Houses are affordable!

ukcarper

lincroft1710 wrote: »

But in the 1970s we also had income tax relief on mortgages.

Yes that bought that 15% almost down to 10% as income tax was 30%. But it’s irrelevant as although you can borrow more now it’s not that much more.

Balabalabala_and_Volare

Cakeguts wrote: »

Because owner occupiers are not getting their housing subsidised by someone else.

That's an interesting argument to put forward so soon after the latest subsidy for owner/occs was announced in the budget.

lincroft1710

ukcarper wrote: »

Yes that bought that 15% almost down to 10% as income tax was 30%. But it’s irrelevant as although you can borrow more now it’s not that much more.

You say interest rates were 15%, but in 1976 BOE rates varied between 9% and 15% and in 1977 between 5% and 14%.

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

I made the point about tax relief to illustrate that even with high interest rates there was some help from the government towards those trying to buy a house.

ukcarper

lincroft1710 wrote: »

You say interest rates were 15%, but in 1976 BOE rates varied between 9% and 15% and in 1977 between 5% and 14%.

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

I made the point about tax relief to illustrate that even with high interest rates there was some help from the government towards those trying to buy a house.

I didn’t just responding to other post, mortgage rates are normally higher than Bank of England rates.

Another consideration is that Earnings have increased faster than RPI since 1972 meaning your wages buy a lot more, that is why these comparisons are fairly meaning less.

Thrugelmir

ukcarper wrote: »

Another consideration is that Earnings have increased faster than RPI since 1972 meaning your wages buy a lot more, that is why these comparisons are fairly meaning less.

Since 1972 isn't much help to someone born in the 90's. Nor people working in the public sector. There's a squeeze for many.

ukcarper

Thrugelmir wrote: »

Since 1972 isn't much help to someone born in the 90's. Nor people working in the public sector. There's a squeeze for many.

Not sure what point you are trying to make, things have gone backwards over the last few years and many workers have been effected by that not just those born in the 90s. But it doesn’t alter the fact that trying to compare 1970s to now is meaningless unless you take everything into consideration.

rtho782

Base rates might have been higher back in the 1970s, but mortgage rates were not so far away from them.

E.g. we took out a 95% mortgage in May 2016, base rate was 0.5%, our 2 year fix was 4.09%.

These 1% deals are reserved for baby boomers with tiny LTVs, or those with big inheritances.

Given that with Mortgage Interest Tax Relief, the effective mortgage rate in the 70s was more like 10%, that's "only" 2.5x

Thrugelmir

ukcarper wrote: »

Not sure what point you are trying to make, things have gone backwards over the last few years

Just seeking clarification of your statement. How many years is a few?

ukcarper

Thrugelmir wrote: »

Just seeking clarification of your statement. How many years is a few?

Looking at ONS real earnings are back to 2005 levels, but I would think for people in public sector effected by freeze it’s worse than that.

Cakeguts

rtho782 wrote: »

Base rates might have been higher back in the 1970s, but mortgage rates were not so far away from them.

E.g. we took out a 95% mortgage in May 2016, base rate was 0.5%, our 2 year fix was 4.09%.

These 1% deals are reserved for baby boomers with tiny LTVs, or those with big inheritances.

Given that with Mortgage Interest Tax Relief, the effective mortgage rate in the 70s was more like 10%, that's "only" 2.5x

I don't think you have got that right because most baby boomers are now retired. So the people you are talking about are younger than that. You are probably talking about people now in their 40s. They are too young to be baby boomers. They would be born in the 70s so buying in the 90s.