House Price Increases-what for?

chucky

Graham_Devon wrote: »

I'd rather have higher rates on my loan of 2x my salary, than average rates on my loan of 5x salary.

No point in pretending todays extreme rates are normality.

be sensible Devon, we're not talking extreme rates. you can't get a mortgage at 0.5% Base Rate - we're talking 5%-6% average mortgage rates compared to rates at 12%-16%.

go do the maths you'll understand why... :rolleyes:

Graham_Devon

chucky wrote: »

be sensible Devon, we're not talking extreme rates. you can't get a mortgage at 0.5% Base Rate - we're talking 5%-6% average mortgage rates compared to rates at 12%-16%.

go do the maths you'll understand why... :rolleyes:

Yes, and I would rather have a mortgage 2x my salary at 12%, than I would 5x my salary at 5%.

chucky

Graham_Devon wrote: »

Yes, and I would rather have a mortgage 2x my salary at 12%, than I would 5x my salary at 5%.

see you haven't done the maths

5% interest rate on a £160k = £1,200 a month on a repayment mortgage
12% interest rate on a £160k property = £2,133 a month on a repayment mortgage

i know which one i'd be choosing!! :money:

i don't think you'll be buying anything 2 times your salary though.
good luck with it though

Graham_Devon

Chucky.

We were talking about LTV's, and heres the maths...

If the house was 160k at 2x salary my salary would be 80k.

Therefore at 5% the cost would be 18% of my salary, the 12% would be 31% of my salary.

At 5x LTV my salary would be 32k.

Therefore, at 5% the mortgage would be 46% of my salary. At 12% the mortgage would cost 80% of my salary.

Hence what I said is completely right, but you are muddying the waters again because it doesnt go alongside the stuff about it being just as hard "back then".

Pobby

One thing that does strike me is how, if renting, does someone raise that deposit? When I was a young fellow it was likely that the first move away from the parents could result in a home purchase. Mind you then it was often the case that you were either marrying or co habiting. Lets think when I first bought in 1975.

3 bedder in the South East a touch under £10,000. Joint income about £3,000 a year. BOE base rate I think hit around 11%. Monthly mortgage was £60 per month. Oh and btw, we didn`t qualify for full miras so we had a mortgage that was provided by the council and it was in some way subsidised to take into that we didn`t earn enough to take advantage of the tax benefit from the miras scheme.

So we paid 25% of our income having laid down a 10% deposit. On a good week end I could make 20 quid playing in a band.

Oh and the bit about it being as hard then as now. Utter rubbish. Even without promotion our incomes would have tripled by the end of that decade. The magic of debt being wafted away by inflation.

chucky

Graham_Devon wrote: »

Chucky.

We were talking about LTV's, and heres the maths...

If the house was 160k at 2x salary my salary would be 80k.

Therefore at 5% the cost would be 18% of my salary, the 12% would be 31% of my salary.

At 5x LTV my salary would be 32k.

Therefore, at 5% the mortgage would be 46% of my salary. At 12% the mortgage would cost 80% of my salary.

Hence what I said is completely right, but you are muddying the waters again because it doesnt go alongside the stuff about it being just as hard "back then".

easy there young devon you taking today's salary comparing to buying a house "back then"...

of course you can buy a house using two times today's salary back then - you could buy six!!!!

how can you compare today's salary to house prices back then... see... it's not me muddying the waters it's just you being that little bit dense again :rolleyes:

the_ash_and_the_oak

chucky wrote: »

see you haven't done the maths

5% interest rate on a £160k = £1,200 a month on a repayment mortgage
12% interest rate on a £160k property = £2,133 a month on a repayment mortgage

Yes but the argument here surely is that if ave rates went from 5 to 12% then amount able to borrow would reduce accordingly and would affect prices equivalently?

Graham_Devon

chucky wrote: »

easy there young devon you taking today's salary comparing to buying a house "back then"...

of course you can buy a house using two times today's salary back then - you could buy six!!!!

how can you compare today's salary to house prices back then... see... it's not me muddying the waters it's just you being that little bit dense again :rolleyes:

Good lord.

I'm not comparing todays salary to one back then.

I'm simply saying I would rather pay higher rates on a lower LTV, as was the case back then, than pay average rates now on a much higher LTV, as is the case now.

Can you take that anymore out of context? It doesn't matter if I use todays wage and house price, or the house price in the 60's and a 60's wage. The outcome is the same.

JonnyBravo

Graham_Devon wrote: »

Chucky.

We were talking about LTV's, and heres the maths...

If the house was 160k at 2x salary my salary would be 80k.

Therefore at 5% the cost would be 18% of my salary, the 12% would be 31% of my salary.

At 5x LTV my salary would be 32k.

Therefore, at 5% the mortgage would be 46% of my salary. At 12% the mortgage would cost 80% of my salary.

Hence what I said is completely right, but you are muddying the waters again because it doesnt go alongside the stuff about it being just as hard "back then".

So you're saying you'd rather earn £80k than £32k.

:rolleyes:

Brilliant.

chucky

Graham_Devon wrote: »

Good lord.

I'm not comparing todays salary to one back then.

I'm simply saying I would rather pay higher rates on a lower LTV, as was the case back then, than pay average rates now on a much higher LTV, as is the case now.

Can you take that anymore out of context? It doesn't matter if I use todays wage and house price, or the house price in the 60's and a 60's wage. The outcome is the same.

that's a silly point you're continuing to make and are getting very close to that little web that was laid out for you :money:

if you could buy a house at 2 times your income you'd be earning £80k.
are you saying you'd rather earn £35k instead of £80k?