abbey ups mortgage limit by 5 times!

Pobby

Well it does seem to me that the whole housing issue is becoming like a pyramid scheme.History very clearly demonstrates how after a boom there is a bust.The way that property graphs out is that at all times the price reverts back to approx. 3.5 times the average salary.Normally after a boom the price will dip below that figure.Can`t see why that has changed.

ZTD

Pobby wrote:

Can`t see why that has changed.

Because it is a new era. The death of boom and bust has already been announced - years ago.

We're so much cleverer than those people who lived in the past....

Pobby

ZTD wrote:

Because it is a new era. The death of boom and bust has already been announced - years ago.

We're so much cleverer than those people who lived in the past....

ZTD,I must be loosing it.Ya right,Tony Blair said so!!!!!!!!!!!!!!!!!!!!

climbgirl

cattie1 wrote:

I agree with everything else you said but where do they say it's not aimed at first time buyers?
Sorry if I mised something.
I saw
"it will typically lend borrowers to up to 5 times income to help ailing first-time buyers"

"we have made changes to our abbey mortgage proposition to help more peopleespecially first time buyerspurchase the home they want."
I think i understand after writing that....does it mean they are doing this for other buyers so that first time buyers get more of a chance of buying?

It was in one of the BBC articles on the topic - the Abbey guy said that very few first-time buyers would meet their criteria so it was pitched more at 2nd and 3rd time buyers who would have the capital from their house sale. Sorry, haven't got time to dig out the link, back to work!

ZTD

High earners.
Large deposit.
Spotless credit record.
No chance in hell of buying a house for anything reasonble.

Screams London professional FTBs to me...

Are house prices going down in London at the moment?

going2die_rich

But considering many first time buyers are in their mid 20's the salary they will be on will be just about the starting salary for their career so in the years to come will go up.

I personally wouldn't borrow 5 times my salary, and I don't particularly mind Abbey lending it out to those that would. It's just supply and demand. You do it at your own risk like most things in life.

Just say you had overstretched 10 years ago, you'd be laughing now with the price increases so it's a gamble. So overstretching itself isn't always bad.

I reckon the house prices wont crash as such but they will drop once the economy has too many bad debts and banks decide to call in all the debts as soon as a missed payment occours to protect their profits. Which would lead to a scare in new buyers and also lead to more houses being available. I personally would benefit from such a situation so bad debt does also help first time buyers getting on the ladder (true it's at the expense of others but thats life).

A good indiction of things to come will be in this new years news headlines since a rate hike is due before xmas and with the cost of xmas some people are bound to finally snap from being overstreteched. So the news headlines will show those that borrowed more than they could afford. If its high then others will sooner or later follow.

going2die_rich

ZTD wrote:

Are house prices going down in London at the moment?

LOL, of course not. Even the gun crime areas are increasing in value. Mostly because people buy as an investment with the knowledge that sooner or later some will have to live in these bad areas if they want to be in London - most likely migrants.

going2die_rich

Pobby wrote:

Well it does seem to me that the whole housing issue is becoming like a pyramid scheme.History very clearly demonstrates how after a boom there is a bust.The way that property graphs out is that at all times the price reverts back to approx. 3.5 times the average salary.Normally after a boom the price will dip below that figure.Can`t see why that has changed.

Greater migration and the wealth of the nation so we have more money to spend.

A bust can only occour if their aren't any people left willing to pay the higher prices but with the UKs population increasing mostly due to migration, we are able to sustain the boom longer. Although migrants can't buy themselves mostly, they can rent, so BTLs are proviging the demand they'd have been generating had they been able to aquire mortgages to buy themselves.

It's BTL properties that are controlling the demand and outpricing first time buyers. If they were taxed heavily they would pull out making space for first time buyers. Obviously this would effect those that can only afford to rent so it's a catch 22 situation. I personally think taxing BTLs so much it becomes pointless in doing it is the way forward to cool down the housing market.

going2die_rich

nearlyrich wrote:

It's OK borrowing 5 x salary but overstretching at whatever multiple is a risky business and some of the sad stories I read on here show that it all too common. Sadly the benefit system doesn't help to pay the mortgage and if a high earner loses their income through illness or redundancy there is often no safetynet.

Sadly?

You mean THANKFULLY the benefit system doesn't support mortgage payments as it would cripple the system to support even 5% or 10% of the economy's mortgage now. It struggles to pay £50 or so a week in JSA, imagine coping with £1500+ pm mortgages.

dinkylou

Personally I think if people can get that sort of deposit together and want to take the risk then its up to them.

But 2 people with £25k income each taking on that sort of debt is a big risk. After all, anyone can loose their jobs nowadays or be made redundant (having found out the hard way) and a mortgage of £1400 is a big committment.

Each to their own, but it wouldn't be my choice.