Mortgage help will release a surge of pent up demand.....

John_Pierpoint

You mean the new "aspirational" class - as some comedian remarked. the verb aspirate is to extract bodily fluids.
So now who is taking the p!!s ?

HAMISH_MCTAVISH

dktreesea wrote: »

. One couple has a fairly good combined income of just over £40k, .

On a national basis anyway, that isn't a "fairly good" combined income. It's a "below average" combined income.

It's not even two times the average single income of all people, let alone two times the average income of the top earning 70% who have historically been the actual house buyers.

Nationally, the average income of all people is around 26k, so x 2 for a couple is 52K. And again, that's of all people, not house buyers. The average for house buyers will be higher.

grizzly1911

HAMISH_MCTAVISH wrote: »

It's not even two times the average single income of all people, let alone two times the average income of the top earning 70% who have historically been the actual house buyers.

I don't dispute it isn't a big income.

That's the point it isn't just the top 70% who buy property.

HAMISH_MCTAVISH wrote: »

Nationally, the average income of all people is around 26k, so x 2 for a couple is 54K. And again, that's of all people, not house buyers. The average for house buyers will be higher.

Your are usually pretty good with your arithmetic, heavy night?

HAMISH_MCTAVISH

grizzly1911 wrote: »

Your are usually pretty good with your arithmetic, heavy night?

:rotfl:

LOL, it was actually.

Now fixed.

coastline

this one reckons houses are still too expensive...

http://brickonomics.building.co.uk/2011/05/why-young-folk-cant-buy-homes/

grizzly1911

coastline wrote: »

this one reckons houses are still too expensive...

http://brickonomics.building.co.uk/2011/05/why-young-folk-cant-buy-homes/

Wrong type of earnings according to the Man from Aberdeen.

Couldn't find a picture of a man in a white suit.

http://www.knowhere.co.uk/aberdeen/aberdeenshire/scotland/info/worstthings

Turnbull2000

coastline wrote: »

this one reckons houses are still too expensive...

http://brickonomics.building.co.uk/2011/05/why-young-folk-cant-buy-homes/

The house price to income ratio is obsolete. It has very little relevance to today's market, for a number of reasons...

1. Mortgage lending is now based on 'affordability', not income multiples.

2. Mortgage lending is now assumes two full time incomes.

3. Long term interest rates are much lower, and will likely remain ultra low for the rest of the decade.

4. Government policy now aims to ensure mortgage rates are as low as possible.

5. New mortgage terms are now typically 30 years rather than 25.

20 years ago, a couple earning 25K would be limited to borrowing around 125K. Now, that same couple could borrow 225K.

5-6x average income is the new norm.

the_flying_pig

Turnbull2000 wrote: »

The house price to income ratio is obsolete. It has very little relevance to today's market, for a number of reasons...

....

5-6x average income is the new norm.

Make yer mind up. You seem to be saying both that the ratio is irrelevant and also seemingly that it's relevant but the benchmark has changed.

But 5-6 times income, a ratio that we've only seen for a couple of years, ever, even in booms, as the "new norm"? Forgive me for calling BS on that one.

Turnbull2000

the_flying_pig wrote: »

Make yer mind up. You seem to be saying both that the ratio is irrelevant and also seemingly that it's relevant but the benchmark has changed.

When people refer to the salary multiple, it's usually in terms of the old historic trend of 3.5x single, 2.5 duel. Anything above is apparently 'unaffordable' and overpriced. That's the benchmark I refer to as obsolete.

the_flying_pig wrote: »

But 5-6 times income, a ratio that we've only seen for a couple of years, ever, even in booms, as the "new norm"? Forgive me for calling BS on that one.

The market is being geared towards supporting 5-6x over the long term. Help to Buy should even help bolster this trend in 2014, as borrowers will be able to...well...borrow more, giving a nice little boost to house prices.

Oh, and we also have the competition from of BTL investors - most of whom can bid above and beyond the purchasing power of first-time buyers. All these housing market support measures will also be highly destructive to private pensions, driving more and more people into property as an investment.

grizzly1911

Turnbull2000 wrote: »

When people refer to the salary multiple, it's usually in terms of the old historic trend of 3.5x single, 2.5 duel. Anything above is apparently 'unaffordable' and overpriced. That's the benchmark I refer to as obsolete.

The market is being geared towards supporting 5-6x over the long term. Help to Buy should even help bolster this trend in 2014, as borrowers will be able to...well...borrow more, giving a nice little boost to house prices.

Oh, and we also have the competition from of BTL investors - most of whom can bid above and beyond the purchasing power of first-time buyers. All these housing market support measures will also be highly destructive to private pensions, driving more and more people into property as an investment.

How can the market provide 5 - 6 multipliers when it should be providing mortgages on the basis of affordability.

But according to the FSA's own figures these checks do not appear to have been rigorous enough. The regulator found that almost half of all households have (46pc) have either no spare cash at all – or have a shortfall – once the mortgage, essential bills and living costs have been paid each month. Even more startling is the figure that 43pc of all new mortgages were advanced without consumers having to verify their income.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/7889057/New-mortgage-affordability-rules-QandA.html



We want lenders to lend to people who can repay, and consumers to take on mortgages that they can afford. To date lenders have had considerable flexibility in how they assess affordability, and in some cases firms have used inadequate criteria and over-relied on house prices. To address this we are proposing that lenders should assess the consumer’s ability to repay for all mortgage applications, through an assessment of their income and expenditure, and to lend only where the mortgage is assessed as being affordable.

http://www.fsa.gov.uk/pubs/cp/cp10_16.pdf

To ensure that lenders base this assessment on accurate information, we propose that lenders must verify income for all mortgage applications. This proposal effectively bans self-certification and fast-track mortgages where income is not verified. We are not proposing to be prescriptive about the type of evidence that lenders can use to verify income, but the evidence must be from a source independent of the consumer and should be sufficient to enable the lender to assess the risks posed by the consumer’s individual circumstances.

When assessing expenditure, lenders will be free to undertake a line-by-line assessment of all expenditure for each individual applicant if this is their preferred approach. However, recognising concerns about the practical difficulties of gathering comprehensive and reliable expenditure data from consumers, we want to give lenders the flexibility to use statistical data and their own expenditure models. Where a firm chooses to go down this route, we would expect them to take into account committed and personal expenditure, and have a process in place for identifying and assessing outliers.

To prevent the stretching of affordability seen in the past, through the use of interest-only and the extending of mortgage terms, we are proposing that affordability assessments must normally be based on a capital and interest basis, even for interest-only mortgages; and on a maximum term of 25 years, even where the actual term is longer

http://www.fsa.gov.uk/pubs/cp/cp10_16.pdfAs you say additional restraint may be needed to ensure BTLs don't run a mock.