Debate House Prices


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Repo's up and some startling numbers

2456722

Comments

  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    Nor do most people. 125% mortgages and the like are absurd.

    But historically normal and responsible lending includes 90% and 95% mortgages.

    Good, good Hamish. Now we just need to keep to 4 times a single earning multiple and 3 times a joint earning multiple maximum and we're there.
  • HAMISH_MCTAVISH
    HAMISH_MCTAVISH Posts: 28,592 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    edited 22 June 2011 at 7:00PM
    Good, good Hamish. Now we just need to keep to 4 times a single earning multiple and 3 times a joint earning multiple maximum and we're there.

    Don't have much of a problem with that in most cases.

    3 times joint is plenty.

    4 times single is plenty for most people, but could see a bit of wiggle room to 5 times single for junior doctors or other professionals where income rises are structured into their career.

    Regardless, the average LTI of actual FTB-s never crossed 3.5 times even at peak.
    “The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.

    Belief in myths allows the comfort of opinion without the discomfort of thought.”

    -- President John F. Kennedy”
  • shortchanged_2
    shortchanged_2 Posts: 5,546 Forumite
    Don't have much of a problem with that in most cases.

    3 times joint is plenty.

    4 times single is plenty for most people, but could see a bit of wiggle room to 5 times single for junior doctors or other professionals where income rises are structured into their career.

    Regardless, the average LTI of actual FTB-s never crossed 3.5 times even at peak.

    So where does so much of your argument come from then Hamish about current mortgage rationing etc?

    This is probably pretty much what most of the banks are lending at the moment.

    I wonder if it is actually high house prices that is the problem then?
  • Loughton_Monkey
    Loughton_Monkey Posts: 8,913 Forumite
    Part of the Furniture Combo Breaker Hung up my suit!
    Cleaver wrote: »
    ....... But when you look at it as a percentage of total numbers you wonder whether the difference between 0.066% and 0.046% of all owner-occupied houses being repossessed each quarter is really worth worrying about.

    Good point.

    I hadn't realised how insignificant these numbers are. I would have guessed something nearer ½% to 1%.

    Shame, really. When there's a nice glut of these, then the auction rooms are full of really cheap houses. Ideal for FTB's. Still. If and when mortgage rates go up, then there will be a few more, I expect.
  • macaque_2
    macaque_2 Posts: 2,439 Forumite
    Mortgage famine ongoing, FTB-s continue to be discriminated against.

    Nothing new there Graham, just the same old points we've been mentioning for some time.

    There is an entire generation being forced to enrich their landlords because the banks won't lend more than a token amount of mortgages at reasonable (5% or 10%) deposit levels, particularly to young people.

    There is no mortgage famine, quite the opposite in fact. Lenders are desperate find good places to invest. However, they do need to be sure that borrowers have secure income and 'skin in the game' before parting with the money. If the boot was on the other foot and you were lending your own money, I have little doubt that you would also want to see 40% deposits if borrowers wanted to pay £450k for £150k properties. It is just supply and demand Hamish.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Regardless, the average LTI of actual FTB-s never crossed 3.5 times even at peak.


    http://www.nationwide.co.uk/hpi/historical/May_2011.pdf

    First graph. It's even got the long run average on it for you. It's from Nationwide, your own preferred house price measure.

    Currently around 5.3x

    When will you stop spouting this?
  • Really2
    Really2 Posts: 12,397 Forumite
    10,000 Posts Combo Breaker
    http://www.nationwide.co.uk/hpi/historical/May_2011.pdf

    First graph. It's even got the long run average on it for you. It's from Nationwide, your own preferred house price measure.

    Currently around 5.3x

    When will you stop spouting this?

    I think that is against average wage. Not of average income when buying.

    Here it is in 2007, I think the data is done by the CML but this was the first link I found.
    http://www.moneywell.co.uk/blog/general-financial/the-average-first-time-buyer-income-multiple-increases-2007
    The average first-time buyer income multiple now stands at 3.29 times household earnings, said the Council of Mortgage Lenders. A year earlier the ratio stood at 3.08 while in early 2002 it was 2.55, reports the Guardian.
  • Wookster
    Wookster Posts: 3,795 Forumite
    Pressure on incomes is only going to get worse.

    I'd be surprised if these numbers don't get worse.
  • Really2
    Really2 Posts: 12,397 Forumite
    10,000 Posts Combo Breaker
    Wookster wrote: »
    Pressure on incomes is only going to get worse.

    I'd be surprised if these numbers don't get worse.

    It will,with the public sector cuts some people are bound to become long term unemployed.

    Unemployment I would say is the biggest cause IMHO over income pressure. But I suppose in the end it all becomes income pressure.
  • Graham_Devon
    Graham_Devon Posts: 58,560 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Really2 wrote: »
    I think that is against average wage. Not of average income when buying.

    Here it is in 2007, I think the data is done by the CML but this was the first link I found.
    http://www.moneywell.co.uk/blog/general-financial/the-average-first-time-buyer-income-multiple-increases-2007

    Does that not tell you something?

    Nationwide say the average house is 5.3x income, average price £167,000

    CML say its 3.13x income, making the average loan £120,000.

    Nationwide therefore suggests average income is £31,500

    CML state average income for those buying is £38,300.

    However, CML figures are only based on the size of the loan. Therefore, any deposit is not taken into account, making the income of the FTB even higher. Infact, we'd be into higher tax rate brackets, as they base this on an 80% LTV. Making the income of the FTB in the CML figures an average of around £48,000 per year.

    Therefore, using the figures Hamish likes to use, is, unfortunately, very VERY misleading. Firstly, it only counts those who can afford to buy. Then it only counts those with the large deposits needed to buy.

    You've got to ask yourself, if this is all true, and FTB's really are that rich, and it never passed 3.5x even at the peak....how on earth did people buy? Based on these statistics that the CML is producing, the average FTB would have been on a wage of approximately £54,000 per year in 2007.

    Yet more, LOTS more, bought then. We also had 125% loans then. So if the average never passed 3.5x earnings, and 100% mortgages were running at the highest levels for a long time, it pushes the average FTB wage up yet again.

    Theres something not quite right with these figures. All they say is they cover 98% of lenders. But don't state what type of lending they cover. Apparently, the average FTB takes home more than 2 nurses combined.

    Hmmmm.
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