Mortgage lending up again, rises by 2%

IveSeenTheLight

ruggedtoast wrote: »

Oh well...

Not everyone could afford to buy and not everyone can afford now.
If you want property to be even cheaper, then the supply has to increase.
The population is increasing on average by 325,000 per year and the figure is increasing each year.
Without more supply of houses, it means that there is an exclusion to only the higher earners or those with a larger deposit.

IveSeenTheLight

bumpoowee wrote: »

Doesn't affordability need to be measured over the full 25 years rather than what people are paying monthly 'right now'? ie. you don't really know how affordable it is unless you have a 25 year fixed rate? I would think the only guarantee you have by buying now is that you have £200k of debt to deal with rather than the £80k or so if HPI had stuck with RPI over the years.

Property has roughly increased at 2.9% on average for the last 30 years

The index is a comparable index, meaning it is comparing the same stats now as it was at any point over the last 25 years.

Statistically, this shows that house prices are more affordable as a percentage of income than it has been on average over the last 25 years

bumpoowee

IveSeenTheLight wrote: »

Property has roughly increased at 2.9% on average for the last 30 years

The index is a comparable index, meaning it is comparing the same stats now as it was at any point over the last 25 years.

Statistically, this shows that house prices are more affordable as a percentage of income than it has been on average over the last 25 years

I take your point, but I'd imagine when people talk about houses being 'unaffordable' they aren't just looking at the headline monthly payment figure - after all this does seem reasonable as you have pointed out.

The issue seems to be risk - holding £200k of mortgage debt is much more risky than holding £80k of mortgage debt as you are more vulnerable to a number of factors, eg interest rates (and theres only one way they can go), falling house prices. The level of risk in taking on a mortgage for an average house as a FTB from where we are now seems far higher than it would have been back when houses were £80k in real terms.

cootambear

nollag2006 wrote: »

If anything, the rise in FTBs shows that the best time to buy has probably passed, and that we are back on for continued house price rises.

The crash that never was, has now been replaced by service as usual.

Bye bye bears

Surely you aren`t denying theres been a crash (I agree we`re in recovery)?Taking in to account the £ devaluation HP have crashed about 35%, (which is why theyre tempting buyers).

IveSeenTheLight

bumpoowee wrote: »

I take your point, but I'd imagine when people talk about houses being 'unaffordable' they aren't just looking at the headline monthly payment figure - after all this does seem reasonable as you have pointed out.

The issue seems to be risk - holding £200k of mortgage debt is much more risky than holding £80k of mortgage debt as you are more vulnerable to a number of factors, eg interest rates (and theres only one way they can go), falling house prices. The level of risk in taking on a mortgage for an average house as a FTB from where we are now seems far higher than it would have been back when houses were £80k in real terms.

It's interesting you use £80k and £200k.
Are you thinking that house prices should drop 60%:eek:

You are indeed correct in that factors such as interest is a factor on a higher mortgage, however as for risk, I think it must be the same.
If the percentage of income is now lower, this should mean there is more disposable income.
If you argue against this due to taxes etc reducing the disposable income, then that is different from the mortgage payment percentage of income stat.

Now I concede, interet rate hikes would have a far more devastating effect than previously.
Many managed to cope albeit difficultly with 15% interest rates.
I think far more would go to the wall with 10% rates.
In my opinion, that would affect such a lot of people that we would see pandemonium.

Which is why it is a good idea to get a property for as cheaply as you can and pay off the debt as fast as you can.

When you look at the demand for property even in these times against the available supply and when you consider that the UK is ageing and increasing in population, this only adds to the demand.

Ultimately, if you want to see lower house prices, you need the demand to be much lower or the supply of property much higher

Thrugelmir

chucky wrote: »

and there's me thinking that all FTBers were totally priced out of the market... pffffff that's another HPC.co.uk myth out of the window :T

Why would all FTB's be priced out the market? There are vast regional differences.

A FTB can purchase a 1 or 2 bed property around here for between £60,000 and £90,000. So affordable for many individuals or couples even on lower quartile wages. Even a 25% deposit is perfectly manageable on these prices.

ruggedtoast

Thrugelmir wrote: »

Why would all FTB's be priced out the market? There are vast regional differences.

A FTB can purchase a 1 or 2 bed property around here for between £60,000 and £90,000. So affordable for many individuals or couples even on lower quartile wages. Even a 25% deposit is perfectly manageable on these prices.

I would imagine that the average salary of a place that sees £90k 2 bed places is probably quite low though.

There are houses up north remaining unsold at £50k and less, so assuming there really is this massive shortage of supply we all keep hearing about there really are many people that cant afford that much.

IveSeenTheLight

Thrugelmir wrote: »

Why would all FTB's be priced out the market? There are vast regional differences.

A FTB can purchase a 1 or 2 bed property around here for between £60,000 and £90,000. So affordable for many individuals or couples even on lower quartile wages. Even a 25% deposit is perfectly manageable on these prices.

I wonder how many areas have similar affordable property?
My VI area could also get you property for those prices

HAMISH_MCTAVISH

ruggedtoast wrote: »

There are houses up north remaining unsold at £50k and less, so assuming there really is this massive shortage of supply we all keep hearing about there really are many people that cant afford that much.

Not really.

It just means there is a surplus of some types of houses, in some areas. We all know that to be true.

As frequently stated, there is a massive shortage of housing, of the type people want, in the areas people want to live, and where the employment exists to support them.

This in no way contradicts the fact that some areas, where not enough people want to live, and where there is not enough employment to support them, may have a housing surplus.

Emy1501

Thrugelmir wrote: »

Why would all FTB's be priced out the market? There are vast regional differences.

A FTB can purchase a 1 or 2 bed property around here for between £60,000 and £90,000. So affordable for many individuals or couples even on lower quartile wages. Even a 25% deposit is perfectly manageable on these prices.

Where I am in South East average FTB property about £175K average way about 30K. Therefore a couple buying could afford a property if they are on average wage.

The real probelm is the deposit. you are looking at a minimum of 17.5K. I know very few people of FTB age with that sort of money saved up. Most I know are about that much in debt. I know a about 5 people who have looked to be FTB's over the last year. One managed to get a 95% mortgage at nearly 8% 3 borrowed from family and one gave up as they could not get a deposit.