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Debate House Prices
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Indy - BoE pump priming of mortgage market brings house price cheer
Comments
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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.
There is more to life than property, or though you wouldn't think it on here. What if they don't want a bigger/better property?
Are we getting cross threaded here?
I thought we were just talking about the relevance of multipliers?"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 -
grizzly1911 wrote: »There is more to life than property, or though you wouldn't think it on here. What if they don't want a bigger/better property?
Are we getting cross threaded here?
I thought we were just talking about the relevance of multipliers?
As you say there is more to life than property.
Some people want to spend all their spare cash on drinking and eating out.while others are happy to just go for a walk in the country while others what if that extra mortgage got them a house where they could do that from their front door.0 -
Funny how the BoE have changed their tune.
Back in the "good times" (2002 - '07) they stated several times that when deciding on base rate levels, they took very little notice of house prices.
Now that HPI has been "off the menu" for a while, it seems that house prices are suddenly an important issue.
OK, it may be argued that they are targeting lending, so why did they not raise concern when the banks were obviously lending themselves into trouble ?30 Year Challenge : To be 30 years older. Equity : Don't know, don't care much. Savings : That's asking for ridicule.0 -
Back in the "good times" (2002 - '07) they stated several times that when deciding on base rate levels, they took very little notice of house prices.
Base rates had very little impact. Lenders (banks) were gearing up their balance sheets and lending at wafer thin margins. Often sub base rate.
From 2000 onwards lenders were no longer on retail deposits to fund mortgages. Lenders used securitisation to create finance.
Now the situation is in reverse. FSA and BoE need to allow the debt balloon to deflate in a controlled manner. Sharp correction in house prices would damage the banks. Who have no capacity to absorb multi billion pound provisions.0 -
shortchanged wrote: »Any reason why that is absurd?
Because 3.5 times income was the average when base rates had a realistic prospect of reaching 15% and most families did not have two full time workers.
Times change.....
Expecting 3.5 times income to be normal "just in case" rates shoot up to 15%, is like expecting every house to have a bomb shelter in the back garden "just in case" the Germans attack London again.
It made sense once upon a time, but not any more.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Because 3.5 times income was the average when base rates had a realistic prospect of reaching 15% and most families did not have two full time workers.
Times change.....
Expecting 3.5 times income to be normal "just in case" rates shoot up to 15%, is like expecting every house to have a bomb shelter in the back garden "just in case" the Germans attack London again.
It made sense once upon a time, but not any more.
Has little to do with rates shooting up to 15% more a case of simple affordability.
If you are on lower wages maxing out multipliers means you can't afford to live.
Being fully reliant on two incomes and heavy multipliers is reckless for the majority of punters."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 -
grizzly1911 wrote: »Has little to do with rates shooting up to 15% more a case of simple affordability.
.
Has everything to do with rates not shooting up to 15%.
What was simply unaffordable with rates at 15%, is completely affordable with rates at 5%.
Or to put it another way, a 3.5 times "median single salary of all people" multiple house price, with rates at long term historical average of 4.9%, would result in people paying less of their income for housing than they have in something like 90 out of the last 100 years.
And there is zero prospect of seeing that given the housing shortage, switch to two incomes, etc etc etc.If you are on lower wages maxing out multipliers means you can't afford to live.
Being fully reliant on two incomes and heavy multipliers is reckless for the majority of punters.
That entirely depends on the interest rate over the term of the mortgage.
And given that you can get a 25 year fix for a little over 5%, there is simply no need to assume rates could hit 8%, or 12% or 17%, or whatever. If you think that's a realistic prospect, then fix.
And a 5% fix means you can afford a much bigger multiple than you could with rates at 15%, without stretching or being reckless..“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Has everything to do with rates not shooting up to 15%.
What was simply unaffordable with rates at 15%, is completely affordable with rates at 5%.
Or to put it another way, a 3.5 times "median single salary of all people" multiple house price, with rates at long term historical average of 4.9%, would result in people paying less of their income for housing than they have in something like 90 out of the last 100 years.
And there is zero prospect of seeing that given the housing shortage, switch to two incomes, etc etc etc.
That entirely depends on the interest rate over the term of the mortgage.
And given that you can get a 25 year fix for a little over 5%, there is simply no need to assume rates could hit 8%, or 12% or 17%, or whatever. If you think that's a realistic prospect, then fix.
And a 5% fix means you can afford a much bigger multiple than you could with rates at 15%, without stretching or being reckless..
Fine if all you want to do is lead a life of penury in chasing a dream.
Back in the land of reality if you are only on or around average to moderate income there are many other things in life that need to be catered for and financed.
Housing is but part of the equation of life.
I have seen many even on escalating professional incomes eventually come unstuck when that income plateaus as it will for many."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 -
grizzly1911 wrote: »Fine if all you want to do is lead a life of penury in chasing a dream.
Sorry, but are you struggling with the concept that at 5% rates you can afford a much bigger multiple than you could at 15% rates, and still have more disposable income to spend on other things?
Do I need to provide a worked example?“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Sorry, but are you struggling with the concept that at 5% rates you can afford a much bigger multiple than you could at 15% rates, and still have more disposable income to spend on other things?
Do I need to provide a worked example?
NS Sherlock.
Yous state the obvious.
Give me as many spreadsheets and calculations as you want.
Doesn't change the fact that you have to live as well fund your property purchase."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
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