The Housing Surplus Timebomb

baileysbattlebus

chucky wrote: »

you're not being thick at all - the average interest rate repayment on a mortgage now is about the same cash amount as the 1990s. it's the capital repayment piece that needs to be compared as separate parts, it's obviously higher now - both show different things.


spending habits and culture are different - it's easier to commute now, do people drive more. comparing doesn't give you much info.

I can definitely agree with that - our £60k mortgage (interest only because of the absolutely fabulously performing (not) endowment we had) reached about £750 per month at times during the late 1980s, early 1990's -

When interest rates came down to about 8% it was one of the things that helped us make the decision in 1993 that we could afford to move to a bigger house -(that and lower prices) because the payments on a £25k bigger repayment mortgage were less than we had been paying at some points on £60k interest only. Our monthly repayment on an £85k repayment mortgage was about £650 in 1993.

Roll on quite a few years and the daughter and her partner bought their first house for £190k with a mortgage of £180k - if they had gone interest only on their fixed rate of 5% the payments a month would have been £750. That was 2006 - not far off 20 years after we had been paying around £750 for a £60k mortgage. So 3x the mortgage size and roughly the same payment - so although houses are a lot more expensive - it costs a lot less to service the mortgage.

Although houses based on salary multiples may have looked more afffordable - based on paying the mortgage for a lot of people they weren't.

Although Gordon Brown always gets an absolute slating on here - stable and for me relatively low interest rates have been good - although we haven't moved since 1993 - it has meant that as a mortgage payer there have been very few "Oh no" or even worse "Oh God no" moments in the last 12 years.