The correction has been, gone, and is over

mwpt

ukcarper wrote: »

You keep ignoring the fact that in relation to earnings the amount you can borrow has not increased significantly even though rates are lower, as I said earlier FTB house price to earning ratio has almost double since 2010 people can't borrow almost double.

I'm not ignoring that fact, I just don't have the stats. I can only work with the figures we do have.

We know for sure that FTBers are paying a lot more today than they were 10 years ago. We know for sure that wages have not increased very much since then. We know that mortgage payments as a percentage of salary are not up. So what does that leave us with? What maths can make those facts above make sense?

Well, a few things actually.
- FTBers could be paying much much larger deposits.
- The average FTB today could be earning a lot more than 10 years ago
- Low rates are enabling them to borrow a lot more

I believe it is a combination of all, particularly low rates.

(Remember too, MMR does not apply to fixes of 5 years or more)

ukcarper

mwpt wrote: »

I'm not ignoring that fact, I just don't have the stats. I can only work with the figures we do have.

We know for sure that FTBers are paying a lot more today than they were 10 years ago. We know for sure that wages have not increased very much since then. We know that mortgage payments as a percentage of salary are not up. So what does that leave us with? What maths can make those facts above make sense?

Well, a few things actually.
- FTBers could be paying much much larger deposits.
- The average FTB today could be earning a lot more than 10 years ago
- Low rates are enabling them to borrow a lot more

I believe it is a combination of all, particularly low rates.

(Remember too, MMR does not apply to fixes of 5 years or more)

I'd say it's a combination of 1 and 2

mwpt

ukcarper wrote: »

I'd say it's a combination of 1 and 2

Yes, of course you do. But you can't escape maths I'm afraid.

ukcarper

mwpt wrote: »

Yes, of course you do. But you can't escape maths I'm afraid.

Your maths is not relevant what is relevant is what people are borrowing in relation to earnings in 2014 ( the las test figures I can find CM!) it was 3.44x compared to 3.29x in 2012.

I did find some figures for London published in 2015 showing ratio of 3.84x last quarter of 2014 compared to 3.86x for the previous quarter

dktreesea

ukcarper wrote: »

Not sure what point you are trying to make.

I was responding to another poster, who was saying that whenever one buys a house, they still face the same restrictions as before, being able to get a mortgage no more than a fixed multiple of their income. Whereas I think, while that is true, it doesn't mean that a would be buyer, over time, even with income that hasn't grown all that much, is not able to improve their position, vis a vis the market. E.g. by saving a bigger deposit.


Even if house prices went up 10% a year, there would still be people who can't afford to buy right now who, at some point down the line may be able to afford to buy.

ukcarper

dktreesea wrote: »

I was responding to another poster, who was saying that whenever one buys a house, they still face the same restrictions as before, being able to get a mortgage no more than a fixed multiple of their income. Whereas I think, while that is true, it doesn't mean that a would be buyer, over time, even with income that hasn't grown all that much, is not able to improve their position, vis a vis the market. E.g. by saving a bigger deposit.


Even if house prices went up 10% a year, there would still be people who can't afford to buy right now who, at some point down the line may be able to afford to buy.

I agree people's situations can and do change.

cells

mwpt wrote: »

So I'll repeat myself again, rationing compared to what. Rationing compared to 2000-2007 is not rationing in my opinion. We have a range of products right from 95% LTVs available at reasonable lending multiples, at ultra low rates.

In areas where people want to buy, they can take out larger mortgages because rates are cheap.

what about people who can only buy currently via self cert, i know one such family who have about £60k in savings and would only need a mortgage of ~£50k to buy in their area. The mortgage interest would cost only about £1k a year but instead you force them to pay £7.2k a year in rent and get £600 interest on their £60k sitting in the bank. They are £5.6k a year worse off thanks to mortgage rationing and they are a prime example of why renting has increased even in the cheap parts of the country


Can you at least admit that the removal of self cert will mean at least some people who could buy can no longer buy? You can then argue if it impacts just 1 household, 1000 households or 1 million households

cells

mwpt wrote: »

I'm not ignoring that fact, I just don't have the stats. I can only work with the figures we do have.

We know for sure that FTBers are paying a lot more today than they were 10 years ago. We know for sure that wages have not increased very much since then. We know that mortgage payments as a percentage of salary are not up. So what does that leave us with? What maths can make those facts above make sense?

Well, a few things actually.
- FTBers could be paying much much larger deposits.
- The average FTB today could be earning a lot more than 10 years ago
- Low rates are enabling them to borrow a lot more

I believe it is a combination of all, particularly low rates.

(Remember too, MMR does not apply to fixes of 5 years or more)

eeeeerrr NO

in over half the country, First time buyers are paying A LOT LESS than 10 years ago as house prices are either lower or the same in their regions and mortgage patments have gone from ~5% to ~2%

That means a FTB with a loan of £100k was paying £585 a month but would now pay £424 a month. So the FTBs were paying nearly 38% more ten years ago than they are doing today. Plus wages are up ~21% over the last 10 years

So wages up ~21% while mortgage payments down ~28% for the aprox two thirds of towns and cities where prices are the same or lower. That means real wage to mortgages are some 40% cheaper now than a decade ago in the areas where prices are the same or lower than a decade ago



EDIT:
If we take the most extreme city in the UK and look at London you find FTBs are paying 38% more in mortgage payments (or 32% more if we use your favoured 30 year mortgages) while wages are up ~18% so as of today repayment mortgages in London are ~17% (or 12% using 30 year mortgages) more expensive vs wages than they were a decade ago. This does not seem unreasonable to be 12-17% more expensive in real mortgage terms than a decade ago since there are +1 million people in London.

mwpt

cells wrote: »

what about people who can only buy currently via self cert, i know one such family who have about £60k in savings and would only need a mortgage of ~£50k to buy in their area. The mortgage interest would cost only about £1k a year but instead you force them to pay £7.2k a year in rent and get £600 interest on their £60k sitting in the bank. They are £5.6k a year worse off thanks to mortgage rationing and they are a prime example of why renting has increased even in the cheap parts of the country

I don't believe your anecdote. I also could make some stuff up to post as evidence.

Can you at least admit that the removal of self cert will mean at least some people who could buy can no longer buy? You can then argue if it impacts just 1 household, 1000 households or 1 million households

Yes, I admit that. I'd be happy to see a form of self cert come back, with a minimum of say 20% deposit, and interest rates at a 2% premium over standard issue mortgages. So, say 5% repayment mortgage.

mwpt

cells wrote: »

eeeeerrr NO

in over half the country, First time buyers are paying A LOT LESS than 10 years ago as house prices are either lower or the same in their regions and mortgage patments have gone from ~5% to ~2%

That means a FTB with a loan of £100k was paying £585 a month but would now pay £424 a month. So the FTBs were paying nearly 38% more ten years ago than they are doing today. Plus wages are up ~21% over the last 10 years

So wages up ~21% while mortgage payments down ~28% for the aprox two thirds of towns and cities where prices are the same or lower. That means real wage to mortgages are some 40% cheaper now than a decade ago in the areas where prices are the same or lower than a decade ago



EDIT:
If we take the most extreme city in the UK and look at London you find FTBs are paying 38% more in mortgage payments (or 32% more if we use your favoured 30 year mortgages) while wages are up ~18% so as of today repayment mortgages in London are ~17% (or 12% using 30 year mortgages) more expensive vs wages than they were a decade ago. This does not seem unreasonable to be 12-17% more expensive in real mortgage terms than a decade ago since there are +1 million people in London.

Please cite you stat sources so I can make an informed reply.