly the emergency meeting is not a case of muddled thinking but rather a doomed attempt to keep everybody happy.
Bottom line is if a houseprice collapse is unthinkable, albeit good for the Market in the medium to long term, that leaves higher wages as the only solution - and the Government will be damned if they dont and damned if they do deliver.
Best 'appear' as if you are doing something then...
None of this "action" will do any good
The market will take care of itself, and the government will not want to upset the banks anymore than they already have - recent talks about loans to small businesses, and bonus caps collapsed - so why should this be any different?
The HPC merchants will have another field day with this story no doubt
The banks are content to dismantle a market that was of their own making, and will make a lot of money again in the future when they decide to re-create the booming market once more
To whoever posted "Seeing as it costs about £50,000 to build a house and they can be sold for £150,000 there is plenty of scope for them to cut prices."
REALLY?? Go take your head for a shake.
Ray Evans says: "Builders will not build unless they can sell at a profit."
Seeing as it costs about £50,000 to build a house and they can be sold for £150,000 there is plenty of scope for them to cut prices. The land value is merely a balancing figure.
Simple solution, blindingly obvious. Prices must fall to affordable levels (back to the 80's multipliers) so buyers can buy without fudged deals like shared ownership. Artificial props under prices like real interest rates below inflation must end. Builders will still build as land prices will also fall to reasonable levels. The Goverment must leave alone and allow a "normal" market to establish itself. Only then will it be self sustaining.
The problem is not lending but peoples ability to pay back the amount they need to buy a home.
The real problem is that house prices are too high. The very basics of supply and demand
Shapps should sit them round the table like that scene with Robert de Niro in the Untouchables.
If anyone refuses to lend, they get the baseball bat.
House prices can only fall so far and we are approaching that level. Vendors will not sell if they have a mortgage that cannot be discharged and builders will not build unless they can sell at a profit.
The market is driven by first time buyers and many, not all, could afford the actual mortgage repayments if offered at a ‘reasonable’ interest rate with a ten percent deposit.
The radical overhaul NEEDED is to sell houses via auction [with in-room and internet bidding]. The EAs left would then just show round "interested parties" before the auction, and provide no interference in the pricing and selling process.
The only thing that is slowing the market down at the moment is EAs continual reluctance to face reality and to price down in the current falling market. FTBs and large deposit buyers are not daft; they now have access to sold prices versus original askin price(s), so they know EAs marking up by 15-30% (Poxtons, Smutt & Porkers).
Price right & you'll start to sell, and stop whining.
Is there any reason, providing premiums were thoughtfully calculated, why we could not go back to the days of the MIG premiums on loans in excess of 70%. This helped move the market many years ago and could possibly do so again.
Why do you think most lenders want 20-25% deposits at the moment? Becasue the Banks know prices are going to drop & dont want further borrowers in negative equity, as they have enough already.
I agree if property is prices correctly it will sell, but far too many properties are for sale at too high a price.
The last couple of weeks have been a challenge on new sales & its likely to get tougher over the coming weeks especially if the press keep whipping up negative headlines.
Dogbreath i know its monday morning, but you dont seem to have a very positive outlook & with that outlook your sure to have a bad monday sir.
In my experience the main reason for the stagnant market is that asking prices are often wildly unrealistic. The money is simply no longer there to support boom time prices and in my opinion nor should it be. If the only way to fund a purchase is with interest only, self cert and high LTV mortgages then something is clearly wrong. As an industry we need volume and that means that property should be affordable for the average person. We should have a bit more respect for Joe Public and quit lobbying for him to take on unmanageable debt since it is that attitude that has brought us to this point.
Many would-be-buyers are simply sitting tight and waiting for the inevitable correction. As per usual, nowhere do the "industry leaders" suggest that would-be-buyers are electing to stay clear; as that would undermine their 'it's all the banks fault' argument
This is all just hot air, property is for the wealthy now. It's all going just as planned. the governemtn don't really want young people getting on the ladder, nor do they want to give out free education or an economy with a future. What future do the young have ? Even car insurance in London for a youngster is beyond means. Can't drive, no jobs, housing unaffordable, education too expensive.
What a mess.
they will no doubt come up with something they believe to be revolutuionary, like a stamp duty holiday and it will have zero effect on the market.
I am no economist or politician, I'm a long way off being an industry leader, but I do have an ounce of common sense, they do not need expensive summit meetings etc, just needs Mr Shapps to say to the government run banks please start lending 90% LTV again using sensible income multiplier/affordibility scale, hey presto other banks will then follow suit.
Biggest problem Shapps faces right now is the lack of housebuilding.
More supply of houses would assist meeting the demand, with the effect of lowering or freezing house-prices and giving some hope to FTBers.
Lenders won't be controlled by Government, since they are far more powerful. Government can, however, control the rate of housebuilding- should it choose to do so.
With the epic delays in even defining Zero Carbon Homes, its clear this Government isn't interested in increasing the volume of houses built in the short-term. FTBers can go to hell in a hand-basket.
Far easier for Shapps to call conferences and talk through 101 issues claiming to be listening to the industry rather than doing anything of any consequence.
Three questions that need asking:
Which 'Industry Leaders' are involved here?
How can the REAL industry leaders - those who actually DEAL with the public and SELL on a day-in:day-out basis let their views be heard at this crisis meeting?
WHY has it been left to get this bad? Surely before terminal care is implemented there should have been some effort to heal...
“The bankers’ doors are shut to first-time buyers without a big helping hand from the Bank of Mum and Dad"
..................and the government/ UK tax payer "own" how many banks?
May I repeat that In my view the main reason that the property market is in the doldrums is the attitude of the mortgage providers. They used to operate on a ‘considered risk’ but now operate on a ‘negative risk’ basis. The market is driven by first time buyers and many, not all, could afford the actual mortgage repayments if offered at a ‘reasonable’ interest rate with a ten percent deposit. Whilst a twenty five percent plus deposit is required the market will stall. Chicken & Egg: No first time buyers = stalled market and falling prices. Reasonable lending means first time buyers = working market with stabled prices