Repo's up and some startling numbers

RenovationMan

shortchanged wrote: »

I believe you need to have a salary multiple cap in order to have more control in the market as I've stated when money is too freely available in the housing market is when problems occur with booming prices.

It's the horrible words I'm afraid that many people seem to hate so much 'tighter regulation'.

There is nothing wrong with tighter regulation, it just needs to be applied sensibly. There seems to be to be no point in having any reference to salary muliples in mortgage lending because salary multiples have absolutely no bearing on people's ability to pay their mortgage. As you and I have already agreed.

If you bring in legislation that states that people should only be allowed a maximum of 4x salary multiple then all lenders would lend upto a maximum of 4x salary income and the onus is back on the borrower not to borrow too much.

If you bring in legislation that is based on people's income and outgoings and mortgage affordability then lenders could only lend what a borrower could afford.

shortchanged_2

RenovationMan wrote: »

There is nothing wrong with tighter regulation, it just needs to be applied sensibly. There seems to be to be no point in having any reference to salary muliples in mortgage lending because salary multiples have absolutely no bearing on people's ability to pay their mortgage. As you and I have already agreed.

If you bring in legislation that states that people should only be allowed a maximum of 4x salary multiple then all lenders would lend upto a maximum of 4x salary income and the onus is back on the borrower not to borrow too much.

If you bring in legislation that is based on people's income and outgoings and mortgage affordability then lenders could only lend what a borrower could afford.

You are trying to misquote me now RenovationMan as nowhere have I agreed that salary multiples have no bearings on peoples abilities to pay their mortgage because I stated earlier that the higher the lending multiple the bigger the risk to the borrower, simply because the debt is bigger and therefore the mortgage will account for a bigger proportion of someone outgoings, therefore they are more at risk of such things as interest rises or higher costs of living.

The problem is if you simply base mortgage decisions at the time on affordability alone these affordability factors can change quite rapidly such as children coming into the equation etc.
By having an earnings multiple cap there is at least some way of stopping someone from overstretching themselves in the first place.

RenovationMan

shortchanged wrote: »

You are trying to misquote me now RenovationMan as nowhere have I agreed that salary multiples have no bearings on peoples abilities to pay their mortgage because I stated earlier that the higher the lending multiple the bigger the risk to the borrower, simply because the debt is bigger and therefore the mortgage will account for a bigger proportion of someone outgoings, therefore they are more at risk of such things as interest rises or higher costs of living.

The problem is if you simply base mortgage decisions at the time on affordability alone these affordability factors can change quite rapidly such as children coming into the equation etc.
By having an earnings multiple cap there is at least some way of stopping someone from overstretching themselves in the first place.

Well we have gone full circle, erm, twice and here I am again saying that we will not agree on this and to stop us developing a Graham Devon vs XYZ relationship I think we should leave it there.

It was nice debating with you and I think that we probably have more common ground than not. From what I have read we both think there should be a ceiling on lending, we just have different views on how that ceiling should be calculated.

geneer

RenovationMan wrote: »

Well we have gone full circle, erm, twice and here I am again saying that we will not agree on this and to stop us developing a Graham Devon vs XYZ relationship I think we should leave it there.

It was nice debating with you and I think that we probably have more common ground than not. From what I have read we both think there should be a ceiling on lending, we just have different views on how that ceiling should be calculated.

Stick or twist?
Third time lucky?

shortchanged_2

RenovationMan wrote: »

Well we have gone full circle, erm, twice and here I am again saying that we will not agree on this and to stop us developing a Graham Devon vs XYZ relationship I think we should leave it there.

It was nice debating with you and I think that we probably have more common ground than not. From what I have read we both think there should be a ceiling on lending, we just have different views on how that ceiling should be calculated.

Yes I don't think we will see eye to eye on this RenovationMan as we obviously have different ideas and perspectives regarding the housing market.
That's fine we obviously have different reasons for this but it is nice to keep it civil.

Graham_Devon

RenovationMan wrote: »

If you bring in legislation that states that people should only be allowed a maximum of 4x salary multiple then all lenders would lend upto a maximum of 4x salary income and the onus is back on the borrower not to borrow too much.

If you bring in legislation that is based on people's income and outgoings and mortgage affordability then lenders could only lend what a borrower could afford.

Salary multiples, applied properly, allow for lean times and plentiful times. I.e. it allows for a month whereby you have to spend everything you have, which happens sometimes.

Affordability however, does not allow for any change in circumstances. Once the mortgage is lent based on whats affordable today....thats it. A child on the way can seriously damage that affordability. Whereas it wouldn't neccesarily damage the 4x wages ceiling.

Ponyo

shortchanged wrote: »

That's fine RenovationMan but I think you have to draw the line somewhere. You obviously have a figure in mind or do you think 8 or 10 times income multiples is acceptable?

It doesnt matter who thinks 8 or 10 times multiples is acceptable, if we ever got this far out of wack there would be hardly any homes sold. Bad luck for someone wanting or needing to sell and move, they would be waiting a long time for a buyer.

nembot

So much denial from the usual suspects, way to go chaps - keep it up!

IveSeenTheLight

Graham_Devon wrote: »

Salary multiples, applied properly, allow for lean times and plentiful times. I.e. it allows for a month whereby you have to spend everything you have, which happens sometimes.

Affordability however, does not allow for any change in circumstances. Once the mortgage is lent based on whats affordable today....thats it.

That's right, if you get a mortgage based on affordability, your restricted from pay increases and promotions.

Your not allowed to budget to live off less of your joint income to reduce the mortgage further.

Graham_Devon wrote: »

A child on the way can seriously damage that affordability. Whereas it wouldn't neccesarily damage the 4x wages ceiling.

The wife and I maxekd out on the house we could afford.
If truth be told, we were prepared to take a loan on top to cover solicitors, stamp duty etc, but just managed to scrape in without it.

We were however focussed to living off one wage ond paying down the mortgage fully from the second wage.

We did that for a number of years and only after we had reduced the mortgage (and I increased my income) to a level where we were happy we could afford to have children on the single wage.

The options are there if you are prepared to open your eyes and look for them.

shortchanged_2

IveSeenTheLight wrote: »

The wife and I maxekd out on the house we could afford.
If truth be told, we were prepared to take a loan on top to cover solicitors, stamp duty etc, but just managed to scrape in without it.

We were however focussed to living off one wage ond paying down the mortgage fully from the second wage.

So come on then IveSeenTheLight, tell us a little more. Like when did you buy and what earning multiple was your mortgage?