If weekly median salary is $950, no one can expect tenants to pay anymore than that.

If a wife's salary is $0 because she's just lost her job, she can't be expected to pay 'usual' rent, unless it is a much reduced rent.

As reported over the weekend (and as we hear from friends and many others), rents are already decreasing in Sydney Inner City, North Shore and Eastern Suburbs, whether anyone likes it or not.

Dean

I think a FHOG of 50K is possible, but would make the Gov. seem extremely foolish to most.

Using your same criteria (180K mg for 200K home, 90% LTV) I looked at the site:
http://www.moneysupermarket.com/mortgages/mortgagesstep1.asp

From it I got the following results, which 'may' indicate trends in UK lending practices: (note 200K mg)
======================
0 results for 10K deposit (95% LTV)
23 results for 20K deposit (90% LTV)
134 results for 30K deposit (85% LTV)
199 results for 40K deposit (80% LTV)
562 results for 50K deposit (75% LTV)
608 results for 60K deposit (70% LTV)
======================

From those numbers I not only notice that there are no 95% LTV mortgages, but that whilst there are some 90% LTV mortgages available, the majority of all mortgages offered expect 75% LTV. Make of those numbers what you will.

However Northern Rock appears to be doing 90% LTV's again, after being nationalised. Whether this is a good idea or not (considering they are using taxpayer money) is another matter.
(http://www.financemarkets.co.uk/2009/02/23/northern-rock-returns-to-new-lending-at-90-ltv/)

And this from an article does not bode well for high LTV's:
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In a survey of 2,000 Brits, Fairinvestment.co.uk found that although the average mortgage LTV borrowed by homeowners is 64 per cent, three per cent of mortgage holders had borrowed 125 per cent LTV, five per cent had borrowed between 101 and 125 per cent, and 13 per cent had borrowed 91 to 100 per cent of the property's value.

This means that 21 per cent of mortgage holders borrowed more than 90 per cent of their property's value, which could give them an increased risk of negative equity – particularly if house prices continue to fall.

The Financial Services Authority has predicted that if house prices fall by 30 per cent from the level they were at the end of 2007, more than two million British homeowners will be in negative equity – this is more of a risk for those who borrowed 90 per cent of the property's value or more, as according to some market analysts, house prices have already fallen by more than 15 per cent in the last 12 months alone

http://www.ccrmagazine.com/index.php?option=com_content&task=view&id=712&Itemid=37
==================================

Note that in my previous post I did say "typical" LTV's were 75% in the UK now (not all of them of course).

My overall point is that Australia is only BEGINNING to tighten its stance on LTV's, yet we can take a look at the UK and notice that LTV's have already tightened. From that we can draw an inference that Australia will tighten its LTV's for new mortgages if the market starts to fall.

This means that FHB's will be UNABLE to purchase a new place unless they have a sizeable deposit, unless the Gov. upgrades the FHOG to something silly like 50K (hey anything is possible right?).

I am speculating here. But I think what I have said is reasonable.

Joe, I am not talking about what WAS the case. I am talking about what is CURRENTLY the case. I am not suggesting that LTV's were always 25% in Britain...they wouldn't have half their problems if they were!

FYI I got my information from http://www.mortgages.co.uk/
The site compares mortgages from the different lenders. I looked at the big banks.

So you say that I 'speculate', which is actually true. I speculate based on what I perceive to be LOGICAL. You can refute and dispute the logic, I am open to that. However I am not open to being told that I am wrong 'just because'. That is real estate spruiker talk.

If you disagree with me, give me some relevant points so that you may convince me otherwise.

Typical loans in the UK require an LTV of 75%. (LTV = loan to valuation...how much deposit you will need).

Being British I know for a fact that the standard deposit required was 5% and in more recent decades none was more than acceptable. More than a few lenders were offering > 100% mortgages over the last decade.

The principles of mortgage indemnity permitted some reassurance to the banks. Hence when the crash came the insurance industry started worrying and making losses on their indemnity claims.

It is a bad situation where wages are likely to stagnate or fall and inflation is likely to increase