Todays events...Any FTBs feeling poor? I do

Sir_Humphrey

stephen163 wrote: »

I'm saving for a deposit too but i'm more optimistic than some of the views expressed here. Inflation will probably go very low soon enough and this will increase your real savings rate. Also, house prices show no signs of recovering any time soon, so as long as you're regularly putting money into your deposit fund, this scenario isn't too bad.

It's better than that. The actual interest paid on the deposit is only a small proportion of the actual amount saved (particularly since the time period is fairly short, so compounding does not fully kick in).

To Alan M, I think the type of first property FTBs buy depends on the area of the country. I agree that a 3-bed semi is a bit much to expect for a young singleton however!

b0rker

sympatex wrote: »

Alan, fair enough but if i earn average salary, i should therefore be able to purchase an average house regardless of my position in the housing chain. I could be a FTB earning 250k a year, they wouldn't buy a 1bed.

You think because you earn £20-25K PA that you should be able to buy a 3 bed semi as a FTB?

SamIAm_3-2

sympatex wrote: »

This year my savings earn 70% less than they did. Barred to the mortgage market by interest rates of 6.5% for moajority of 90% mortgages (that still exist) and local housing market stubbonly staying at 2006 prices. (there has been falls but for good properties no more than 10% off peak). I earn an average salary nationally and 3bed semis sell for 8x my salary.

I can understand your position, but I would say that you have done well to save a deposit. A few people I know who are under the impression they will buy their first property soon haven't even done that yet.

Even though there is not much interest being paid for saving it is still in your interest to do so if it will be used as a deposit. The more money for the deposit, the less required for the mortgage which will be a big saving when it comes to paying your mortgage back.

My opinion is that house prices are still being marketed a little optimistically and will fall to more realistic levels eventually. If you continue to save you might find yourself in a good position in the next year or two.

SamIAm_3-2

b0rker wrote: »

You think because you earn £20-25K PA that you should be able to buy a 3 bed semi as a FTB?

It seems a little optimistic. When I was looking, I started at 1-2 bed flats with an above average salary. Even with this initial view, it took a few months of viewing to get my expectations down to realistic levels.

sympatex

b0rker wrote: »

You think because you earn £20-25K PA that you should be able to buy a 3 bed semi as a FTB?

Ok let's not get too hung up on 'what exactly' is purchased, for this post i'll change it to "A 1bed flat in my area is currently 6.5* my average uk salary, a 3bed semi is 8*" (just to fit in to your world of 1bed flats for FTB's)

It doesn't matter what it is b0rker or alan, nothing is affordable to me now due to mortgage criteria and historical norms. A good thing for sure i don't dispute, my original thread was really just a reference at being left out either through rising costs or falling costs it just doesn't matter. After being so close. And now what i've saved for is being 'rewarded' by devaluing.

Sir_Humphrey

sympatex wrote: »

Ok let's not get too hung up on 'what exactly' is purchased, for this post i'll change it to "A 1bed flat in my area is currently 6.5* my average uk salary, a 3bed semi is 8*" (just to fit in to your world of 1bed flats for FTB's)

It doesn't matter what it is b0rker or alan, nothing is affordable to me now due to mortgage criteria and historical norms. A good thing for sure i don't dispute, my original thread was really just a reference at being left out either through rising costs or falling costs it just doesn't matter. After being so close. And now what i've saved for is being 'rewarded' by devaluing.

Inflation is 0.1%, base rates are 0.5%. What is being devalued?

b0rker

sympatex wrote: »

Ok let's not get too hung up on 'what exactly' is purchased, for this post i'll change it to "A 1bed flat in my area is currently 6.5* my average uk salary, a 3bed semi is 8*" (just to fit in to your world of 1bed flats for FTB's)

Not my world mate. Just the general consensus is that a single FTB without a pretty huge deposit would be expected to buy in to the market at the lowest rung of the ladder. The person buying the 3 bed semi would have built up equity in there 1 bed flat.

That does entirely matter to the jist of your thread as if you are expecting a 3 bed semi to become affordable to you then you will need a lot more than just a wee bit more interest on your savings.

sarah_elton

sympatex wrote: »

Alan, fair enough but if i earn average salary, i should therefore be able to purchase an average house regardless of my position in the housing chain.

Not so much...

You could perhaps say that a couple, each earning an "average" salary, should be able to afford an "average house", but not someone on their own.

Alain is correct. FTBs (especially on their own) typically buy one or two bedroom properties. Then, as life goes on, they're earning more, have more savings, have equity in their property, and trade up the ladder. My parents started in a two bed terrace in the early 70s because that's what they could afford with both of them working, all my friends parents did the same. And they weren't trying to buy on their own.

Even though your savings aren't earning much, they're growing with the amount you save each month while house prices are still coming down. Your deposit % is rising every month.

And if a 1-bed flat is 6.5 times £20-25k can you not move further from work and commute in? That sounds like a relatively expensive area (with oddly cheap 3-bed properties that comparably aren't much more than 1-bed)

minimacka

lynzpower wrote: »

Those on the SVR are fine! many are seeing huge cuts in what they have top pay for thier mortgage. Those who are fixed wont benefit.

Ive snipped you sorry but im on a SVR and im paying 4.99%. My B/S hasnt passed on the last 3 reductions :eek:

Although i do appreciate how lucky I am to have a relatively small mortgage of £66K (my bank says its small) and I do feel for all ftb out there looking to buy there first property.

MM

Cannon_Fodder

CPI is 3%.

(Cannot let the Govt off with ignoring RPI while the bubble was inflating, then suddenly RPI is the measure of the day...)