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Debate House Prices
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First-timers buyers learn to sacrifice
Comments
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Turnbull2000 wrote: »http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9827253/Families-face-75pc-cut-in-mortgage-borrowing-limit.html
I was surprised at the sums two first-time buyers earning 25K each could borrow according to the article above.
https://online.ybs.co.uk/public/mortgages/quick_enquiry.do#section
And lo and behold...
This is based on a 30 year repayment.
I've always maintained that thanks to lower longer term rates and the normalisation of duel income borrowing, house prices simply cannot fall back the traditional 3.5x single income. 5-6x is now the norm. We just need deposit requirements to ease, that's all.
Just because someone will lend that multiple it doesn't mean its a good idea or even that the offer will be take up in any volume.
Some people might get away with borrowing such high multiples initially but if their circumstances change (for example the arrival or children or something similar) that sort of financial commitment will not be possible to maintain. Despite some of the bluster on this board I believe most people aren't stupid enough to put themselves in that sort of position.0 -
What would be best would be for deposit requirements to ease to average 10%, but then make the loan to income ratio realistic and sustainable. Then people would tend to buy the property that they can properly afford rather than the one that they can get a mortgage for.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
GeorgeHowell wrote: »What would be best would be for deposit requirements to ease to average 10%, but then make the loan to income ratio realistic and sustainable. Then people would tend to buy the property that they can properly afford rather than the one that they can get a mortgage for.
Would that not only work if house prices fell and/ or incomes rose though?
Otherwise it would be all very well needing only a 10% deposit, but if you could only get a mortgage to cover say 70% of the value of the property you still wouldn't be in a position to buy.0 -
thescouselander wrote: »I believe most people aren't stupid enough to put themselves in that sort of position.
I think you would be surprised.
Common sense and forward budgeting/planning, what if, risk assessments aren't high on peoples radars when they want something IME.
Overcommitment is nothing new."If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Would that not only work if house prices fell and/ or incomes rose though?
Otherwise it would be all very well needing only a 10% deposit, but if you could only get a mortgage to cover say 70% of the value of the property you still wouldn't be in a position to buy.
Depends on people's income of course. Those on low income might still have to save longer and put down a bigger deposit. But for many on decent incomes the overblown deposit requirement is the problem, and they can afford the payments. But people need to be realistic and aim for what they can afford even if rates go up, even if their overtime were cut or whatever. The old advice to buy a more expensive property than you can really afford and things will sort themselves out somehow is no longer good advice. Get on the ladder, even it's far from the dream home, and them hope to move up the rungs in due course.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
grizzly1911 wrote: »I think you would be surprised.
Common sense and forward budgeting/planning, what if, risk assessments aren't high on peoples radars when they want something IME.
Overcommitment is nothing new.
Yes, I am sometimes surprised at what some people do and there's no doubt there are plenty of reckless people around. The question is are these people in the minority or the majority. I word hope and suspect its the former but I could always be wrong.0 -
grizzly1911 wrote: »Arguably above inflation increases for many years will still see housing above trend for years to come .
Is this likely in a reccessionary period though?0 -
thescouselander wrote: »Yes, I am sometimes surprised at what some people do and there's no doubt there are plenty of reckless people around. The question is are these people in the minority or the majority. I word hope and suspect its the former but I could always be wrong.
Either way it's up to the banks to stop it happening, and for whoever is supposed to be regulating them (I've lost track) to make sure that they do.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0 -
Ha, easy then as there were no iPhones or gadgets when you were young, Grandad. :rotfl:
Excellent. What were the latest must haves... Vinyl records and drain pipe jeans. Growing your hair long so it touched your collar and made your parents furious.
I fully believe that if we were to take your generation out as teenagers and dump you in the 21st century, you'd be exactly the same as the yoofs of today.0 -
Excellent. What were the latest must haves... Vinyl records and drain pipe jeans. Growing your hair long so it touched your collar and made your parents furious.
I fully believe that if we were to take your generation out as teenagers and dump you in the 21st century, you'd be exactly the same as the yoofs of today.
No doubt they would. But the fact remains that today's young can't on average spend the money that many do on gadgets, entertainment, fashion clothes, alcohol, holidays, gap years, lavish weddings etc etc and still expect to have enough for the deposit on a house. It isn't do-able.No-one would remember the Good Samaritan if he'd only had good intentions. He had money as well.
The problem with socialism is that eventually you run out of other people's money.
Margaret Thatcher0
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