Drops of only 19% predicted on spreadfair

Jumping_Bean

StevieJ wrote: »

Just out of interest why do property loans have to be 3.5 times income?

So people can afford to service the loans.

sabretoothtigger

Spending a third of your income on housing is more feasible then 100% especially when payments can rise far out of line with inflation or your pay rises.

Im glad I wasnt a home owner when interest rates were 10%, thats something real to fear




http://img370.imageshack.us/img370/5598/640pxfederalfundsrate28pw4.png


Interest rates wont be cut, I hope. It would be counterproductive in the long term.
It shouldnt be about votes because its not under browns control, unless he breaks 10 years of good sense at its first real test

Rabiddog_2

You should have been a new mortgagee when interest rates went to 15% with additional lending at +2% and +3% ..... STill I could afford it then.
Baseline for property is surely (avg wage x 3.5) +10% dep = avg hse prc.
avg wage 26000 ...so 100,000
ldn 35000 ... so 135000

Pretty different to the landscape today **gulp**

Generali

Rabiddog wrote: »

You should have been a new mortgagee when interest rates went to 15% with additional lending at +2% and +3% ..... STill I could afford it then.
Baseline for property is surely (avg wage x 3.5) +10% dep = avg hse prc.
avg wage 26000 ...so 100,000
ldn 35000 ... so 135000

Pretty different to the landscape today **gulp**

I'm not sure why that calculation should hold true. Why should the average person be able to afford the average house? Should the average housebuyer should be able to afford the average house.

GDB2222

Jumping_Bean wrote: »

So people can afford to service the loans.

And can pay the capital off before they are 90!

baby_boomer

Many people - increasing numbers - were unwisely relying on their house to be their pension.

:idea: With house prices falling and the value of their home on retirement much lower, they may actually need to save into a pension or ISA instead :idea:

Rising fuel, utility, food prices, student loan repaymments - and taxes in the next decade - all make this more difficult. Unless younger house purchasers are able to contain their mortgage borrowings.

Generali

baby_boomer wrote: »

:idea: With house prices falling and the value of their home on retirement much lower, they may actually need to save into a pension or ISA instead :idea:

Relying on your house to be your pension is only going to work if you have an extremely expensive house.

I reckon I'll need a pension pot of £1,000,000 when I retire to give me a pension of £60k pa which will be the equivalent of about £30k pa today.

If I was relying on my home to be my pension I'd thus need to be able to realise £1,000,000 in equity out of it. Frankly that ain't gonna happen unless you live in a very nice house in a very nice part of the world and are happy to move to a small flat somewhere cheap. Either that or you are happy to sell up entirely and move to a part of the World where you can live on very little.

baby_boomer

I don't disagree.

Just because many people had been relying on their house for retirement, didn't make it either a sensible or realistic option.

People generally have no idea of the true cost of providing a pension - otherwise there might be riots about the pension unfairness between private and public sector.

But the drop in house prices may put paid to the quite widespread idea - IMHO - that "my house is my pension".

Generali

baby_boomer wrote: »

I don't disagree.

Just because many people had been relying on their house for retirement, didn't make it either a sensible or realistic option.

People generally have no idea of the true cost of providing a pension - otherwise there might be riots about the pension unfairness between private and public sector.

But the drop in house prices may put paid to the quite widespread idea - IMHO - that "my house is my pension".

I worked for one of the clearing banks many years ago and at the time, people were retiring on 2/3rds salary with a 25% lump sum aged 50. As they'd had 30 years of subsidised mortgages and also a share scheme too they had assets and plenty of retirement income and were set for a life of leisure and comparative luxury.

The 30 year olds working there were completely miserable. They hated their jobs and the boss and were just hanging out for this massive carrot of retirement aged 50. I kept trying to tell them it wasn't going to happen - that they were deluded. The pension scheme couldn't afford for them to do this. I now see that not only has that bank now stopped early retirements, they have also taken the existing staff out of the contributory pension.

The lesson we learn? Never trust what anyone else says about your pension and always listen to Generali as he'll be right in the end.*

*The second bit may not be entirely true.

StevieJ

Rabiddog wrote: »

You should have been a new mortgagee when interest rates went to 15% with additional lending at +2% and +3% ..... STill I could afford it then.
Baseline for property is surely (avg wage x 3.5) +10% dep = avg hse prc.
avg wage 26000 ...so 100,000
ldn 35000 ... so 135000

Pretty different to the landscape today **gulp**

Do you guys completely ignore the fact that most house purchases are based on two wages/salaries.