FSA warns on levels of UK mortgage debt

geneer

RenovationMan wrote: »

I had a pal who had this approach. He bought a 2 bed terrace cottage pretty much at the same time I bought my first home, though he was older and earned quite a bit more than I did back then. While I borrowed to the max and moved up the housing ladder, pretty much like all of our peers, friends and work colleagues, he stayed in his 2 bed home and paid down his mortgage. For years as we all plodded up the housing ladder, he sat back in his mortgage free home and kept telling us that the 'end is nigh' and we will lose it all when the party ends.

The "housing ladder" you refer to is the one where eye watering inflation eroded debt. This hasn't existed for quite some time, and certainly had little to do with the bubble of the last ten years.

Climbing the ladder in the latter environment simply meant getting into more debt. You might be marginally better off than the FTB, but you're still worse off than you would have been had prices not gotten bubblicious.

Unless your point is that the boomers have turned out to be jammy [EMAIL="b@stards"]b@stards[/EMAIL]. Which would be a bit redundant.

abaxas

ukcarper wrote: »

I’m not sure what people want with planning laws do they believe that every available green space should be built on.

No, the department is called 'planning'. It would be nice if they actually did some.

geneer

RenovationMan wrote: »

I had a pal who had this approach. He bought a 2 bed terrace cottage pretty much at the same time I bought my first home, though he was older and earned quite a bit more than I did back then. While I borrowed to the max and moved up the housing ladder, pretty much like all of our peers, friends and work colleagues, he stayed in his 2 bed home and paid down his mortgage. For years as we all plodded up the housing ladder, he sat back in his mortgage free home and kept telling us that the 'end is nigh' and we will lose it all when the party ends.

He then got married and had two kids, quite late in life so I guess he always thought he would be a dedicated batchelor (I know we all did), and he realised that he needed a larger home. The trouble was that even with owning his terrace house outright, the price of family homes had moved on so far that he couldnt afford to move.

To be fair to him, he held his hands up and conceeded that he had made an almighty mistake. He ended up having to move to a larger house eventually (his kids were not same sex and couldnt share a room forever) and ended up getting an almighty mortgage to do so.

He is now in a precarious financial position at an age when his salary is pretty static and his career has peaked. His determination to avoid risks in his late 20's and early 30's when he was young, building his career and when we had full employment has simply pushed the risk to his late 40's and early 50's when he is older, has peaked in his career and we are in a recession.

I cant begin to describe how embittered he is about house prices, to the point where many of our mutual friends now avoid him, especially if he has had a few beers. However, as he is the first to point out, he had the same opportunities as everyone else and he 'blew it, big time', thinking he would be the one to (in his words) 'sit back and laugh watching the whole pack of cards come falling down around you all'.

I had a pal who wanted to buy when all his friends were buying. Instead he stayed in his rented home saving up the deposit he otherwise would have been pushing into interest rate payments whilst his friends borrowed the maximum they possibly could to buy starter homes, pretty much like all of their peers. For years they paid most of their combined salaries into their mortgages, as he sat back in his reasonably priced rental telling them they might find it tough when the party ends.

Now he's married and planning to start a family. He is now in quite a good financial position, what with his salary having increased and the savings toward his deposit accumulating. Following the global financial meltdown his friends never saw coming, and the crash they denied could ever happen, he managed to jump straight up the ladder into a nice family sized three bed terrace. His good sized deposit has given him preferential interest rates, which in turn have allowed him and his wife to overpay his mortgage, covering him for the inevitable interest rate rise.

I can't begin to describe how embittered his friends are about house prices. They're stuck in over priced two bed starter flats, now worth much less than they paid for them, their sphincters snapping at the prospect of the inevitable rate rises, knowing that the few % points interest rates increased by before the crash almost killed them.

To be fair to them, they rarely bring up the grindlingly dull subject of house prices any more. Apparently its not the same exciting topic of discussion it used to be over a few beers. I doubt they'd be the first to point out that they "blew it big time" buying into the bovine "housepricesonlygoupbynowbeforeyoumisstheboat" mass hysteria which gripped the nation.

They're also bricking the possibility of losing their jobs in the recession they directly assisted in bringing about. Given the fact that they bought into the "affordability" fallacy, they've just got no safety net. Still, their new found silence on the subject of what their "pwopertees" are "worth" speaks volumes, and he doesn't feel the need to rub it in when, in the wake of the astonishing events of 2007/2008, its so abundantly clear he was right to be concerned.

ukcarper

abaxas wrote: »

No, the department is called 'planning'. It would be nice if they actually did some.

But you say planning is fixing the market so what would you like done.

StevieJ

abaxas wrote: »

No the price fixing is based on planning laws. The rest is to do with paying back debt, not the root cause.

Do you think there could be a boom in something we have too much of?

The new Tory garden grabbing legislation is not going to help.

Garden grabbing’ now accounts for around a quarter of all new homes built, according to government figures. The Communities and Local Government department released figures on Thursday showing 25 per cent of all new homes are now built on land previously used for gardens and residential sites. This was a 14 per cent increase since 1997.
Greg Clark, decentralisation minister, said the figures backed up his recent decision to change the planning rules to prevent ‘garden grabbing’. Gardens are no longer classed as brownfield land.

http://www.insidehousing.co.uk/news/development/rise-in-building-on-gardens/6511076.article

Graham_Devon

StevieJ wrote: »

The new Tory garden grabbing legislation is not going to help.


http://www.insidehousing.co.uk/news/development/rise-in-building-on-gardens/6511076.article

Tory?

This was a 14 per cent increase since 1997.

Tories fault that its increased 14% since labour took power?

Thrugelmir

RenovationMan wrote: »

they get close to retirement, they sell the family home and move back into the sort of house they started with (releasing a lot of capital that is largely tax free).

Requires the whole market to function properly. With the dearth of FTB's at the moment, the very ladder you describe is beginning to lose rungs. As who is going to buy these expensive family homes. Investors won't be in this area of the market.

Think of it as a game of pass the parcel. At some point the music will stop. Then some people may well need to evaluate their plans.

StevieJ

Graham_Devon wrote: »

Tory?



Tories fault that its increased 14% since labour took power?

Done it again

HAMISH_MCTAVISH

RenovationMan wrote: »

He is now in a precarious financial position at an age when his salary is pretty static and his career has peaked. His determination to avoid risks in his late 20's and early 30's when he was young, building his career and when we had full employment has simply pushed the risk to his late 40's and early 50's when he is older, has peaked in his career and we are in a recession.

I cant begin to describe how embittered he is about house prices, to the point where many of our mutual friends now avoid him, especially if he has had a few beers. However, as he is the first to point out, he had the same opportunities as everyone else and he 'blew it, big time', thinking he would be the one to (in his words) 'sit back and laugh watching the whole pack of cards come falling down around you all'.

So what's his username on hpc?

:rotfl::rotfl::rotfl::rotfl::rotfl:

mbga9pgf

RM, i can agree with much that you say, the one thing I cant do is agree that real price levels will ever exeed those back at the 2007 boom. There is not the will for this to happen politically, and increasingly, in the publics mind.