Mortgage term ending - capital unpaid - what will the Market do?

Rollinghills

Overall the generation who is approaching retirement has benefited so much from the house price boom. Even if they don't have the cash to repay their mortgages they have plenty of equity in their houses (on average). And unlike wealth generated from entrepreneurial activity housing wealth does not increase total wealth of the country so homeowner's wealth comes at the expense of non-homeowners, especially young people. So overall I have little sympathy. But of course it's different when you are dealing with people and their individual circumstances.

FT did a good article about this called "No country for young men - UK generation gap widens"
http://www.ft.com/cms/s/0/60d77d08-b20e-11e4-b380-00144feab7de.html

amnblog

Rollinghills wrote: »

But of course it's different when you are dealing with people and their individual circumstances.

It is all about people and their individual circumstances.

shortchanged_2

kingstreet wrote: »

I don't recall lenders ever lending higher income multiples to those taking an interest-only mortgage.

If it was 5x income, it was 5x income regardless of the repayment method. Whether the borrower used the lower payments to fund a more consumptive lifestyle and didn't think about the consequences to come later, I can't say...

Yes kingstreet, but which is more appealing a 5x IO mortgage or a 5x repayment mortgage? Hence it was a factor because how many people would have been keen to take out a 5 or 6 times repayment mortgage? Yet the monthly payments for an IO mortgage for the same amount would have looked much more appealing, which is why income multiples became so stretched.

amnblog

If you offer people jam today they will take it.


Taking the moral high ground belies a nature that is within all of us in some form.

shortchanged_2

amnblog wrote: »

If you offer people jam today they will take it.


Taking the moral high ground belies a nature that is within all of us in some form.

So did you see a surge in high income multiple IO mortgages in your time?

Rollinghills

amnblog wrote: »

It is all about people and their individual circumstances.

Yes and no. Assume I don't know any homeowners approaching retirement in this country (close to the truth as I am young and foreign). All I know is the big picture view. Am I supposed to feel empathy to the unknown masses?

On the other hand I know plenty of young people who will struggle to afford to buy their homes.

Easy to see which side I would empathise with more.

amnblog

Walk a mile in my shoes....

martinsurrey

amnblog wrote: »

If you offer people jam today they will take it.


Taking the moral high ground belies a nature that is within all of us in some form.

True they will take the jam today, but if they do so I won’t be sorry for them when they are fat tomorrow.

You seem to be ignoring personal reconcilability, asking what the market will do for these people. When really I want to know what these people will be doing for themselves. There are already plenty of options.

shortchanged_2

amnblog wrote: »

Walk a mile in my shoes....

I take it that is a cryptic yes.

Rollinghills

amnblog wrote: »

Walk a mile in my shoes....

Well, it's your job, you chose it, you get paid for it :-)
It's a credit to you that you do care, that helps make a good adviser.