BBC News - First Time Buyers Are Rich?

StevieJ

shellnapier wrote: »

well im from scotlando
out take home per month ME 600
partner S/E - Averaged 1600
so thats 2200 before tax a amonth mortgage quote we have been given £380 a month

what percentage si taht?

Cheaper than I was paying 20 years ago, everyone keeps saying how expensive it is now, I don't understand

StevieJ

Cleaver wrote: »

Maybe one of the new questions mortgage providers should ask new customers is whether they can understand basic maths and finance principles, such as working out simple percentages.

It's around 17%.

Maybe it was a rhetorical question

Graham_Devon

StevieJ wrote: »

Cheaper than I was paying 20 years ago, everyone keeps saying how expensive it is now, I don't understand

Yes you do.

Firstly you know it depends totally on how much you spent 20 years ago on the house.

Secondly, you keep bringing up how much you were spending at the height of the interest rate rises!! You never tell us how much you were paying at say the 7% average!

baileysbattlebus

StevieJ wrote: »

Cheaper than I was paying 20 years ago, everyone keeps saying how expensive it is now, I don't understand

Same for us -

We bought our previous house in the late 1980's and the mortgage was for £60k - saw payments go from around £480 (8.8%) a month to about £750 within a fairly short space of time.

During the first 10 years we had a mortgage from 1982 to 1992 - I think the interest was in single figures for about 30 months out of the whole of that time. In 1982 when we first purchased it was 12%. It was towards the end of 1992 that rates went into single figures and have stayed there ever since. We never had rates below 8% until then. We must have been unlucky.

baileysbattlebus

Just to add to the previous post - we were able to buy our current house in 1993 - on a mortgage of £83k - because the interest rates were 5.5% then - and the repayments were about £500 and our income had increased. So it seemed as if we were on easy street.

They have stayed fairly low since then - we have never paid anything like the amount in mortgage repayments as we did in our previous house although the mortgage was £23k more.

leveller2911

I'm a FTB and ive just finished my yearly accounts.

Ive earned approx £27k.......gross

The cheapest houses within a 25 mile radius are around £165K...

I have looked into a mortgage with Nationwide and Halifax ..

As a guide I would be looking to buy a house for around £125k.

I have a £25k deposit and a £8k safety net..

I would be looking to fix for around 3 yrs and a repayment mortgage ..

I am quite shocked that so far the cheapest deal Ive been offered is 5.98% ,with repayments of just under £800 per month.

I have no debts at all...

Given that house prices here in East Sussex are fairly high I still don't think I can afford to buy,given that the repayments are approx 50% of my income..As I am self employed and have been for 22 yrs I don't think I can relocate as my customer base is here.....

I don't think FTB,s are rich at all......Given that I,m a typical FTB ,I don't think the housing market will recover for a few years.People will need a far larger deposit or house prices will need to fall a fair bit more yet...

lostinrates

re costs etc.../.I think it needs considering against other costs, as to cost of living and disposable income...i.e. food costs, tax costs etc. I mentioned the other day I was looking at a chart from the eighties which showed ''higher'' tax brackets on salaries...and it was about 31.5% IIRC on salaries of ITR of £30k. (think the book was 1981ish??? could be wrong). Any way, it would be interesting to how it all compares. Its not a loaded point BTW, I generally haven't sat down and looked at it

StevieJ

Graham_Devon wrote: »

Yes you do.

Firstly you know it depends totally on how much you spent 20 years ago on the house.

Secondly, you keep bringing up how much you were spending at the height of the interest rate rises!! You never tell us how much you were paying at say the 7% average!

Irrelevant what I would be paying at 7% I am simply comparing FTBers now and back then 1989.
I was a single buyer - Mortgage was 38k on 39.5k value. Interest £390 repayment vehicle £49 = £439 per month.
Certainly more than 11.2% of my income

StevieJ

baileysbattlebus wrote: »

Same for us -

We bought our previous house in the late 1980's and the mortgage was for £60k - saw payments go from around £480 (8.8%) a month to about £750 within a fairly short space of time.

During the first 10 years we had a mortgage from 1982 to 1992 - I think the interest was in single figures for about 30 months out of the whole of that time.

Youngsters today, yeh can't tell em how tough it was back then.

baileysbattlebus

Here is an interesting one "Tax Freedom Day" the day we stop paying taxes (all taxes direct and indirect) to the exchequer.

In 1982 when we first bought a house it was 20th June

In 2008 it was 2nd June.

http://www.adamsmith.org/a-history-of-tax-freedom-day/

Yes, there were different rates of tax, the basic rate came down from 33 per cent to 30 per cent in 1979, when the top rate dropped from 83 per cent to 60 per cent. You also got tax relief on your mortgage interest payments on the first £30k of your mortgage - OH paid less income tax.
By about 1997 Miras has reduced to 15% then it was reduced to 10%, it was removed altogether around 2000 by Mr Brown who saw it as a middle class perk.


The basic rate was reduced progressively to 25 per cent in 1988 then I think it went to 22%, then 20% and then 10% and back to 20% while the top rate was cut to 40 per cent in 1988, where it stayed.

Apart from income tax the biggest difference I can see is that the cost of electrical/electronic stuff is so much cheaper.

A cheap washing machine costs about the same as it did in 1982 - I paid £200 for my first front loader. You can still buy a washing machine for the same money today.

In 1987 we moved to the south east and bought a colour TV and video player - TV was £200, video player was £300 - they were Dixons brands Matsui, about the cheapest you could get. The first video camera we bought was £1200. For us, each of these (including the wasing machine) were major purchases, that we had to save hard for.

And clothes are cheaper - I was paying £5 for a dress for one of our girls in the early 1980's - I can go and buy the grandchildren a dress in Asda for £5.

Food on the other hand is much more expensive as is petrol. IMHO, I think most people are better off now.


Miras note.
When Nigel Lawson announced the abolition of shared miras in 1988 - in April and it was to happen in August - there was stampede of people looking to buy houses with anyone they could - London prices went up 13% in 4 months - and we were already in a bubble. The bubble burst not very long after that and a lot of people who panic bought and moved in together in 1988 - were stuck with each other and negative equity and the virtual doubling of interest rates. At the time if you weren't married 2 people could claim miras - if you were married it could only be claimed once.