Income vs Inheritance

Mrs_pbradley936

The money supply does have an impact on the market. In my lifetime I have seen women not being able to have her contributions considered. Plus back in the day banks did not give mortgages. The only way to get a mortgage was to save for at least 3 years with a Building Society. They would only ever lend for house purchase and never, ever let you rearrange for anything other than moving. As a result housing was for living in - nobody "invested" in housing and so prices were stable.

Of course that was before Right to Buy so we had stable house prices and lots of Social renting. Now we have "freedom" and look at what that has cost us all!

MPD

MacMickster wrote: »

Although grandchildren do often receive some of the overall inheritance, perhaps we now need a shift in the way that we view the idea of inheritance, so that grandchildren receive the bulk of most estates rather than the children.

Which generation gets to skip their inheritance for the greater good?

cells

mwpt wrote: »

It wouldn't be a small one time increase. There is no fundamental "right" price for property that we will magically reach if we give everyone 100% mortgages on IO mortgages at 0% rates. The price of the asset is infinite in that case and your solution will result in us chasing this infinite price.

What do you think about the back tracking of mortgage rationing for the old?

mwpt

cells wrote: »

What do you think about the back tracking of mortgage rationing for the old?

Why do you not address my point?

cells

mwpt wrote: »

Why do you not address my point?

I dont think your idea of prices ever increasing if IO/100%LTV/Self Cert were to return is plausible.

There are plenty of places in England where local house prices are well below what local wages and 4.5x lending limits would allow. So the idea that house prices are set by lending is silly.

now your go

mwpt

cells wrote: »

I dont think your idea of prices ever increasing if IO/100%LTV/Self Cert were to return is plausible.

There are plenty of places in England where local house prices are well below what local wages and 4.5x lending limits would allow. So the idea that house prices are set by lending is silly.

now your go

If Mortgage rates were at base rate level (0.5%), banks offered 100% deals on IO loan, then I could add a zero to my house price and it would make sense for someone to buy it off me rather than rent it.

That would be rather awesome, for me, I'd sell up and retire in the South of France.

cells

mwpt wrote: »

If Mortgage rates were at base rate level (0.5%), banks offered 100% deals on IO loan, then I could add a zero to my house price and it would make sense for someone to buy it off me rather than rent it.

That would be rather awesome, for me, I'd sell up and retire in the South of France.

no one is going to lend at 0.5% there are costs and overheads and risk premium.

For a 100% down mortgage, were they available, I think you would be looking at 4%

Also the bank asks for a repayment method. I would suggest that IO for 30 years need not return but a hybrid would do just as well. So a mortgage where say the first 5 years is interest only and the next 20-30 years is repayment.

Also I dont think the Interest only element is the most important, I think self cert is then LTV then IO.

westernpromise

Mrs_pbradley936 wrote: »

The money supply does have an impact on the market. In my lifetime I have seen women not being able to have her contributions considered. Plus back in the day banks did not give mortgages. The only way to get a mortgage was to save for at least 3 years with a Building Society. They would only ever lend for house purchase and never, ever let you rearrange for anything other than moving. As a result housing was for living in - nobody "invested" in housing and so prices were stable.

Until 1988 women's earnings were taxed at their husbands' marginal rate and they had no personal allowance; instead their husband had a bigger one. If my mother had had a job in the 1970s she'd have paid 86% tax on every penny it paid, which is £5 out of every £6 earned, and she'd have spent the other £1 getting to and from work and clothing herself for work. So she didn't work. Who works for free?

The net result was that when you applied for a mortgage they lent based on 3.5x the main salary or 2.5 plus 1x the second salary. This was because the second salary was more heavily taxed and thus counted for less as a source of income from which to meet mortgage repayments.

Another fun factoid is that is in 1962, when my parents paid £8,500 for a 3-bed semi in Ruislip, the annual salary of a senior police constable was £570. So that house was 15x a copper's earnings. Today it's worth £600k and a copper earns £37k after seven years. Spot the difference.

westernpromise

cells wrote: »

no one is going to lend at 0.5% there are costs and overheads and risk premium.

For a 100% down mortgage, were they available, I think you would be looking at 4%

Also the bank asks for a repayment method. I would suggest that IO for 30 years need not return but a hybrid would do just as well. So a mortgage where say the first 5 years is interest only and the next 20-30 years is repayment.

Also I dont think the Interest only element is the most important, I think self cert is then LTV then IO.

Clydesdale are lending to me at 0.79%. Although a/ that wasn't the original idea and b/ it's at < 30% LTV.

mwpt

cells wrote: »

no one is going to lend at 0.5% there are costs and overheads and risk premium.

For a 100% down mortgage, were they available, I think you would be looking at 4%

Also the bank asks for a repayment method. I would suggest that IO for 30 years need not return but a hybrid would do just as well. So a mortgage where say the first 5 years is interest only and the next 20-30 years is repayment.

Also I dont think the Interest only element is the most important, I think self cert is then LTV then IO.

You seem to have decided that the current lending levels, though easier and more generous than at almost any time in history, is still not enough. I point out that the problem with this view is that you can say the same thing in 10 years time when everyone is on 1% mortgage rates, IO, 95% LTV. We then need to make lending easier so the next bunch of people can afford. Your implication is that there is a correct price for a house that needs some correct level of lending (as determined by you) to afford.