3.5

Conrad

Income multiples are too blunt.

Mr & Mrs Smythe won't be having children. They have no debts. They feel they can comfortably afford 4.5x joint income.

Mr & Mrs Tynebrand have 5 kids and £15k on credit cards. They can only afford 2.5x joint on a mortgage.

How would an arbitary 3.5x income deliver better lending?

mbga9pgf

IveSeenTheLight wrote: »

Bear in mind that 1995 was the trough of the last house price correction.
You seem to be looking for approx 50% fall in house prices from peak.
That is some margin in my opinion.

Take my post above, where the UK average salary for a mean average couple is £55,400 or median at £48,750

Do you really think that house prices will be below 2x income even without a deposit?

Lets not get into this again. Comparing median salaries with median house prices sorts out this argument. 3.5X couples salary would thus have house prices at around 130K in the UK.

You are also forgetting what happens to average salaries when there is mass unemployment.

Average salary = (Sum(all UK salaries)/Population)

Average salaries are going down my dear boy!

Conrad

Strciter lending will benefit the rich and discriminate against the poorer.
Just as the middle classes know how to work the education system to thier advantage, they will also be better placed to access cheaper and higher levels of mortgage funding giving them access to better properties / locations.

As such inequality will rise still further. We already have the 2nd highest inequality in the world as class and status structures harden.

My parents were able to buy thier council house in the early eighties and the end result was they were eventualy able to move up the ladder and finaly retire to a comfortable dotage.

Had they been unable to access the 5 x income my Dad neede, then perhaps he never would have been able to enter the market. That would have kept him in aspic. Harly a meritocracy.

Remember less than 1% of people are repossessed so we are in danger of throwing the baby out with the bathwater.

It wont happen anyway. Ive had 18 years of regulation and always the regulators are well behind the curve.

Kev09

The problem is that the media and then subsequently the general public take this view that everybody in the UK live in London or the South of England.

Incomes, house prices, salaries and even you could argue general pricing vary greatly from region to region so using these averages are a complete waste of time!!!!!!!!

mbga9pgf

Conrad wrote: »

Strciter lending will benefit the rich and discriminate against the poorer.
Just as the middle classes know how to work the education system to thier advantage, they will also be better placed to access cheaper and higher levels of mortgage funding giving them access to better properties / locations.

As such inequality will rise still further. We already have the 2nd highest inequality in the world as class and status structures harden.

My parents were able to buy thier council house in the early eighties and the end result was they were eventualy able to move up the ladder and finaly retire to a comfortable dotage.

Had they been unable to access the 5 x income my Dad neede, then perhaps he never would have been able to enter the market. That would have kept him in aspic. Harly a meritocracy.

Remember less than 1% of people are repossessed so we are in danger of throwing the baby out with the bathwater.

It wont happen anyway. Ive had 18 years of regulation and always the regulators are well behind the curve.

Conrad, you are delluded. Do you think that becuase what has gone on before will carry on in the future?

RE your inequality comments, they are absolute crap. Typical Socialist crap. I suggest you go to a whole host of nations that have no state benefit, NHS, have highly caste driven social structures and then you wil realise you are talking crap. Anyone can save for a house, anyone.

The problem is, lets face it, you as a mortgage adviser will not make as much money if lending collapses will it? With you working commission and all. Social mobility would not be such an issue with lower house prices corresponding with lower allowed mortgage lending. And it IS coming. Don't delude yourself man. Within 15 months, we will see a limit to mortgage multiples.

If you want a better house, get qualified and get a better job. But at the same time dont expect your bricks and mortar to help our with your commie ideals about 'social mobility'.

IveSeenTheLight

mbga9pgf wrote: »

Lets not get into this again. Comparing median salaries with median house prices sorts out this argument. 3.5X couples salary would thus have house prices at around 130K in the UK.

You are also forgetting what happens to average salaries when there is mass unemployment.

Average salary = (Sum(all UK salaries)/Population)

Average salaries are going down my dear boy!

Average salaries are not worked out by dividing against the population.
If they did, children, retired people, unemployed etc would all mean the average UK salary is in fact vastly skewed down.

Take a look at the link I posted
http://www.statistics.gov.uk/downloa...08/tab7_1a.xls

It shows all, male, female, male full time, male part time, female full time and female part time
You wouldn't have this if it was divided my population as per your extremely poor formula Average salary = (Sum(all UK salaries)/Population)

botchjob

What piffle

macaque wrote: »

The FSA are going to link mortgage offers to income.

Er, the article says no such thing

macaque wrote: »

One suspects the figure will be in the range of 3.5 to 4.0 X income.

This is your suspicion. Again, the article says no such thing.

So, from a space-filler piece which says nothing other than that the FSA ‘may’ take steps at some point in the future if they ever actually get around to it, you’ve managed to come up with a headline of “3.5”, followed by a load of old speculative twaddle.

Congratulations on your sterling reporting. A job on the Daily Express financial desk obviously beckons.

IveSeenTheLight

mbga9pgf wrote: »

Lets not get into this again. Comparing median salaries with median house prices sorts out this argument. 3.5X couples salary would thus have house prices at around 130K in the UK.

Seems like your mathematice for median house prices is the same as your mathematics for average wages.
P!sh poor.

The Median couple is on £48,750, therefore you are allowing a multiple of 2.66 to achieve the house price at £130k

If you get your hypothetical 3.5 situation, 3.5 x median couple salary = a mortgage of £170,625

The average house price is below this and we have not even considered adding the required deposit

twirlypinky

I wish you'd all stop assuming people only buy in twos. I'm on my own as far as buying is concerned (not been with bf long enough to consider buying together).

I earn £26k, so using the 3.5x calculation I can borrow £91k. House prices need to fall a long way where I live for me to be able to buy something.

housesitter

Income multiples are an indicator. They are not a good method of affordability.

I'm looking at a house which is a 4.8 multiple of my salary after my deposit, and I will have no problem in affording it on my own.
The mortgage will be 47% of my salary after tax.

I have no issue with that. I'll be banking 250quid every month after living expenses are taken care of and have a 6month emergency pot available to fund payments is I lose my job (unlikely since I just had a pay rise).

Additionally, I will have a lodger who will be contributing towards 35% of the mortgage !!

But, so many places are denying me a mortgage because of multiples.
I have no car or other loans and small out goings. But Joe Average isn't as frugal so I'm suffering.

What happened to personal circumstances?
A small number of irresponsible people have really !!!!!!ed it up for those of us who've been saving and waiting for the inevitable falls.