House prices down to at least 115K... Thans FSA! 3X here we come!

mitchaa

lostinrates wrote: »

e.g. lets say, , for arguments sake, I earn £10k a month, £120k per year after tax. and we are in a stable market...put HPC/HPI aside for a moment.

If I have a multiple of three I can spend £360k on a house plus my deposit.

Just to be anal, £120k pa after tax equates to a PAYE salary of £195k so it wouldn't be £360k lending, it would be £585k;)

Shouldn't that read £120k before tax, i.e a gross salary, not a net salary.

lostinrates

mitchaa wrote: »

Just to be anal, £120k pa after tax equates to a PAYE salary of £195k so it wouldn't be £360k lending, it would be £585k;)[/quo

You can be anal, I don't mind. We can change the numbers to make the example clearer. I'm just trying to, with round numbers, clarify and example. If someone wants to do it proper like I'm happy. :) I have brain ache today..so yeah, I should go back and edit....:o:D

mitchaa

lostinrates wrote: »

mitchaa wrote: »

Just to be anal, £120k pa after tax equates to a PAYE salary of £195k so it wouldn't be £360k lending, it would be £585k;)[/quo

You can be anal, I don't mind. We can change the numbers to make the example clearer. I'm just trying to, with round numbers, clarify and example. If someone wants to do it proper like I'm happy. :) I have brain ache today..so yeah, I should go back and edit....:o:D

For 1 minute i thought you were earning £200k a year there:D If so, what you doing registered to a site about money saving

I get your point, i was just being anal as mortgages are obviously based on gross salary

lostinrates

mitchaa wrote: »

lostinrates wrote: »

For 1 minute i thought you were earning £200k a year there:D If so, what you doing registered to a site about money saving

I get your point, i was just being anal as mortgages are obviously based on gross salary

For a minute? ;):p

However much you earn you gotta spend it wisely!:cool:

ETA: thisis going to kick me in the teeth if I don't clarify I bet. I earn nothing ATM. DH has a good income, but it is not 200k.

GDB2222

The reason the FSA need to go for simple regulatory system, such as the maximum of three times salary mortgage, is so that they can make it work. It is so simple that they can actually get the banks to comply. Previously, they swallowed the line of models of individual affordability, and they ended up with a mess where banks could offer 125% mortgages of eight or 10 times salary.

I have no doubt that there are people on this forum who can afford a mortgage of more than three times salary, particularly if they are single, earning a higher salary, and with no dependants. They Would Pass the Affordability Test, and under the old rules the bank would have lent them Loadsamoney. Under the camouflage of that, the banks would also lend a whole load of money to people who could not afford it properly.

I can understand that the FSA, if they really are going to regulate the banks, will need to have a system that is really workable.

Finally, whilst I keep hearing that a gradual reduction in house prices will be better for the economy, I have sympathy for the people who will be hurt by that, namely anyone who buys during the time whilst property prices are gradually reducing. if property prices reduce quickly, fewer people will be hurt by that. at the same time, someone who bought at the top of the market in 2007 is still going to be in negative equity (probably!) by the time the market bottoms out.

My two oldest children would definitely benefit from buying a property now, so the sooner property prices reach a sensible level, the sooner they can buy something. until then, they will rent -- at least if I have any influence over them.

piggeh

lostinrates wrote: »

I think this is more true in a standard urban/suburban environment. I think my example of oursituation, with a 6 figure deposit shows some savings commitment, personally!

Or it could show an inclination towards gambling and you've struck lucky.

I have read various amounts in this thread and I'm tryig to keep things general, as a lot of the figures seem to be hypothetical. I don't disagree that on the figures you've quoted that a higher multiple is affordable. Most people (unconfirmed conjecture) do not trust the banks to make correct lending decisions though, if they were to 'individually assess'.

Who would these individual assessments be carried out by? Most probably, an in-branch advisor or bank manager who will sit down and go through your records with you. At the end of the day these people have targets to reach, so I don't believe they would carry out any such assessments totally objectively.

moggylover

mbga9pgf wrote: »

Better late than never. Important point is this is going to slaughter house prices.

Down until we get to 3x salary!!!!

Not quite as exciting as all that really! 3 x salary on a first time buyer type house (with a hefty deposit rquired as well I hope) and not on a 4 bed with half an acre of garden;) .

We have to balance the perceived greed of the current owners - against the often very obvious greed of those not yet on the ladder;)

Kenny4315

Can't see Mr Clown rubber stamping in law anything that allows the market to worsen why would he it's not in his interests to have negative equity and repossessions soar, due to mortgage lending criteria. I'd also reckon that the non-government owned institution will go and tell whoever to go and swivel, and then take them to the court. It is up to them how much they loan until they come cap in hand to the government.

piggeh

You would live there for 3 or 4 years by which point, with further savings and improved salary (assuming you experienced no points of unemployment), you can make a nice jump up. Isn't that's how it's generally worked in the past?

piggeh

moggylover wrote: »

We have to balance the perceived greed of the current owners - against the often very obvious perceived greed of those not yet on the ladder;)

You missed a word out there