does a sensible mortgage get a sensible priced house ?

beer_tins

chucky wrote: »

for some people that isn't good enough and it's their right to own a home.

That reminds me of the "do you have the right to buy your council home?" adverts.

Of course the answer was always "NO YOU CHUFFING WELL DON'T!". Get cheap housing, subsidised by the taxpayer and expect to be able to buy a house at knock down prices on top of that. Wound me up no end!

whathavewedone

Mmm funny I've not seen that advert for ages.

Back in 2006 when I was on maternity with my first child and watching a lot of daytime telly I remember every other advert seemed to be aimed at getting people who had low incomes/county court judgments/previous repossessions/bad credit ratings to borrow money/get mortgages from them.

Looking back on it now it was completely and utterly bonkers.

sjaypink

Degenerate wrote: »

I think you will find the higher wage and higher house price areas correlate rather well.

i cant seem to find figures for 'the south of england' and london in one place... (there was a thread a while back- by mitchaa i think- which had a link to stats of local house prices v local average wages- anyone remeber?).... anyway, i remember being surprised at quite how different the ratios were across the country (eg what the !!!!!! wages here could buy in hull!) ...heres what i could find on a quick search:

average wages south west

average house prices south west

from those (random selection btw), average wage v house price:

Torbay £24,134 - £184,477

Dorset £25,131 - £254,471

Swindon UA £32,173 - £151,449

Bath & NE Somerset UA £26,329 - £266,164

Bournemouth unitary authority £39,114 £205,715

South Gloucestershire UA £30,732 - £187,779



a quick look at that, it doesnt look particularly neat.

swindon and perhaps bournemouth appear affordable... whilst s gloucs and torbay have simlar average house prices, the average wages are very different: torbays ratio is over 7x. dorset and bath 10x.

Squish_21

I live 9 miles from Bath and the prices (even with the downturn) are NOT affordable for young couples.

lostinrates

beer_tins wrote: »

Can I also ask what a sensible income multiple is, anyway?

It's a fairly blunt instrument anyway. Years ago, people spent a much higher proportion of their income on food. Car ownership was also proportionally much more expensive. This meant that the money left over for a mortgage was much lower and a low income multiple was appropriate. And that is before we even consider the huge interest rates during those years.

Nowadays, people have much more disposable income (before housing costs),so a higher multiple seems reasonable. How much more is a matter for debate, certainly the 8x multiples were way too high.

Ideally, affordability (disposable income) would be considered for mortgage approvals. A young childless couple on a joint income of £50k with no car can afford a much bigger mortgage than a married couple with 2 kids and only one parent earning £50k.

I don't claim to have the answer to what the multiple should be, or even what the average wage is (many different answers available!), but we shouldn't use what "used to be" a sensible multiple as the guide for today's market; lifestyles and the economy have changed drastically since then.

I think all this is relevant. And interesting. Why is food so muchless, for example?

Coincidentally I'm reading a book published in 1980 where the higher level of tax is discussed as being 'approximately 31.5% (at 18K-20k perannum). In addition, there were, it seems more grades then? Seems a better system. The lowest end is discussed as being approximately 12.5 % of £4000.

I have no idea how accurate this is though.

jezebel

"does a sensible mortgage get a sensible priced house ?
I think the answer has to be no..consider the ave wage is 20k take home for most people and look what a factor of 3.5 gets you...still a long way to go before we are back to true affordability levels..."

Surely a sensible person with a sensible mortgage buying a sensible priced house would have saved a sensible deposit before purchasing.

And i have to agree with those that said it's about affordability not how much you earn. I earn more than £20k and was shocked that one bank would offer me 5x my income, I wouldn't take that though because it wasn't affordable, that said I'm borrowing at 3.6x and it's not breaking my bank!!!

MrsE_2

Graham_Devon wrote: »

No they are not. Only in London and surrounding areas.

Everywhere else is below the average wage that the government uses.

In Surrey the "average" house, is 10 times the "average" wage:mad:

ukcarper

MrsE wrote: »

In Surrey the "average" house, is 10 times the "average" wage:mad:

There is Surrey and Surrey I live Surrey and you can get 4 bed detached for 10x average wage where I live, but Esher / Cobham that’s a different story.

MrsE_2

ukcarper wrote: »

There is Surrey and Surrey I live Surrey and you can get 4 bed detached for 10x average wage where I live, but Esher / Cobham that’s a different story.

Its the county as a whole. Its based on averages.

Hectors_House

geoffky wrote: »

I think the answer has to be no..consider the ave wage is 20k take home for most people and look what a factor of 3.5 gets you...still a long way to go before we are back to true affordability levels...

Yes, I'm afraid we are a long way from both sellers and buyers making the connection between most folk earning less then £20k a year and it making even a £100k house unaffordable without the buyer taking a lot of risk.

Unfortunately a lot of folk have seen it as a way of showing off their 'worth' if the bank will lend them £200k on an average wage.

The disparity between house prices and wages can only now, IMHO be rectified by the banks doing what they are doing - being so sh?! scared that they refuse to lend like that again whilst sending anyone who defaults to the wall.

Society is getting a hell of a big shake-up at the moment but I think, unfortunately its well overdue.

And I think all of this will scare so many folk away from bricks and mortar that house prices may well crash back to 45% or 60%. My local news was reporting earlier a drop already of house prices in my area of 30% in the last 6 months.

At least the youngsters out there looking to buy a house will find themselves in a better position when all the dust settles.