Posted on 07/28/2013 2:43:34 PM PDT by whitedog57
Like the USA, the UK can’t leave well enough alone and is trying to reinflate their housing market through a program called “Help to own.“
At least the UK government calls it by it’s rightful name: a “scheme.”
Here is how it works.
* Help to Buy equity loans are open to both first-time buyers and home movers on new-build homes worth up to £600,000. * you’ll need to contribute at least 5% of the property price as a deposit * the government will give you a loan for up to 20% of the price
That would be 100% Cumulative Loan-to-Value (CLTV). Or 5% down if you count the deposit as a proxy for down payment.
Sound familiar? Yes, it is a variant of the Federal Housing Administration 203b mortgage insurance plan.
In other words, both the UK government and the USA’s FHA are encouraging low down payment lending.
The London UK housing market bears a resemblance in terms of prices to the USA.
londonus
And the UK as a whole bears a resemblance to the US FHFA purchase-only index.
ukfhfa
Which brings us to the USA. Our national homeownership rate has settled back down to 1995 levels.
homeownrateus
And mortgage purchase applications are back to 1996 levels.
mbapurchlt
As we head down the path of housing finance legislation, we should have a discussion of where we want home ownership rates. We are back to 1995/1996 before the bubble.
Perhaps the USA and the UK should leave well enough alone and not keep juicing the respective housing markets.
Its a shame that we or the UK don’t have a Emergency Protective Circuit to activate.
Warning Will Robinson … or UK Treasury infrastructure minister Lord Deighton.
“Scheme” in British English does not have the negative connotations that it does in American English. It’s meaning is more akin to “plan”. For example a health insurance plan in AmE would be called a health insurance scheme in BrE.
Quite.
O K I am stupid
“need to contribute at least 5% of the property price as a deposit * the government will give you a loan for up to 20% of the price “
how does this equal100%.
We were doing 125% LTV there for awhile back in the mid 2000’s. Big paydays.
125% on a half million dollar house, no doc, buy it, live in it, never make the first payment, abscond with the $125,000. Not too shabby for an illiterate foreign national. Who was coaching them on how to do it, is what we apparently will never learn,
LULAC? LaRaza? ACORN?
SOP in Canada used to be 75% LTV. I presume Britain is using the same measure: 5% DP, 20% gov’t loan, 75% bank loan.
londonus ukfhfa homeownrateus mbapurchlt right back at you, spanky.
AH
I missed that important piece and makes sense now
thank you very much
Sure, buy a house.
Or rather, buy three houses - one for yourself and two for the lender. In economics, this is called “interest”.
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