MSE News: 22-year wait for low earners to buy first home

HAMISH_MCTAVISH

Also....

They are basing their article on a 20% deposit. And they claim 22 years to save a 20% deposit.

Now if deposits were a historically normal, prudent and sensible 5%, then logically it would only take 5.5 years.

And if house prices were at the historical average of 4 times the average male, mean, salary as opposed to the current level of 4.4 times the average male, mean, salary (source, Halifax) then it would take 4.95 years.

Clearly, the absurd deposit requirements account for the vast majority of this wait.

MonkeyMad

HAMISH_MCTAVISH wrote: »

Also....

They are basing their article on a 20% deposit. And they claim 22 years to save a 20% deposit.

So how long do the report writers think it take to pay the principle back, or do the occupants suddenly have the ability to throw money at the mortgage despite only being able to save 5% of income for the deposit?

niksyg

26 years old, oh is 22. We have a combined gross income of just under 50k, bought our house a year ago after saving like mad whilst renting.

22 year wait?? Only if people keep viewing holidays and new clothes as priority items.

Lizling

niksyg wrote: »

26 years old, oh is 22. We have a combined gross income of just under 50k, bought our house a year ago after saving like mad whilst renting.

22 year wait?? Only if people keep viewing holidays and new clothes as priority items.

This article is about couples who earn no more than 29k, or 41k for couples with 2kids. If you earn 50k then obviously it will take you less time.


On a separate note, average house prices are meaningless. To start with, it makes much more sense to look at the median price, not the mean, and also they need to be broken down regionally because the south east is a very different market to most of the rest of the UK.

brit1234

As prices continue to fall the quicker it will be to save a 25% deposit. Also as the housing bubble deflates the banks will require less deposit %s. The reason the deposits are so high is that the banks realise how overvalued property is and to protect them from falls with the buyer taking more risk for them.

It is only record low interest rates that is slowing the speed of falls, however high inflation is now eating the public's money which is countering the low interest rates and helping force prices down together with more sensible lending.

jgriggle

MonkeyMad wrote: »

So how long do the report writers think it take to pay the principle back, or do the occupants suddenly have the ability to throw money at the mortgage despite only being able to save 5% of income for the deposit?

Because they have to pay rent as well as save. Once you start paying for a mortgage you're no longer paying rent!

ReadingTim

HAMISH_MCTAVISH wrote: »

Sorry, but that's just nonsense.

UK mortgage lending standards had absolutely nothing to do with the global financial crisis and freezing up of international credit markets.

Nor did mortgage lending standards have anything whatsoever to do with banks such as Northern Rock needing to be nationalised. That was purely down to their business model of borrowing short and lending long, which became impossible once the global money markets froze.

It would have made not the slightest bit of difference if UK banks had been lending at 80% LTV all along, they still would have needed bailouts, and they still would have been nationalised.

ok - so I compressed a couple of factors into a rather short slapdown to someone to whom I should have just invoked Godwin's Law by proxy in respect of their use of the phrase "the bankers". However...

1 - Widespread access to high LTV lending was certainly a factor in the general rise in house prices, which have contributed to the problems highlighed in the article.

2 - there will always be people who do, and do, not fall into the ideal, or prime lending targets for banks. Those on lower incomes tend to fall into the 2nd category, which was termed (in the US) as sub-prime. And look what happened when they were lent to....

Mishomeister

Low and middle income earners saving around 5% of their annual wages, amounting to just over £1,000-a-year in savings before interest, would take 22 years to raise a deposit of just under £25,000

My yearly income is after tax £18,600, I live in London and pay £430 rent. I have moved in to live near by my work not to pay for transport On average I am saving £500 per month which is 33% of my salary, meaning I will have £12,000 in 2 years time which is enough for a 10% deposit.

As a bank employee I am going through a budget planning on a regular basis with the customers of mine.
Over 90% of my BRITISH customer have a car, that is including those without any kids. They pay £80+ for their car insurance, another £200 for petrol, have mobile phone contracts of £40+, spend another £100+ on entertainment. They would not consider living in a shared accommodation but only seperately, meaniong that including bills it will cost them nearly £1000.00 for one bedroom flat. What stop's these people from saving the same way that I do?

With myself not being British I really struggle to understand you people buying a car or expensive smartphone for your 18 yo child that has never even tried to work himself? When I was 12 I was not eating anything at school for 1-2 weeks if I wanted to buy a toy as I was saving my lunch money on it.
By giving everything for nothing you are just throwing your children to that group that is managing to save only 5% of their income on 22k salary.
In the part of London I live 60% of population are White British. However 80% of my mortgage customers are either foreign or children of foreigners as Britons(not all but majority of young generation) unfortunately are useless when it comes to sacrificing a standard of living eg Car in order to save up quicker.

As Warren Buffet said 'Do not save what is left after spending, but spend what is left after saving'

P.S.
I believe this is a very good say as £300 Standing order lives my current account on my pay day and goes straight in to the savings account meaning I don't eve see this money:)