Homes in the UK still very cheap/affordable

GreatApe

kinger101 wrote: »

I said terraces are typically 2 bedroom, and your data confirms this. Either way, you can't get away from the fact you've deliberately massaged your data by selecting homes too small for many of the families within your average.

Not sure which average you've used, but even with the mean, by definition half of people earn below that amount. Your calculations for affordability are simply wrong on the basis that the bank will do their calculations based on an interest rate of 6 or 7%, not 2.5. They're not interested in your spreadsheet or averages.

That was a search for only terraces. Not semis or detached. Which shows a median of 3 bedrooms and a mean of about 2.7 bedrooms. Also as clearly shown on the table the 8 cheap regions are very cheap thus the median full time working couple need not buy the median they can actually afford to buy better than the median terrace. Do keep up

As for bank regulations and criteria they need to change they have gone too far limiting perfectly good customers from buying.

GreatApe

Windofchange wrote: »

So a nurse should be able to get a £500,000 mortgage on a salary of £26,000 per year? A repayment of £2,371 per month at 3%.

Or hey, a £300,000 mortgage at £1,422 per month?

No questions asked?

Yes so long as she puts down 20% she should be able to get a repayment mortgage for £300k or £500k or even a million pounds.

With 20% down the lending is risk free to the banks and to the government. The mortgage criteria should simply be ticking a box that says you are happy to take the mortgage and are confident you can service the mortgage.

The nurse is an adult and should be free to do this. She may rent out the spare rooms to make it work she may get married later and the two incomes make it work.

100% competitive prime repayment mortgages should also be offered but in that case it should be limited to 4x income and verified employment and earnings.

Windofchange

So if our nurse has a £200,000 deposit she should be able to borrow £800,000 meaning that she will default immediately on her first repayment of 6k or whatever it is?

The bank then needs to start the repossession process, presumably instruct lawyers, pay court costs, lose all the interest payments on their 800k. This drags out what, 9 - 12 months, I dunno, never been through it. Nurse in the meantime trashes the place or (heaven forbid) property in the area stalls / declines / interest rates rise.

Your repayment vehicle is based on the fact that she might get married later in life or rent out a room or two. I'm lost for words. You have basically described pretty much what happened before the 2008 financial crisis - lending vast sums of money to people who had no hope of paying it back. Banks being instructed to give out loans that they knew were dodgy. Did you mention you worked in finance?

kinger101

GreatApe wrote: »

Do keep up

Don't be condescending. The forum has rules.

Rich2808

It's always nice to see middle aged and older property owners who bought their homes for a few thousand pounds telling today's youngsters that house prices today are cheap. If they were home ownership rates would be rising not falling.

And of course the places where prices are cheap are cheap for a reason - they don't have many well paid jobs.

ukcarper

GreatApe wrote: »

Yes so long as she puts down 20% she should be able to get a repayment mortgage for £300k or £500k or even a million pounds.

With 20% down the lending is risk free to the banks and to the government. The mortgage criteria should simply be ticking a box that says you are happy to take the mortgage and are confident you can service the mortgage.

The nurse is an adult and should be free to do this. She may rent out the spare rooms to make it work she may get married later and the two incomes make it work.

100% competitive prime repayment mortgages should also be offered but in that case it should be limited to 4x income and verified employment and earnings.

What would you consider a reasonable amount of money left over after paying mortgage. Considering earnings are rising very slowly at the moment and it is possible that interests could rise. Also what is a reasonable amount for someone on median earnings to save for a deposit.

ukcarper

Rich2808 wrote: »

It's always nice to see middle aged and older property owners who bought their homes for a few thousand pounds telling today's youngsters that house prices today are cheap. If they were home ownership rates would be rising not falling.

And of course the places where prices are cheap are cheap for a reason - they don't have many well paid jobs.

I think you will find its only a couple of people are saying property is cheap everywhere. Where I am in the south east prices are about 50% higher in relation to earnings that they were when I bought in the 70s. But you can borrow quite a bit more in relation to your earnings now especially if you are a couple.

economic

ukcarper wrote: »

I think you will find its only a couple of people are saying property is cheap everywhere. Where I am in the south east prices are about 50% higher in relation to earnings that they were when I bought in the 70s. But you can borrow quite a bit more in relation to your earnings now especially if you are a couple.

i dont think anyone said SE/london was cheap. its affordable. low rates will correlate with low wage growth. affordable can be higher if banks lend on higher multiples given the new low rate macro enrinvonment which is set to stay for a long time.

ukcarper

economic wrote: »

i dont think anyone said SE/london was cheap. its affordable. low rates will correlate with low wage growth. affordable can be higher if banks lend on higher multiples given the new low rate macro enrinvonment which is set to stay for a long time.

Near me a half decent 2 bed terrace would cost £325k this a the bottom of the range not median. A couple both earning full time male earnings would be on about £60k there could borrow £240k. No matter what cells says about present morgage rules that is where we are so that couple would need to save almost £100k when you take into account legal fees.

economic

ukcarper wrote: »

Near me a half decent 2 bed terrace would cost £325k this a the bottom of the range not median. A couple both earning full time male earnings would be on about £60k there could borrow £240k. No matter what cells says about present morgage rules that is where we are so that couple would need to save almost £100k when you take into account legal fees.

yeh so thats possible after 10 years saving. is 60k combined the median?

i even think median wages dont matter. its all about marginal buyer. i do agree things are not fair but by no means is this a bubble. inequality has gone up. i worked in banking nearly 10yrs average income gross 100k. i own an average 2 bed flat in a nice area. i could afford more but i choose not to. dont need the space.