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Debate House Prices
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The Trouble With Gen Y
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Just to add, my first house was 60k, and I was earning 12k.
Mortgage payments (25 year repayment at 15%) would have been around £768 a month.
That same £768 a month at today's 5% rates, would fund a 130k mortgage. But of course, salaries are now higher. Let's say that they've doubled. So the equivalent salary today would fund a 260k mortgage.
So, whilst I realise that house prices have soared, I'm not convinced that things are as black and white as people make out.
Edited to add a final point. I've just checked the area where I bought my first house (in Bedford). Prices for similar property seem to be around £160-180k. So I make houses much more affordable than they were back in 1989 when interest rates are taken into account.
For many people, the trouble is the second step on the ladder. Back in the days when mortgage rates were 15%, that £768 a month would have been very painful to start with, but got easier to pay as time went by and inflation increased salaries. So when people had kids, for example, and needed more space, they had a nice bit of equity, and loan that they could comfortably pay with plenty of margin to take on a bigger mortgage and a larger house. For today's buyers, if your first house is a bit of a stretch, it'll likely stay a bit of a stretch for much longer, and upsizing to a significantly bigger house after 5 years or so isn't very viable.Do you know anyone who's bereaved? Point them to https://www.AtaLoss.org which does for bereavement support what MSE does for financial services, providing links to support organisations relevant to the circumstances of the loss & the local area. (Link permitted by forum team)
Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
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For many people, the trouble is the second step on the ladder. Back in the days when mortgage rates were 15%, that £768 a month would have been very painful to start with, but got easier to pay as time went by and inflation increased salaries. So when people had kids, for example, and needed more space, they had a nice bit of equity, and loan that they could comfortably pay with plenty of margin to take on a bigger mortgage and a larger house. For today's buyers, if your first house is a bit of a stretch, it'll likely stay a bit of a stretch for much longer, and upsizing to a significantly bigger house after 5 years or so isn't very viable.
I think there is some truth in that not so much because it was easier to move but that your mortgage did become a smaller percentage of your income, but it did bring problems as wages lagged inflation and sometimes did not keep up.0 -
I was earning 12k.
Mortgage payments (25 year repayment at 15%) would have been around £768 a month.
In 1989 the married tax allowance was £4,375 and the basic rate was 25%. That would leave at best £10,093.75 after tax. Twelve payments of £768 comes to £9,216. That's a whopping 91.3% of take home on a mortgage, leaving only £877.75 for the year to live off.If you think of it as 'us' verses 'them', then it's probably your side that are the villains.0 -
Yes, that's right.In 1989 the married tax allowance was £4,375 and the basic rate was 25%. That would leave at best £10,093.75 after tax. Twelve payments of £768 comes to £9,216. That's a whopping 91.3% of take home on a mortgage, leaving only £877.75 for the year to live off.
All my takehome went on the mortgage, and we lived on my wife's income. I seem to remember she was on 7 or 8k.
Finances were very tight. Hence me getting into the habit of making sandwiches for lunch, which I still do to today.
The younger people I work with seem to want to buy a house but not give up their lifestyle. They think that the rest of us lived in some golden era. It was not the case!
I remember us being very worried when my wife's union called a strike. If she'd been docked a day's pay we'd have really struggled that month.
We had only a 12" black and white TV, an old rusty car, I cycled to work, etc. We saved for a year to buy a video recorder.0 -
So, the learning from this thread is that previous generations leveraged themselves massively, taking on huge mortgages whilst denying themselves a decent quality of life for years. Sounds great.
My wife and I have a mortgage, it's 2 x annual earnings. A decent life and a nice house isn't mutually exclusive. It just takes some work.0 -
And I bet it was the same for those that turned 18 in 1970.
Turn on, tune in and drop out is hardly encouraging people to save for the future!
when I was 18, I thought I'd live forever, have lots of money and didn't even think about where i'd live - always assumed things 'happend' ...0 -
Yes, that's right ... we lived on my wife's income.
Ahh ... two incomes. Accidentally not mentioning that must have inadvertently exaggerated your description of just how tough things were.If you think of it as 'us' verses 'them', then it's probably your side that are the villains.0 -
Yes, that's right.
All my takehome went on the mortgage, and we lived on my wife's income. I seem to remember she was on 7 or 8k.
Finances were very tight. Hence me getting into the habit of making sandwiches for lunch, which I still do to today.
The younger people I work with seem to want to buy a house but not give up their lifestyle. They think that the rest of us lived in some golden era. It was not the case!
I remember us being very worried when my wife's union called a strike. If she'd been docked a day's pay we'd have really struggled that month.
We had only a 12" black and white TV, an old rusty car, I cycled to work, etc. We saved for a year to buy a video recorder.
Wait.. The bank lent you money with you having to spend such a massive amount of your household income to be able to keep up repayments? Wasn't this in the days of needing an interview to get a mortgage?
No wonder we've had rampant house price inflation
And you blew a years savings on a VCR? I've got to call shenanigans on this tale of woe0 -
ringo_24601 wrote: »Wait.. The bank lent you money with you having to spend such a massive amount of your household income to be able to keep up repayments? Wasn't this in the days of needing an interview to get a mortgage?
No wonder we've had rampant house price inflation
And you blew a years savings on a VCR? I've got to call shenanigans on this tale of woe
1989 was well after the time you needed a interview to get a mortgage and it didn't help much with rampant HPI as prices crashed after 1989.0 -
ringo_24601 wrote: »And you blew a years savings on a VCR? I've got to call shenanigans on this tale of woe
b&w tv in 1989 ? then buying a VCR ? Hmmm0
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