Abbey to offer 5 x salary mortgage

tomstickland

Well, amid all the madness I managed to buy a nice flat for a less than 2 x salary mortgage. It just needed some minor work doing on it. I feel pretty chuffed TBH. Then again, i could have bought a 3 bedroom house for less than what I payed if I'd bought 5 years earlier.


On one hand the latest rise looks like an enlarged version of the previous boom. But the new one has flattened off. Who knows what will happen.

Trouble ahead in my onion.

littleange

That's crazy, if we we're earning £60k a year I don't think we'd struggle to get a morgage, if fact we'd probably just save up for 2-4 years and buy a house with the cash.

tomstickland

Naaah, buy a house on 6 times income and it'll be worth 7 times that in 2 years and everyone will be so rich that they can retire. BTL everything you can see.

fairenoughclough

I can remember interest rates at 15%.

Could you afford to pay a 5x dual income mortgage at 15% ?

dunstonh

Nice graph. Whenever you look at investing in stockmarket or property, you should look at graphs like that as you can work out the long term average.

What tends to happen (historically) is that the growth goes above the long term average and then crashes at some point thereafter to fall below the long term average. Then the cycle begins again. Over the long term you get growth but it wobbles on the way.

The ideal time to buy is below the long term average line and sell above the long term average line. Sure, you could sell too early and crashes do not always occur. Sometimes you get sustained periods of no growth which brings it back in line with the long term average.

The data on lending suggests we are currently back to 1991 levels (news articles confirming that appeared in August). So, take a look at 1991 on the graph and see what happened next.

EdInvestor

Bear in mind that when London previously hit a multiple of 5.0 (in 1987), it hit a high of 5.8 some 18 months later, crashing back to 3.1 just 4 years after that.

Of course interest rates were in the 12-15% range at the time. :rolleyes:

It would be more useful to do a comparison of the monthly mortgage payment as a percentage of net pay in the two periods than to try and compare income multiples now and then - you are not comparing like for like.

roswell

Completely off topic so please excuse me but has anyone got a graph of month by month average house price for the last 18 months ?

whambamboo

UK007BullDog wrote:

This is such old news with the 5 x income mortgage. Dont know why the media is going crazy about it.

The 5 x income has been around for many many months with other lenders.

There are some even going as high as 10x. Depending on jobstatus and income.

It's because it's 5* JOINT.

On 5* joint one partner's salary is entirely consumed by the mortgage, implying no possibility to have children or get ill or made redundant.

mystic_trev

roswell wrote:

Completely off topic so please excuse me but has anyone got a graph of month by month average house price for the last 18 months ?

Try this

http://www.housepricecrash.co.uk/graphs-nationwide-percentage-change.php

run your cursor along the graph and you'll get the monthly figs.Only goes up to July.

ReportInvestor

It is the "joint" element that may cause problems (for customers, not Abbey given the 25% deposit required) rather than rising interest rates.

How many modern relationships last the course of a mortgage?