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Debate House Prices
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Mortgages at most affordable for 14 years
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People getting into the help to buy scheme early are going to do really well. 0% on 20% of the mortgage and record low long term fixes will take care of the rest.
Even the London crew are doing alright. New buyers are only paying 36% of income on the mortgage. London buyers are obviously well up the income scale and so will be insulated from rate rises.
'Only' 36% of income! :rotfl:
And not all Londoners earn megabucks as City dealers, corporate bankers or commercial lawyers.0 -
black_taxi wrote: »im seeing quite a few fixed price properties edinbugh,people needing to sell for next move up
Looking at WWW.espc.com
There are 646 Fixed Price Properties out of 2352, therefore 27% of properties in the Edinburgh area are fixed price. 63% are offers over:wall:
What we've got here is....... failure to communicate.
Some men you just can't reach.
:wall:0 -
Managing the rise in interest rates will be very interesting. Both deflation and high inflation remain threats (6% inflation isn't high).
6% inflation is high by modern standards, although not by historical ones. If inflation goes above 5% it will have a significant negative impact on pensioners, many of whom have pensions which are only indexed to CPI/RPI at 5% maximum inflation.0 -
'Only' 36% of income! :rotfl:
If he's referencing the Halifax figures that's 36% of net, after tax, income.
Well below the historical average for London.“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: »If he's referencing the Halifax figures that's 36% of net, after tax, income.
Well below the historical average for London.
That's still an awful lot. We were paying 20% of after tax income when we bought a terraced house in Reading as (mature) first timers in 2005, and now we'll be paying 16.5% on our new detached house. We could only manage this because of an inheritance, but there is no way we would have streteched to 36% even if that other money hadn't arrived. We just couldn't have afforded it.0 -
That's still an awful lot. We were paying 20% of after tax income when we bought a terraced house in Reading as (mature) first timers in 2005, and now we'll be paying 16.5% on our new detached house. We could only manage this because of an inheritance, but there is no way we would have streteched to 36% even if that other money hadn't arrived. We just couldn't have afforded it.
Not sure what any of that little anecdotal is all about really.
Here's the national average data.... (as % of net, after tax, income for new buyers)
“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 -
who's income?£48515 interest £181 (2009)debt/mortgage-MFIT/T2/T3
debt/mortgage free 28/11/14
vanguard shares index isa £1000
credit union £400
emergency fund£500
#81 save 2018£42000 -
HAMISH_MCTAVISH wrote: »Not sure what any of that little anecdotal is all about really.
Here's the national average data.... (as % of net, after tax, income for new buyers)
Isn't that graph pretty pointless though...
Since the base rate is currently 0.5% and thus distorts it massively.
Lets face it the last time they were that low was... Never.. In the last 40 years the lowest it's ever really gone has been 4%.
Yet during the period 1993-2003 (Where mortgage repayments as a percent of income is around the same), BoE rates were on average around 5-6%.
As a compare..
Example of today
- 3% mortgage rate
- £200,000 mortgage
- £957.13 per month repayment
Example of 1993-2003
- 7% mortgage rate
- £200,000 mortgage
- £1430.17
With an increase of around 50% in repayment, it essentially means on typical interest rates were looking at a mortgage to income ratio of 45%, which according to your graph started climbing to that level around 1989... When BoE interest rates were 8% (and began going up).
0.5% interest rates can't last forever, goal is typical to aim for around 5% average in the last 20 years. In 2 years that graph could look massively different..0 -
thedalmeny wrote: »0.5% interest rates can't last forever, goal is typical to aim for around 5% average.
Nope.
The "goal" is to aim for the neutrality point. The point at which levels above destroy demand in an overheating economy, and levels below stimulate demand in an under-performing economy.
That rate was around 5.5% to 6% in the last cycle.
The BOE have admitted it will more likely be 3% to 3.5% for this cycle.
It will be a very long time before a booming economy requires rates to rise to the point of demand destruction....“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: »Nope.
The "goal" is to aim for the neutrality point. The point at which levels above destroy demand in an overheating economy, and levels below stimulate demand in an under-performing economy.
That rate was around 5.5% to 6% in the last cycle.
The BOE have admitted it will more likely be 3% to 3.5% for this cycle.
It will be a very long time before a booming economy requires rates to rise to the point of demand destruction....
I'm not talking about destruction.
No, they did not stand around 5.5-6% in the last cycle, post the 90s crash and recover of interest rates they typically sat around 5.5-6.0% until 2002 (with a short peak of 7% for a couple of those years). After 2002 they were 4-5% till 2007'ish'....
The mean itself for the entire period was 5.4% (1994 - 2006), they're only that high because of the odd peaks.
I'm talking about how posting that graph is pointless, since a 0.5% interest rate massively distorts what it's trying to represent. It's misleading in relation to the point you're trying to make.
Can you please post a link to the article where the BoE believe the average interest rate will be 3 - 3.5% over the next housing cycle.0
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