Mortgage now Cheaper than Rent in 80% of the UK

doire_2

HAMISH_MCTAVISH wrote: »

In the interests of balance, and you know, accuracy.....

Perhaps you'd be kind enough to list the banks that "lost huge amounts of money" on UK mortgage lending.

Or should I save you the trouble by pointing out that with an average reposession rate of well under 1%, UK mortgage lending has remained immensely profitable for all concerned.

Northern Rock didn't do too well did they?

And repo's are low because IR are at an all time low and the banks are showing leniency which wont last forever

Plus support for mortgage interest payments changed last month

HAMISH_MCTAVISH wrote: »

Absolute nonsense.

That discredited figure is based purely on existing spending patterns, and makes the incorrect assumption that people are unable to modify their spending in any way if interest rates rise.

It's complete and utter alarmist twaddle.

Who discredited it?

HAMISH_MCTAVISH

doire wrote: »

Northern Rock didn't do too well did they?

Northern Rock had problems with global financial markets freezing up, not their UK lending book.

In fact, the so called "bad bank", that was formed with their worst loans, made a £300m profit last year.

Try again.

And repo's are low because IR are at an all time low and the banks are showing leniency which wont last forever

It doesn't have to last forever. It only has to last until unemployment starts to fall. Which it almost certainly will as it's in the interests of no-one to see mass reposessions. (well, except for a few housing bears)

Plus support for mortgage interest payments changed last month

To the average that people are actually paying, instead of letting them make a profit on the deal.

doire_2

HAMISH_MCTAVISH wrote: »

It doesn't have to last forever. It only has to last until unemployment starts to fall. Which it almost certainly will as it's in the interests of no-one to see mass reposessions. (well, except for a few housing bears)



.

Unemployment fall? And where are all these jobs coming from then? Its the jobless recovery remember. Yesterdays figures were a complete joke

HAMISH_MCTAVISH

doire wrote: »

Unemployment fall? And where are all these jobs coming from then? Its the jobless recovery remember. Yesterdays figures were a complete joke

It's far from a jobless recovery, unemployment peaked some time ago at numbers far lower than the doomers expected. But no sane person expects to see unemployment dip significantly immediately after the recession. It has always taken several years to fall markedly.

Oh, and still no data on banks that "lost huge amounts of money" on UK mortgage lending then?

N1AK

HAMISH_MCTAVISH wrote: »

It's saying a mortgage at 5% interest rates (more than most people are paying at the moment, BTW) is cheaper than rent, on average, in 80% of towns in the UK.

That's all it's saying, so the rest of your post is meaningless.

"The research found tenants pay 9.9 per cent more on average than an owner with a mortgage with a pay rate of 5 per cent."

It's impossible to tell from the Telegraph article exactly what they are comparing because it doesn't say. It is possible that they are comparing, like for like, but I see nothing saying they are. Have Zoopla shared the research? I couldn't find it on their website.

In short I simply don't believe that paying off a full mortgage at 5% is cheaper, in terms of monthly payments, than renting the same property. That would mean that the average rent on a £150k property would be £1000pm a month :rotfl:

My point here isn't even that buying is a bad idea. In fact renting is normally cheaper than buying (ignoring property price variation). Long term it will decrease your monthly outgoings. Short term, you will pay more on a (repayment) mortgage than you would renting the same place.

HAMISH_MCTAVISH

N1AK wrote: »

In short I simply don't believe that paying off a full mortgage at 5% is cheaper, in terms of monthly payments, than renting the same property. That would mean that the average rent on a £150k property would be £1000pm a month

No, they are not very clear in the article.

I think we'll have to assume they're talking about the interest component.

As an example......

150K house, 10% deposit, 5% interest.

Mortgage amount 135K

Mortgage payment £798, interest component £562.

My point here isn't even that buying is a bad idea.

Oh good.

Short term, you will pay more on a (repayment) mortgage than you would renting the same place.

Depends on the area.

To rent a 1 bed flat up here costs around £550 per month.

To buy the same flat costs around £90,000

Even at 100% LTV, a full repayment mortage at £532 is less than the rent.

doire_2

HAMISH_MCTAVISH wrote: »

It's far from a jobless recovery, unemployment peaked some time ago at numbers far lower than the doomers expected. But no sane person expects to see unemployment dip significantly immediately after the recession. It has always taken several years to fall markedly.

Oh, and still no data on banks that "lost huge amounts of money" on UK mortgage lending then?

So a fall in employment will take years and you expect the banks just to sit back and wait all that time?

500,00 expected to go in the public services (and your assumption that most of these will be made up of people retiring is ridiculous otherwise the unions wouldn't be up in arms about it) and the knock on affect of 500,000 going in the private sector.

Still no proof that the "3 million close to tipping point" is discredited then?

LilacPixie

N1AK wrote: »

"The research found tenants pay 9.9 per cent more on average than an owner with a mortgage with a pay rate of 5 per cent."

It's impossible to tell from the Telegraph article exactly what they are comparing because it doesn't say. It is possible that they are comparing, like for like, but I see nothing saying they are. Have Zoopla shared the research? I couldn't find it on their website.

In short I simply don't believe that paying off a full mortgage at 5% is cheaper, in terms of monthly payments, than renting the same property. That would mean that the average rent on a £150k property would be £1000pm a month :rotfl:

My point here isn't even that buying is a bad idea. In fact renting is normally cheaper than buying (ignoring property price variation). Long term it will decrease your monthly outgoings. Short term, you will pay more on a (repayment) mortgage than you would renting the same place.

That may be true in your area but not all areas. I posted links earlier on in the thread to a 3 bed flat to rent and a 3 bed flat to buy in a random street in the closest city to me and buying (presuming you could buy) would be cheaper. The flat was £750 a month to rent but 105k to buy presuming you pay full asking price which wont happen. 105k @ 7% repayment is around £750. If you got for 95k then £680 ish repayment totally ignoring deposits

I personally think its because property prices here are lower than the national average so the rents look strange in comparison.

All that should matter to individuals is their own area and for that reason I opted to buy and not rent, interest gained on deposit amount was less than the difference between renting and buying a 3 bed semi with an 85% ltv mortgage so even in short term with buildings insurance and mortgage payment protection we are still paying less, well will be when we move in 3 weeks.

benb76

I see the usual crowd over at HPC have picked up on this article and are doing their best to discredit it. Some outrageous claims being made, such as that the savings interest earned on the money that it would cost to buy a property us actually more (after tax) than the cost of renting the same property!

I just wish I could find those savings accounts that yield 5% net of tax!

HAMISH_MCTAVISH

doire wrote: »

So a fall in employment will take years and you expect the banks just to sit back and wait all that time?

Absolutely. The banks have no interest in pursuing any policy that will cause another crash, as it would result in futher capitalisation needs.

500,00 expected to go in the public services (and your assumption that most of these will be made up of people retiring is ridiculous otherwise the unions wouldn't be up in arms about it) and the knock on affect of 500,000 going in the private sector.

It ain't my assumption. David Cameron already came out and said most losses would be through natural attrition.

300K public sector workers leave each and every year anyway. That's 1.5 million over the next 5 years. And we only need to reduce 500K posts. If you want to reduce the public payroll, the cheapest way by far to do it is to just hire less people to replace the ones that leave anyway.

Still no proof that the "3 million close to tipping point" is discredited then?

Still no proof that UK banks sustained "huge losses" on UK mortgage lending then?