So the government plans to help new homebuyers to get houses. This will be done by the state guaranteeing mortgages of up to 95% LTV for first time buyers. Riiight…
Lets see how expensive or cheap houses really are in the long term perspective…
(note – this data is quite dirty on the house price side but … best we have )
Perhaps the government is betting that a rising tide will lift all boats by decreasing ratios across the board. If wages rise then these prices become more affordable.
A higher LTV doesn’t make a mortgage more affordable. It will make the mortgage more appealling to the underwriter as it facilitates the bank sourcing cheaper funds to lend. And increase its profitabliity on making the loan. The borrower will encounter a higher degree of leverage.
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