Telegraph: Lending main obstacle for buyers, causing Brits to "give up"

geneer

HAMISH_MCTAVISH wrote: »

Quite bizarre that you celebrate young FTB's being locked out of the market through mortgage rationing.

SNAP!




Anyway, its not that bizarre when you consider the self evident truth that theres a clear mechanism by which FTBs will inevitably be able to re-enter the market.
(clue: sounds like mouse rice balls)

Maybe not in the numbers which there was during the boom time, but that sounds like less competion amongst first time buyers to me.

Surely an excellent thing for those sensible FTBs who have saved up a decent deposit.:)

geneer

HAMISH_MCTAVISH wrote: »

Nope.
I have all the cheap credit I need and then some, thanks...

Sure mimi. That big house flash car lifestyle you keep banging on about will be why you live on the internet.

myhouse_2

HAMISH_MCTAVISH wrote: »

The cost of homeownership involves two equally important factors.

1. The sticker price of the house.

2. The cost of funds for the mortgage.

The proof of this is that mortgages for FTB's, as a percentage of after tax income, are now just 29%, versus an all time high of 68% in 1990, and 45% briefly at the peak in 2007.

The total cost of buying a house is dramatically cheaper today than it was when I first bought in 1990... Even though the sticker price of the house is higher.

I wouldn't disagree with this, but the problem we are facing is that the cheap cost of housing now is temporary - at some point soon IR will rise - probably to 5% or more over the next few years. People who buy a cheap house can often cope with a rise in IR, but people who stretched to buy in a bubble market are at serious risk, particularly in the first years of their mortgage.

HAMISH_MCTAVISH

myhouse wrote: »

I wouldn't disagree with this, but the problem we are facing is that the cheap cost of housing now is temporary - at some point soon IR will rise - probably to 5% or more over the next few years.

We're almost three years into ultra-cheap rates.

Now I personally don't think we'll see 5% base rates again for another decade or more, but even if you're right and rates rise to 5% over the next 5 years or so, that's an enormous financial advantage for those people who have had a mortgage for those 8 years of super low rates.

It'll average out to be 2-3% a year worth of gain over more "normal" rates, times 8 years.... So roughly 16% to 24% of a house's purchase price.

That's a big gain to offset any potential falls in price.....

People who buy a cheap house can often cope with a rise in IR, but people who stretched to buy in a bubble market are at serious risk, particularly in the first years of their mortgage.

Most people didn't stretch to buy though..... The average mortgage for FTB's never crossed 3.5 times income even at peak.

doire_2

HAMISH_MCTAVISH wrote: »

This mortgage famine is ruining the prospects of an entire generation of FTB's, who are instead doomed to enriching their landlords.

..

Says the man who wants prices to rise meaning that generation of FTB take on even more debt. Pathetic

You couldn't give a toss about FTB so stop going on about them.

abaxas

doire wrote: »

Says the man who wants prices to rise meaning that generation of FTB take on even more debt. Pathetic

You couldn't give a toss about FTB so stop going on about them.

Everyone has tried to argue with him/her/it/mineral.

You cant argue with insanity as you cant win.

Linton

doire wrote: »

Says the man who wants prices to rise meaning that generation of FTB take on even more debt. Pathetic

You couldn't give a toss about FTB so stop going on about them.

I hadnt noticed Hamish or any other serious person saying they want prices to rise. We simply point out that a rise in prices is the result of too many people chasing too few houses. In an open market a rise in prices is the inevitable consequence that is independent of what you may want.

Its no good moaning if you havent any better solution. How would you distort the market, and what would be the unforeseen consequences of doing it?

the_flying_pig

Linton wrote: »

I hadnt noticed Hamish or any other serious person saying they want prices to rise....

i know it's odd but 'fraid so, m8.

he posts silly animated smilies of beaming smiles, beer glasses chinking, & whatnot at any news of prices rising... obviously it's been a fair while since we had any of this but check out the archives - he did it very reliably, sad to say.

and *guess what* - his expert predictions & analysis happen to be such that exactly what he wants to happen is exactly what he thinks will happen. funny, that.

abaxas

Linton wrote: »

I hadnt noticed Hamish or any other serious person saying they want prices to rise. We simply point out that a rise in prices is the result of too many people chasing too few houses. In an open market a rise in prices is the inevitable consequence that is independent of what you may want.

Its no good moaning if you havent any better solution. How would you distort the market, and what would be the unforeseen consequences of doing it?

The market is already distorted by protectionism in the planning system.

And mortgage rescue schemes.....sls.... etc

If it was a fair market, house prices would not be their current levels.

myhouse_2

HAMISH_MCTAVISH wrote: »

We're almost three years into ultra-cheap rates.

Now I personally don't think we'll see 5% base rates again for another decade or more, but even if you're right and rates rise to 5% over the next 5 years or so, that's an enormous financial advantage for those people who have had a mortgage for those 8 years of super low rates.

It'll average out to be 2-3% a year worth of gain over more "normal" rates, times 8 years.... So roughly 16% to 24% of a house's purchase price.
That's a big gain to offset any potential falls in price.....
Most people didn't stretch to buy though..... The average mortgage for FTB's never crossed 3.5 times income even at peak.

Well personally I think you'll be surprised at how fast rates rise when they do finally start back up. But that's a matter of conjecture and only time will tell. I do think you're rather optimistic to be talking about 8 years of super low rates.
Where did you get the 3.5 income statistics? - not disputing it necessarily, but it would surprise me if the rate over the boom period was constant with pre-bubble times. The average is intersting but the volumes of those who over-stretched is certainly going to be higher than pre-bubble.

I would suggest that ultra-low rates of 2 years (and possibly another 1-2 years) will not compensate for having paid 20-30% more than a house was worth, particularly when you suddenly find yourself locked in to your mortgage and unable to move house for many years.