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Worrying omens for the housing market
Comments
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Graham_Devon wrote: »Key difference then was that many had taken loans at 3x wages, approximately.
That has changed now, with 5/6 x wages not uncommon, especially pre-2007 mortgages. Makes smaller interest rate rises harder to cope with than in the time you talk of.
3x wages is still common today. Some do stretch themselves though.0 -
3x wages is still common today. Some do stretch themselves though.
Is that joint at 3X. Issue is just twice as bad.
How many FTBs do it on 3X single income?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
This looks quite worrying
http://www.greenbaypressgazette.com/article/20131224/GPG03/312240293/Mortgage-applications-tumble-13-year-low?nclick_check=1The number of Americans applying for mortgages has fallen 63 percent since a May peak, reflecting a cooling housing market and higher borrowing rates.The Mortgage Bankers Association says applications fell a seasonally adjusted 6.3 percent last week from a week earlier. Applications are now at a 13-year low.
The drop-off follows a 1 percentage point increase in mortgage rates from historic lows last spring. The average for a 30-year mortgage is 4.47 percent, according to mortgage buyer Freddie Mac.
looks like the property market in the US can't take much ..
I am not sure how much this result would be mirrored over here ..Only one way to find out really.0 -
Graham_Devon wrote: »Key difference then was that many had taken loans at 3x wages, approximately.
That has changed now, with 5/6 x wages not uncommon, especially pre-2007 mortgages. Makes smaller interest rate rises harder to cope with than in the time you talk of.
My 1976 4.1X and my 1979 3.5X must have been an illusion....0 -
Loughton_Monkey wrote: »My 1976 4.1X and my 1979 3.5X must have been an illusion....
Were you ever average?:D"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
grizzly1911 wrote: »Is that joint at 3X. Issue is just twice as bad.
How many FTBs do it on 3X single income?
Joint. There is absolutely nothing wrong with that. It is a very common scenario, especially FTB.0 -
When will that be?
When the government decide that the depreciation in the pound due to having very low interest rates has gone far enough. As soon as they shut off quantitative easing. Six months ago the press were saying the Bank of England will be cutting back their QE programme. Now they say they are going to hold it (and the underlying interest rate on which many loans interest rates, especially mortgages, are based) steady.
I don't think there will be any change in the interest rate for a good couple of years. The government is running at a huge deficit, likely to grow given the way the population is increasing. How can they fund it if not by QE? At some point the government is going to have to bite the bullet and invest massively into our infrastructure - and probably need to finance it through an expansion of QE - just to be able to absorb the 400,000 a year increase in our population.0 -
Joint. There is absolutely nothing wrong with that. It is a very common scenario, especially FTB.
So is 3x single income common, especially FTB, as you alluded to?"If you act like an illiterate man, your learning will never stop... Being uneducated, you have no fear of the future.".....
"big business is parasitic, like a mosquito, whereas I prefer the lighter touch, like that of a butterfly. "A butterfly can suck honey from the flower without damaging it," "Arunachalam Muruganantham0 -
Graham_Devon wrote: »Key difference then was that many had taken loans at 3x wages, approximately.
That has changed now, with 5/6 x wages not uncommon, especially pre-2007 mortgages. Makes smaller interest rate rises harder to cope with than in the time you talk of.
As a snapshot according to the CML in June 2013 the average FTB (presumably most at risk from worrying omens) income multiple was 3.33 and they were paying <20% on repayments (12% interest/ 8% capital). So whilst 5/6 wages might not be 'uncommon' it's not common enough to drag the average to that level. Someone less charitable than me might suggest you were just making things up.
http://www.cml.org.uk/cml/media/press/3620
Also mortgage holders earn somewhat more money than they did in the '70's so wouldn't necessarily have to dip into 'essential' spending - just cut down on male grooming products and the like.
It seems highly unlikely that if the biggest financial crisis ever didn't derail UK homeowners then an improving economy and the corresponding interest rate rises are going to either.
Despite all the worrying omens of the last few years people have just kept on paying their mortgages month after month, year after year.0
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