Crash postponed?

RabbitMad

Generali wrote: »

Perhaps I'm being slow.

Gross income = £50k

Borrow £50kx10 = £500k

£500kx6% £30k

£30k/£50k = 0.6 (or 60%)

yep you are

Gross income = £50k

Borrow £50kx10 = £500k

Monthly repayment = £2,433*12 = £29,196

£29,196k/£50k = 0.58 (or 58%)

Still on 50K after mortgage payments and tax and NI you'll be left with about £5K based on my calculations. Council tax is a further £1K so you'll be left with approx £75 per week for all your living expenses.

I must admit it made me chuckle into my cornflakes when I heard this story on the radio this morning.

epz_2

RabbitMad wrote: »

yep you are

Gross income = £50k

Borrow £50kx10 = £500k

Monthly repayment = £2,433*12 = £29,196

£29,196k/£50k = 0.58 (or 58%)

Still on 50K after mortgage payments and tax and NI you'll be left with about £5K based on my calculations. Council tax is a further £1K so you'll be left with approx £75 per week for all your living expenses.

I must admit it made me chuckle into my cornflakes when I heard this story on the radio this morning.

where did the £2,433 a month come from, i thought (500000*.06)/12 was £2500 a month and thats interest only :eek: cant see you putting by enough to pay it off or building up a pension on that little leftover so you aint going to be able to retire ever

kingkano

Melissa177 wrote: »

10x income stuff is rubbish.

My colleague - a finance analyst too, of all people - has just been whining about this. I gave her my view that prices won't increase to that extent becaue people can't afford them, and there would be a crash otherwise. She blames the banks lending 6x and 8x mortgages - but this is very very rare, I know of no examples like that, although I'm sure a few exist.

Very very rare to see 6x I know of only 2 instances - a young professional on a guaranteed career track, where their salary will be increasing drastically in short periods of time. Or people earning over 100k (what else can they spend it on :rotfl:).

Most other people 5x is really the limit they are going to and even then they do force stipulations like 5yr+ fixes I think. Which makes it atleast slightly more responsible.

Self cert is more the scary side with people flat out lying etc to get it. And IO loans I dont agree with. I can't personally see them relaxing lending criteria much more. Of course I'm prepared to be proven wrong! but there is just too much pressure on lately.

baby_boomer

BTman wrote: »

Just wait until you are really old baby_boomer...
Do you think the generation that you have robbed from are going to pay for your care...

I've robbed no-one. Nor would I expect any taxpayer help with my old age care.

baby_boomer

Generali wrote: »

I think it's just a prediction by someone who really hasn't thought it through.

Unfortunately you and I have paid for this "expert" opinion.

The National Housing and Planning Advisory Unit - It's a new government agency .

"an independent national advice unit to strengthen the evidence and analysis on improving housing market affordability available to the regional planning bodies throughout the planning process.

The National Housing and Planning Advice Unit is an advisory non-departmental public body comprising a small expert panel/board—six members including a chair—with a supporting technical unit of 10 to 12 staff. It is an independent body sponsored by the DCLG with an annual budget in place of up to £2 million.

A chair, Stephen Nickell, and a board of five members—Professor Glen Bramley, Bob Lane, Professor Paul Cheshire, Dr Peter Williams and Max Steinberg—have been appointed after an open public competition held in accordance with the code of practice of the Office of the Commissioner for Public Appointments."

Presumably either the government either acts on the Agency's recommendations or abolishes it as a waste of taxpayers' money?

Or is there a "third way" :rotfl: ?

Below you can find links to four Times articles from today, Thursday.

The Future of House Prices: 10 times pay

First-time buyers prices out by the failure to build new houses

Refore of planning laws "vital" to meet growth in demand

How the mortgage market has changed

pinkshoes

It says house prices could reach 10x your earnings, not that you have to borrow 10 times your earnings.

People need to get the perception of "I want a nice 2 bed house with garden for me, my hubby and my dog" out their heads, and understand that life changes.

Everyone goes on and on about the house price cycle, and therefore prices must crash, but what about the average number of people per house cycle. Years ago, large families lived all together in large houses, then large families live all together in small houses, then couples lived together and put off the whole having kids thing, and now people wanna buy a house on their own... maybe this cycle is repeating, and we'll just have to go back to shacking up with our parents and grandparents!!!!!!!!!!!!! eeeeeeeeek!

manhattan

pinkshoes wrote: »

It says house prices could reach 10x your earnings, not that you have to borrow 10 times your earnings.

People need to get the perception of "I want a nice 2 bed house with garden for me, my hubby and my dog" out their heads, and understand that life changes.

Everyone goes on and on about the house price cycle, and therefore prices must crash, but what about the average number of people per house cycle. Years ago, large families lived all together in large houses, then large families live all together in small houses, then couples lived together and put off the whole having kids thing, and now people wanna buy a house on their own... maybe this cycle is repeating, and we'll just have to go back to shacking up with our parents and grandparents!!!!!!!!!!!!! eeeeeeeeek!

Or live in the car? At this rate!

fimonkey

pinkshoes wrote: »

People need to get the perception of "I want a nice 2 bed house with garden for me, my hubby and my dog" out their heads, and understand that life changes.

QUOTE]

Yes indeed, accept that life has changed so much that you can no longer acheive what you want but have to put up with what's left... or else get out of the game altogether.

( I obviously haven't learnt the knack of quoteing properly)

mystic_trev

The whole housing thing has a smack of unreality to me.
I've been out of the City for over ten years, but still keep in touch with my friends there. Today I wandered up for lunch with a few of them. The 'deals' they talked about of people i'd known made me bemused! Many of these guys (and Girls) we're stashing away millions for doing very litttle, so I can understand why so much of it's being stuck into Property. I'm not jealous - good luck to them and I can understand they're looking after their future.
Me? Well I made my 'lot' and have a good life, but what of others? It's not unreasonable for the average person to expect to buy a small property, nest, and move on, but in todays housing sittuation it ain't going to happen......I despair.

BTman

baby_boomer wrote: »

Today's Times suggests that house prices could grow from an unaffordable 7X earnings to an even more unaffordable 10x earnings.

My generation can therefore sit back smugly.

The formation of new households was 209,000 pa before the Eastern European migration.

We need to double current building levels to meet this deadly dual combination which is adding to demand.

But vested interests - swing voters, banks, estate agents, NIMBYs stand against reform.

And the current government is unlikely to make a big difference in order to not to highlight 10 years of neglect and policy failure in the area of housing.

Tripled house prices 1997-2009 would be worth more votes.

This post just stinks of a VI that is getting worried to me...
You're not an EA are you? or a baby boomer who has MEWed to the max and are a bit worried about paying off your LARGE debts???:rotfl: :rotfl: