Indy - BoE pump priming of mortgage market brings house price cheer

Graham_Devon

Turnbull2000 wrote: »

http://www.independent.co.uk/news/business/news/bank-of-england-boost-housing-market-as-prices-rise-by-05-in-january-8475437.html



You've got to hand it to them. But the following snippet is what stood out...



So not only are we facing an unprecedented housing shortgage, an entrenched ultra-low base rate (market and buyers assuming a new norm), we have continued pump-priming and lengthening of mortgage terms. Factor in duel income buyers now being the norm, house prices are arguably undervalued.

All that, and the best you can get is 0.5%? Which, actually, in monetry terms, is a fall in prices?

Secondly, areNationwide suggesting mortgages are being taken on a period over 25 years, as in 30 years, or over 25 years as "my mortgage payments are over 25 years"?

It's a little confusing.

ukcarper

shortchanged wrote: »

Any reason why that is absurd?

Salary multiplies are very crude someone earning £30k who got a 3.5x salary mortgage at 4% would be left with about £1350 a month after mortgage while some on earning £60k would be left with about £2340.

ukcarper

Graham_Devon wrote: »

All that, and the best you can get is 0.5%? Which, actually, in monetry terms, is a fall in prices?

Secondly, areNationwide suggesting mortgages are being taken on a period over 25 years, as in 30 years, or over 25 years as "my mortgage payments are over 25 years"?

It's a little confusing.

My first mortgage in 1972 was over 35 years.

Graham_Devon

ukcarper wrote: »

Salary multiplies are very crude someone earning £30k who got a 3.5x salary mortgage at 4% would be left with about £1350 a month after mortgage while some on earning £60k would be left with about £2340.

That's nice. But what about a £162,000 mortgage?

Not gonna get much for 100k in most areas of the country, so while it sounds nice, it's not very realistic.

A more realistic interest rate would upset your calculations somewhat too.

ukcarper

Graham_Devon wrote: »

That's nice. But what about a £162,000 mortgage?

Not gonna get much for 100k in most areas of the country, so while it sounds nice, it's not very realistic.

A more realistic interest rate would upset your calculations somewhat too.

I didn't post to show affordability just to show how crude salary multiplies are, if the person on £30k can afford to live on £1350 after mortgage why does the person on £60k need another £1000.

grizzly1911

ukcarper wrote: »

I didn't post to show affordability just to show how crude salary multiplies are, if the person on £30k can afford to live on £1350 after mortgage why does the person on £60k need another £1000.

To enjoy themselves? To do things they want to do in the here and now rather than be living hand to mouth?

There is nothing making people extend themselves if they don't have to.

I accept that salry multipliers are crude but not far off as a rule of thumb IME.

ukcarper

grizzly1911 wrote: »

To enjoy themselves? To do things they want to do in the here and now rather than be living hand to mouth?

There is nothing making people extend themselves if they don't have to.

I accept that salry multipliers are crude but not far off as a rule of thumb IME.

So less well off person has £1000 a month less to do the things they wanT to do.

Thrugelmir

ukcarper wrote: »

I didn't post to show affordability just to show how crude salary multiplies are, if the person on £30k can afford to live on £1350 after mortgage why does the person on £60k need another £1000.

Number of dependants has impact to.

There's no one size fits all.

grizzly1911

ukcarper wrote: »

So less well off person has £1000 a month less to do the things they wanT to do.

Yep.

That's life earn more have more choice, probably dig bigger holes too.

ukcarper

grizzly1911 wrote: »

Yep.

That's life earn more have more choice, probably dig bigger holes too.

If the less well off person can live on £1350 so could the better off persons and if the thing they want is a bigger house or a house in a nicer position why can't they spend some of the extra £1000 they have on that.