Mortgage for a new borrower significantly below LT averages

nollag2006

It's an important nugget to draw out from the Halifax's latest commentary on the market:

Mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings. [FONT=Arial,Arial][FONT=Arial,Arial]Typical mortgage payments for a new borrower - both first-time buyers and homemovers – at the long-term average loan to value ratio, stood at 26% of disposable earnings in the second quarter of 2012. This was well below the average of 36% recorded over the past 27 years. Mortgage payments have nearly halved as a proportion of income in recent years from a peak of 48% in 2007 Quarter 3. The relatively low level of mortgage payments in relation to income continues to provide support for house prices.
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Source:
http://www.lloydsbankinggroup.com/media/pdfs/halifax/2012/0507_HPI.pdf


So the real issue is not affordability - it is availability of credit to homebuyers. Houses are perfectly affordable.

As soon as mortgage rationing ends (some way off yet) house prices across the country will rocket, like they are doing in London.

This is why even the Guardeeeun is encouraging investors to avoid pensions, and invest in property

wotsthat

26% - is that it?

Seems like an incentive for potential FTB's to get that deposit together especially when there seems to be little chance of renting suddenly becoming more affordable.

Percy1983

SUrely this just points to the better off are buying houses and the poor aren't?

As it is my percentage is 21% excluding own business income as thats rather erratic currently.

wotsthat

Percy1983 wrote: »

SUrely this just points to the better off are buying houses and the poor aren't?

As it is my percentage is 21% excluding own business income as thats rather erratic currently.

They use an average earnings figure for a full time male and not the average earnings of their mortgage holders.

Their mortgage holders are likely to be, on average, paying even less than this.

Jack_Johnson_the_acorn

I've just worked out my % and it's only 19%...... My interest rate is at 4.99%, I know that we are fairly comfortable but that figure has surprised me.:beer:
Plus I'm a FTB.

StevieJ

wotsthat wrote: »

They use an average earnings figure for a full time male and not the average earnings of their mortgage holders.

Their mortgage holders are likely to be, on average, paying even less than this.

You mean like Percy at 21%

System

Ours is 17%.

Graham_Devon

What matter is how much the house is costing to those trying to buy. This is looking at those who have bought and people moving home. Some moving home could have massive equity, reducing the mortgage payments massively.

Anything else is pretty pointless when determining whether a percentage figure makes it affordable or not.

We all know that houses are not at the affordability level noted in the article for the general populace.

nollag2006

Graham_Devon wrote: »

We all know that houses are not at the affordability level noted in the article for the general populace.

And your evidence for this wild assertion?

abaxas

nollag2006 wrote: »

And your evidence for this wild assertion?

In most of the country, almost no-one is buying them.

Unless of course people have 'gone off' the idea of somewhere to live and we've all become gypsies.

the_flying_pig

nollag2006 wrote: »

It's an important nugget to draw out from the Halifax's latest commentary on the market:

Mortgage payments for a new borrower remain significantly below the long-term average as a proportion of disposable earnings. [FONT=Arial,Arial][FONT=Arial,Arial]Typical mortgage payments for a new borrower - both first-time buyers and homemovers – at the long-term average loan to value ratio, stood at 26% of disposable earnings in the second quarter of 2012. This was well below the average of 36% recorded over the past 27 years. Mortgage payments have nearly halved as a proportion of income in recent years from a peak of 48% in 2007 Quarter 3. The relatively low level of mortgage payments in relation to income continues to provide support for house prices. [/FONT][/FONT]
[FONT=Arial,Arial]

[/FONT]

Source:
http://www.lloydsbankinggroup.com/media/pdfs/halifax/2012/0507_HPI.pdf


So the real issue is not affordability - it is availability of credit to homebuyers. Houses are perfectly affordable.

As soon as mortgage rationing ends (some way off yet) house prices across the country will rocket, like they are doing in London.

This is why even the Guardeeeun is encouraging investors to avoid pensions, and invest in property

Noll

First time I've replied to one of your witless posts. My standards must be slipping. So just one point really - you've used a misleading topic title, "Mortgage for a new borrower... below... averages..." - what are actually below averages are mortgage repayments [given zero interest rate policy], not mortgage size, hardly the same thing at all.