Help to buy Mortgage Guarantee scenario

Tancred

Deleted_User wrote: »

Let's say Mr Average wants to buy a 140k house. Let's say Help to buy Mortgage Guarantee offers a 4.4% mortgage rate with a 5% deposit. This then means a monthly repayment of £672 over 30 years or at a third of his wage a gross £31k salary.

Personally I don't see how mortgage rates at 4.4% are really that great. Not unless Mr Average earns more than average or wants a house cheaper than average.

Where I live Mr Average would struggle to buy a 2 bedroom flat with £140k, let alone a house.

Tancred

Deleted_User wrote: »

Hmmm - that's a shame. Maybe Mr Average fancied a semi-detached rather than a bog standard Terrace.

Then he needs to find Miss Average and use his average charm to start an average relationship with her.

Tancred

Loughton_Monkey wrote: »

It's not a 'shame'. More a reality that has always applied, and presumably always will.

This rather silly analysis of an average salary person buying an average house is totally fallacious. Look at 100 people who leave school/university, and start earning. Apart from abrupt life-changing circumstances [irrelevant to the main argument] you will find that 'real' wages increase over time.

Someone in a 'job' [rather than career] will tend to get promotions, salary grade increments, move to higher paid company when jobs are available..... But this sort of person tends not to be a house buyer anyway.

Someone in a career will tend to get to national average wage more quickly, and then move beyond that, at which point they trade up to (at least) an average house, and often beyond.

I consider my own career progression as 'OK' for a graduate, but not necessarily 'sparkling'. Even so, my salary at retirement was 100+ times my starting salary [helped by 20%+ inflation throughout the 70's], all of which meant it was quite easy to end up in a house 5 or 6 times more expensive than 'average'.

Ask yourself what an 'average' car costs, if such things exist. Probably you're talking of a 2-year-old car worth, say, £25K. How many first time car buyers do you know who buy such a car as their first purchase?

You are assuming that such a person will continuously trade-up as he earns more money and end up at retirement with a 4-5 bedroom detached in the most genteel part of town. It doesn't necessarily end up that way, and nowadays there is more uncertainty than ever in the job market, so salaries can go down as well as up.

wotsthat

Graham_Devon wrote: »

If you had quoted me exactly you wouldn't have told me I stated that the typical rate of a HTB mortgage. As I didn't.

I've not been caught lying. I've lied about nothing, just said "same sort of rates", which is true. You are just gettin increasinly hot under the collar as you find it more and more difficult to twist what I have said.

I've walked you through it and you're still lying.

You might be befuddled - don't assume I am.

Loughton_Monkey

Tancred wrote: »

You are assuming that such a person will continuously trade-up as he earns more money and end up at retirement with a 4-5 bedroom detached in the most genteel part of town. It doesn't necessarily end up that way, and nowadays there is more uncertainty than ever in the job market, so salaries can go down as well as up.

I'm only assuming it as a posibility, which (in my experience) a lot of people do. Of course it doesn't necessarily happen. All a matter of personal choice.

With many of my era, it was recognised that an early purchase of a small/tatty house was extremely cost effective on its own (cf rent) and gave one leverage with house price inflation - thus ensuring that an 'average' house is far more achievable earlier than the alternative of saving more and waiting.

Still works today. But it has never been 'compulsory'. In fact probably works better today. Anyone who has £10K in savings stands to get £200 growth a year. Bung it in as a deposit on the £100K house, and you're looking of up to £5K growth compounded on average.

The 3 million unemployed at one time would disagree with "more uncertainty than ever" although I admit it's not currently 'good'.

The thing with my generation was, I suppose, that however bad things were, we got on with it knowing that the cyclical nature of the economic world changes all the time. The next 40 years may well average out as 'better' than the last 40 years. I don't know.

Personally I have no axe to grind. I watch the younger generations close to me and notice a far more pessimistic and 'uneconomic' behaviour they exhibit, despite much larger beds of 'cotton wool' the state now provides, and shrug my shoulders. I will always pass on experience and encouragement, but they will ultimately stew in their own juice. Good or bad.