Looks like my prediction of a tougher 2012 is becoming mainstream

julieq

Average throughout the boom never exceeded 3.5x salary. THEREFORE the big multiples were a very small proportion of the market. You talk as if everyone was on them.

First time buyers are not frozen out because prices are high. First time buyers are frozen out because they need a 25% deposit. It's very easy in most parts of the country for a couple on slightly above average earnings to get a mortgage for 75% of the value of an average house in that area. It's far harder for them to save a quarter of the value of something that would normally take 25 years to repay 75% of (or 90% or 95% in former times). But this will start happening as savings build up.

Anyway, you'll figure it out eventually. Merry Christmas.

shortchanged_2

julieq wrote: »

Average throughout the boom never exceeded 3.5x salary. THEREFORE the big multiples were a very small proportion of the market. You talk as if everyone was on them.

First time buyers are not frozen out because prices are high. First time buyers are frozen out because they need a 25% deposit. It's very easy in most parts of the country for a couple on slightly above average earnings to get a mortgage for 75% of the value of an average house in that area. It's far harder for them to save a quarter of the value of something that would normally take 25 years to repay 75% of (or 90% or 95% in former times). But this will start happening as savings build up.

Anyway, you'll figure it out eventually. Merry Christmas.

Did you actually read what I said?

I am suggesting it was mainly FTB's during the boom period who ended up taking out most of the higher multiple mortgages as it was either a choice of that or an IO mortgage to be able to 'afford' to get on the property ladder. And as you are aware there was a huge increase in the number of IO mortgages taken out during this time.
People moving up the ladder often had the added 'equity' from the sale of their properties to help them move up the ladder.

And FTB's are frozen out now because banks are not happy lending these high multiples any more, so therefore they cannot now afford to pay the prices that are being asked for houses.

So as long as the banks keep the taps turned off then house prices will need to drop in order for any reasonable amount of FTB's to enter the market.

You'll figure it out eventually, and a Happy New year.

Cleaver

RenovationMan wrote: »

Do I really need to provide you with the long list of life enhancing factors realised by our decision to buy a farmhouse in a rural village?

No, of course not. There's loads of benefits to buying a house. I was simply questioning the statement that taking out a loan many times your income was the best thing you've ever done in life.

Cleaver

DaisyWheel wrote: »

Getting onto the property ladder this year was the best thing I ever did.

Okay, that's fair enough. A house, for me, is somewhere to live at the end of the day, so buying one isn't really high on my list of 'best things I've ever done'. I've done loads of things I'm more proud of, and have made me happier, than taking out a loan to buy somewhere to live.

RenovationMan

Cleaver wrote: »

Okay, that's fair enough. A house, for me, is somewhere to live at the end of the day, so buying one isn't really high on my list of 'best things I've ever done'. I've done loads of things I'm more proud of, and have made me happier, than taking out a loan to buy somewhere to live.

Maybe you just haven't found the right home yet?

Cleaver

shortchanged wrote: »

I am suggesting it was mainly FTB's during the boom period who ended up taking out most of the higher multiple mortgages as it was either a choice of that or an IO mortgage to be able to 'afford' to get on the property ladder. And as you are aware there was a huge increase in the number of IO mortgages taken out during this time.

This table, which states that its source is the CML, shows that at peak the average FTBer mortgage was £119,000, based on £35.5k income (presume this is a mixture of joint and single, so per mortgage) and was therefore 3.39 multiple.

These seem low to me. But, like Julie, I would be of the opinion that whilst there were a sizable minority of FTBers buying houses at 5 or 6 times multiple, most weren't. And whilst it isn't evidence as such, I'm 30 so me and a lot of friends bought in the period of 2003 to 2007. We all borrowed around 3 to 4 times our income to buy our first places. I remember that we borrowed £95,000, which was 2.7x our income. I was earning £21k, Mrs C £14k, and we bought a two bed terrace.

Cleaver

RenovationMan wrote: »

Maybe you just haven't found the right home yet?

I absolutely love our house and can see us being here for decades. Love the location, our space, the garden, the inside, everything. But at the end of the day, it's just a house. Maybe it's just me, but I just don't get that excited about houses - it's the place you keep your stuff as you get on with life.

shortchanged_2

Cleaver wrote: »

This table, which states that its source is the CML, shows that at peak the average FTBer mortgage was £119,000, based on £35.5k income (presume this is a mixture of joint and single, so per mortgage) and was therefore 3.39 multiple.

These seem low to me. But, like Julie, I would be of the opinion that whilst there were a sizable minority of FTBers buying houses at 5 or 6 times multiple, most weren't. And whilst it isn't evidence as such, I'm 30 so me and a lot of friends bought in the period of 2003 to 2007. We all borrowed around 3 to 4 times our income to buy our first places. I remember that we borrowed £95,000, which was 2.7x our income. I was earning £21k, Mrs C £14k, and we bought a two bed terrace.

Interesting table Cleaver. It does show however that over time the income multiples have pretty much increased year on year. So you have to wonder how far could this have gone on.

So out of curiosity Cleaver any idea what your FTB house is selling for now?

Cleaver

shortchanged wrote: »

So out of curiosity Cleaver any idea what your FTB house is selling for now?

We bought it in Jan 2004 for £129,000 (which was asking price, and I wish we'd come down a bit, but there we go) and we sold it in 2008 for £115,000. Presume it would still sell for around the £115,000 mark. We loved that house, it was one of those terrace houses that looks small from the outside then you get in and it has 30 foot rooms and 12 foot ceilings.

shortchanged_2

You had quite a hefty deposit then Cleaver, £34,000. Fair play to you and good saving.