Boomers' House Price Bonanza Barrels Onwards. Young Excluded and Forgotten

OffGridLiving

dktreesea wrote: »

Focusing instead on those who could expect to afford to buy but either don't have the deposit to make the borrowing rates attractive, and/or the income to be able to buy where they would like to buy, notwithstanding they can afford to buy somewhere, it must be pretty soul destroying, just shelling out rent, month in month out.

Take somewhere like this:

http://www.zoopla.co.uk/for-sale/details/29170361

Nice enough area of Kent, pretty reasonably priced for a 2 bedroom renovated terrace at £150k. Say you had a household income - a couple in their 20s - of £40k a year. Getting a mortgage shouldn't be a problem, but decent interest rates don't even start to kick in at our mainstream bank until you have a 30% deposit, so £45k. Not to mention £1,500 stamp duty. Say £47k including the solicitor's fees. How many people in their 30s, let alone their 20s, would have saved up that kind of deposit towards their first house?

I don't understand your logic. While it would be nice to have a 30% deposit to get the very best interest rates, it's not mandatory. The question is whether having a high LTV would mean that they are paying more in mortgage interest than in renting the same property. Unlikely.

How much would the rent be on that property? Would the couple in their 20s be able to afford the rent?

Dribley

Loughton_Monkey wrote: »

Very civilised. Catering for guests.

One day, however, you will look back on the cocktail cabinet as a symbol of poverty, and work yourself up to having a proper bar. Couldn't live without mine.

But do you have an inside toilet?

Loughton_Monkey

Dribley wrote: »

But do you have an inside toilet?

No. That's a new project we are saving up for.

At my age, all these large gin & tonics go through me very rapidly, and the 30 yard walk down the garden to the little wooden shed is quite a chore. Social Services don't want to know about it either....

If I don't get it sorted out soon, I'm sure one of these days I'm not going to make it, and I'll have to go in the swimming pool.

dktreesea

OffGridLiving wrote: »

I don't understand your logic. While it would be nice to have a 30% deposit to get the very best interest rates, it's not mandatory. The question is whether having a high LTV would mean that they are paying more in mortgage interest than in renting the same property. Unlikely.

How much would the rent be on that property? Would the couple in their 20s be able to afford the rent?

True - they may well be able to borrow for a property like that even with a 5% deposit. And the rent might well be more than the interest, even on a 95% mortgage.

My point, though, was that in order to get the best interest rates - especially when they don't know what the financial climate might be once they come fof the initial fixed term - they would need at least a 30% deposit. Given the difference in the rates - 2.49% for five years with a 30% deposit versus 4.29% with a 10% deposit at our local bank - there's quite a big incentive to get the interest rate as low as poosible, isn't there?

CLAPTON

dktreesea wrote: »

True - they may well be able to borrow for a property like that even with a 5% deposit. And the rent might well be more than the interest, even on a 95% mortgage.

My point, though, was that in order to get the best interest rates - especially when they don't know what the financial climate might be once they come fof the initial fixed term - they would need at least a 30% deposit. Given the difference in the rates - 2.49% for five years with a 30% deposit versus 4.29% with a 10% deposit at our local bank - there's quite a big incentive to get the interest rate as low as poosible, isn't there?

I don't understand your point

on a 95% mortgage at 4.29% will cost about 770 pm ; totally affordable on 40k salary

OffGridLiving

dktreesea wrote: »

My point, though, was that in order to get the best interest rates - especially when they don't know what the financial climate might be once they come fof the initial fixed term - they would need at least a 30% deposit. Given the difference in the rates - 2.49% for five years with a 30% deposit versus 4.29% with a 10% deposit at our local bank - there's quite a big incentive to get the interest rate as low as poosible, isn't there?

Sorry, I'm still not getting it? Are you complaining about banks adjusting their rates according to people's risk levels? Should someone with more equity and therefore less risk for the bank, receive the same interest rate as someone with less equity and therefore more risk?

Are you also opposed to credit scoring for loans? Should everyone be able to borrow money at the same rate, with no regard to their risk levels. Someone with CCJs and defaults on their record should be able to get loans at the same rate as someone with a clean credit record?

chucky

OffGridLiving wrote: »

Sorry, I'm still not getting it? Are you complaining about banks adjusting their rates according to people's risk levels? Should someone with more equity and therefore less risk for the bank, receive the same interest rate as someone with less equity and therefore more risk?

Basically too many people want to have that cake and want to eat it too.

They should cut their cloth accordingly.

dktreesea

CLAPTON wrote: »

I don't understand your point

on a 95% mortgage at 4.29% will cost about 770 pm ; totally affordable on 40k salary

OffGridLiving wrote: »

Sorry, I'm still not getting it? Are you complaining about banks adjusting their rates according to people's risk levels? Should someone with more equity and therefore less risk for the bank, receive the same interest rate as someone with less equity and therefore more risk?

Are you also opposed to credit scoring for loans? Should everyone be able to borrow money at the same rate, with no regard to their risk levels. Someone with CCJs and defaults on their record should be able to get loans at the same rate as someone with a clean credit record?

The thing is with buying a place, human nature will be to want to get the best interest rate possible. I know this because a few of my friends have got children currently wanting to get on the mortgage ladder and all wanting to borrow money from their parents (I say "borrow" but the impression I get more is that they want an advance on their inheritances!) so they can have a high enough deposit to get the lowest interest rate.

As one of those 20 something year olds said to me, (he's got around £15k, he said), if it was just a matter of saving £1,000 a month for the next 12 months he would just buckle down and get on with it, but a 30% deposit on the new build he has his eye on (a yuppie apartment I personally wouldn't touch with a barge pole and I told his parents the same) is £48k.

His point is he earns enough for the bank not to consider him any risk at all but because he only has a small deposit he is being penalised, something he can avoid if his parents "come to the party".

He doesn't want to pay £770 a month for a property. He was thinking more like £400 a month, entirely possible if only he can get the deposit together. And he doesn't want to wait. He, like me, thinks property prices are going up again.

dktreesea

chucky wrote: »

Basically too many people want to have that cake and want to eat it too.

That's called being British
I'm all for that attitude, provided it doesn't involve any subsidy from other taxpayers.

chucky wrote: »

They should cut their cloth accordingly.

That sounds like you are in training to be someone's Grandfather. My Grandpa and you would have got along well.

Prothet_of_Doom

I'm middle aged, live in what was probably designed as a starter home, but am lucky enough to own 99.95% of the equity. The step, was always too much, of a financial commitment, although for about 1 year in about 2005 we could have probably jumped to a house more suited to having teenage kids, but we'd have been in the poo, when job security and health issues changed our incomes.

Strangley, as the kids reach adulthood, the house is about the right size for a couple.