Why interest rates will surge upwards.

Dithering_Dad

mbga9pgf wrote: »

Hang on, you cant use average salaries then compare them to starter homes.! :rolleyes:

Why not, most people on here who are renting are on an average salary and are FTBers. Are you saying that FTBers should be able to buy non-starter homes such as 4 bed detached houses?

The rest of us on average salaries, with homes will be able to get the same £100k mortgages, but we will have equity and can afford larger houses.

That's how it works - you get on the first rung of the ladder and climb up!

the_ash_and_the_oak

Dithering_Dad wrote: »

Neither do I, except for those people who sold to rent so that they could buy a cheaper house. For those people, they're literally putting their lives on hold because they do want their own home, again, eventually.

I have never understood this country's obsession with house buying, most of continental Europe and large area of the US seem to rent for life and are quite content. We need to go back to having long assured tenancies, professional landlords and a mindset where owning a pile of bricks is not the 'be all and end all'.

I won't hold my breath because even people on here who say they're happy about renting are obsessed about buying - therwise why would they be on a House Price forum?

Well my grandparents sold with the idea of buying a cheaper home later on. Though it hasn't really worked out like that! They got to liking renting but the recent changes to interest rates have them worried (and they are hoping they'll go up again pretty soon!). My parents are trying to sell but they left it too late. As a family we are on all sides of this mess!

mbga9pgf

Dithering_Dad wrote: »

Why not, most people on here who are renting are on an average salary and are FTBers. Are you saying that FTBers should be able to buy non-starter homes such as 4 bed detached houses?

No, I am saying someone on an average salary is not on a first time owner salary and thus should be able to afford a starter home... The FTB stats are skewed by the fact they also include.... STRs. Thus FTB salaries and ages are not what they seem. Funny old thing that, government stats favouring government policy...

The average salary should be able to buy the average home. Fact. And it will. circa 2010-2011.

Graham_Devon

Dithering_Dad wrote: »

The rest of us on average salaries, with homes will be able to get the same £100k mortgages, but we will have equity and can afford larger houses.

See. Where is the equity you are talking about? Prices are going to have to drop a long way yet to become affordable to the majority of the population, on the new mortgage terms.

This means you can kiss your equity goodbye. I am an mortgage holder, and I know I will owe. I will owe more thn others because i bought in early 2006, but less than some who bought in 2007.

Seems to me your expecting first time buyers to prop up the market, on 4x to 5x mortgages that will not exist, with a deposit that they have never had, but you now expect them to have in THIS economy, and your expecting to sit on your equity.

And how many first time buyers, i.e. young people, do you know, in reality that have jumped into the job market at the averag £27,000 wage? Most people tend to go in to the job market, like houses, at the bottom, even when they have qualifications.

Your expecting rather a lot!!

Dithering_Dad

mbga9pgf wrote: »

No, I am saying someone on an average salary is not on a first time owner salary and thus should be able to afford a starter home... The FTB stats are skewed by the fact they also include.... STRs. Thus FTB salaries and ages are not what they seem. Funny old thing that, government stats favouring government policy...

The average salary should be able to buy the average home. Fact. And it will. circa 2010-2011.

I can only go off what the people on here tell me and the likes of !!!!!! (age 35), carolt (age 35), NeverDespairGirl(aged 35) who work in IT, teaching and Law respectively are all prospective FTBers and probably on way more than the £20k average salary that is being mooted.

* I have guessed at the ages, but I don't think I'm too far away from the truth.

If you're saying that most FTBers are younger and will be on lower salaries, then I agree, but I think if anyone is on 20k or less they will probably be stuck in rented accomodation for life.

Dithering_Dad

Graham_Devon wrote: »

See. Where is the equity you are talking about? Prices are going to have to drop a long way yet to become affordable to the majority of the population, on the new mortgage terms.

This means you can kiss your equity goodbye. I am an mortgage holder, and I know I will owe. I will owe more thn others because i bought in early 2006, but less than some who bought in 2007.

Seems to me your expecting first time buyers to prop up the market, on 4x to 5x mortgages that will not exist, with a deposit that they have never had, but you now expect them to have in THIS economy, and your expecting to sit on your equity.

And how many first time buyers, i.e. young people, do you know, in reality that have jumped into the job market at the averag £27,000 wage? Most people tend to go in to the job market, like houses, at the bottom, even when they have qualifications.

Your expecting rather a lot!!

I have to go now, thanks for a great debate everyone. It's nice to have one that doesn't descend into personal jibes and childish arguments.

As far as your post Graham, I will say that 30% of home owners are completely mortgage free, the vast majority of the rest are like me, with plenty of equity (I have over £150k even after the crash). Only a small minority of home owners will be in neg equity.

There are also an awful lot of people (also like me) who are making overpayments onto their mortgages.

Sorry, got to leg it - we're off out with the kids now and they're all tapping their feet.

whathavewedone

I agree DD. Traditionally people on low wages have not been home owners and anything under 20k per year IS a low wage nowadays.

Graham_Devon

whathavewedone wrote: »

I agree DD. Traditionally people on low wages have not been home owners and anything under 20k per year IS a low wage nowadays.

Well theres a LOT of people under it.



The mean, is worked out as the average in the country.

However, the median is taking everyone, lining them up in terms of income, and picking the middle person. So it's the Median we really need to go on.

Thats obviously 2006/7, but only a year old, we won't have this years data yet.

That puts the average person on £377 per week, or indeed, £19,604 a year.

Take the mean, and it puts people on the £24,000 bracket. However, theres more people earning less than the mean figure. The Mean figure is just taking all wages, adding them up and divinding by people. Means nothing really in terms of what people are actually earning.

My council last year sent me a leaflet with my council tax bill, and the average here (mean) was £19,800.

So taking the actual average wage that actual people en masse are eaning, and multiplying it by 3.5x = £68,614.

This is why I stand by my figures above of house prices, having the probablility of coming down 70%. I'm not saying they will, but what I am saying, is I'm not saying its impossible.

I AM saying I think we have a long way to go yet before the bottom, as all these people on these wages have not a hope in hell at the moment.

pandamonia

Dithering_Dad wrote: »

I think it's better not to have a large mortgage, full stop.

It doesn't matter whether house prices will be lower in 2019 than 2007 because you're not buying in 2007. You'll be buying in 2009, possibly early 2010 and I'd suggest that house prices in 2019 will be higher than in late 2009, early 2010.

Do you really believe we'll still be suffering from the current recession in 2019? If you do (and I think you're in the minority), then arrange a 25 year fixed rate.

All the good tracker rates vanished when mortgage rates fell. Fixes are still available. Let me ask you this... do you think that you will get a better fixed rate deal in three years time when interest rates are at 6% or right now when interest rates are at 1%?

EDIT: after literaly 2 mins of googling I have found a 5.24% 10 year fixed rate with Abbey. It has a 75% LTV, so most of the FTBers on here will be already have a 25% deposit saved (if they're to be believed). While 5.25% may look high compared with the 1% BoE rate, it'll look amazing against a 15% BoE rate, especially as 1% BoE rates may last a year, whereas the 8% to 15% rates may last for a decade (if the HPC people are to be believed).

FTB 25% deposit? lol you are detatched from reality.

the uk average for money needed to buy a new home is 22k! thats all in!

most homes are between 100-150k for FTB,

you do the maths.

your arguments are always flawed

Even on my salary which is over twice the average UK salary i think taking out 117k mortgage for £750 per month 5 year fixed is very expensive. Once i factor in all the costs of a home then i start to realise just how overpriced these homes are.

Fact is that most people buying their first home now who "think" they can afford their home probably cant. They will hit big trouble in the coming years from all angles.

Graham_Devon

pandamonia wrote: »

FTB 25% deposit? lol you are detatched from reality.

the uk average for money needed to buy a new home is 22k! thats all in!

most homes are between 100-150k for FTB,

you do the maths.

your arguments are always flawed

I think DD is basing it all on 3 people posting on this board.