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MSE News: House prices up at fastest rate for three years
Comments
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You can fix for 25 years if you want. So interest rates do not affect your repayments.
And this is the key thing.
You can buy fixed rate mortgages for 2, 3, 5, 7, 10, 15 or 25 years....
If anyone believes that base rates are likely to rise to 5% or 10% or 15% within the term of their mortgage, they can completely eliminate that risk today by buying a long term fix.
I think doing so would be irrational. As the chances of us seeing base rates north of even 5% in the next 10-15 years are vanishingly small. I suspect they'll peak at closer to 3% this cycle.
But that option remains open for anyone that believes differently.“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 -
You can fix for 25 years if you want. So interest rates do not affect your repayments.
Yes but as I said earlier the 25 year fix quoted would add another £170ish a month to my mortgage which would not be a comfortable amount for me to be paying.
And for friends with much bigger mortgages the extra would not be payable.0 -
People my age today are extending themselves to buy at low rates without considering or understanding the effect of small rises in rates. I am by far better off than any of my home owning peers!
This assertion, like most assertions supported only anecdotally, is highly questionable.
The latest CML lending data for actual borrowers shows that the average FTB is....
-Borrowing an income multiple of just 3.31 times earnings
-Paying an 18% deposit
-Spending just 19.2% of income on interest and capital repayments
http://www.cml.org.uk/cml/media/press/3666
Most FTB-s are clearly not over-extending themselves to buy at low rates, nor are they "vulnerable" to even quite significant rate rises.“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: »This assertion, like most assertions supported only anecdotally, is highly questionable.
The latest CML lending data for actual borrowers shows that the average FTB is....
-Borrowing an income multiple of just 3.31 times earnings
-Paying an 18% deposit
-Spending just 19.2% of income on interest and capital repayments
http://www.cml.org.uk/cml/media/press/3666
Most FTB-s are clearly not over-extending themselves to buy at low rates, nor are they "vulnerable" to even quite significant rate rises.
I'm giving my personal experience. Figures off a website are meaningless to me. I pay 24% or our income on mortgage payments and bought with a 50% deposit.0 -
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I'm giving my personal experience. Figures off a website are meaningless to me.
Those "figures off a website" are immensely helpful when objectively looking at the market as a whole however.
Particularly when they demonstrate, as in this case, that the anecdotal posts claiming that young people are stretching themselves are simply not accurate for most FTB-s today.
Posts like this one.....People my age today are extending themselves to buy at low rates without considering or understanding the effect of small rises in rates.
I am by far better off than any of my home owning peers!
Yet the data shows that the average FTB is "far better off" than you are with regards to the percentage of income they're paying for a mortgage.
So when combined with the low average income multiple, this suggests that FTB-s are nowhere near as "extended" as you think they are.
Nor nearly as "vulnerable" to moderate rate rises.I pay 24% or our income on mortgage payments
OK.
Which probably explains your perspective in wrongly thinking moderate rate rises would be a struggle for significant numbers of people.
Your mortgage (from your sig) is lower than average, and the percentage of income you pay is higher than average.
Which indicates your earnings are lower than average for house buyers.
It may well be the case that you would find rate rises uncomfortable, but you are not typical of FTB-s....
The average FTB spends less than 20% of income on mortgage repayments, and borrows at a very sensible and low multiple of earnings.
That doesn't fit at all with your earlier narrative of an overextended generation....“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: »Those "figures off a website" are immensely helpful when objectively looking at the market as a whole however.
Particularly when they demonstrate, as in this case, that the anecdotal posts claiming that young people are stretching themselves are simply not accurate for most FTB-s today.
Posts like this one.....
Yet the data shows that the average FTB is "far better off" than you are with regards to the percentage of income they're paying for a mortgage.
So when combined with the low average income multiple, this suggests that FTB-s are nowhere near as "extended" as you think they are.
Nor nearly as "vulnerable" to moderate rate rises.
OK.
Which probably explains your perspective in wrongly thinking moderate rate rises would be a struggle for significant numbers of people.
Your mortgage (from your sig) is lower than average, and the percentage of income you pay is higher than average.
Which indicates your earnings are lower than average for house buyers.
It may well be the case that you would find rate rises uncomfortable, but you are not typical of FTB-s....
The average FTB spends less than 20% of income on mortgage repayments, and borrows at a very sensible and low multiple of earnings.
That doesn't fit at all with your earlier narrative of an overextended generation....
I have no experience of average numbers off a website my experience is of me and my peers. As I said previously that I would no longer respond to your posts and I made the mistake of doing it again! You obviously have no interest in accepting others experiences or opinions. My wages are roughly average for my peer group.0 -
I have no experience of average numbers off a website my experience is of me and my peers.
And that's fine.
So long as you realise that experience is not typical nor representative of the average FTB.
The conclusions and assumptions we all make can be skewed by our personal experiences, which is why it's helpful to look at the facts and statistics for the population as a whole.
Rather than relying on personal experience, which is prone to confirmation bias.My wages are roughly average for my peer group.
I'm sure they are.
But in that case, your peer group are below average earners when compared to the average FTB.
Most FTB-s are paying significantly less as a percentage of income than the historical norm for housing, and therefore should manage quite comfortably when rates do gently rise back to more normal levels.
There will of course be a few that struggle, there always have been, but the average person will be fine.“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 -
But if you're on a FIXED RATE mortgage, interest rates going up makes no difference to your repayments. That's precisely why people take out fixed rate mortgages.
And that's precisely why I said 'at the end of your fix'. The vast majority of FRMs are for 5 years or less, and if rates have risen dramatically over that period (whatever it is) there's a serious problem for any borrower who depends on the original fixed rate to meet the repayments.
The government's setting off a time bomb here with its interventionist policies, and it could well prove disastrous for everyone. They never learn from history - even recent history.
Interestin R4 programme in the week, contrasting static house prices in York with fast-rising prices in areas of London (Leytonstone and Walthamstow) that until recently few people would have wanted to move to.0 -
And that's precisely why I said 'at the end of your fix'. The vast majority of FRMs are for 5 years or less, and if rates have risen dramatically over that period (whatever it is) there's a serious problem for any borrower who depends on the original fixed rate to meet the repayments.
The government's setting off a time bomb here with its interventionist policies, and it could well prove disastrous for everyone. They never learn from history - even recent history.
Interestin R4 programme in the week, contrasting static house prices in York with fast-rising prices in areas of London (Leytonstone and Walthamstow) that until recently few people would have wanted to move to.
But you can fix a mortgage rate for 25 years if you so please, so I don't see the problem.0
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