BBC - House prices dip 1.1% in November

Guy_Montag

Lomion wrote: »

As soon as house prices drop by 40-50% I'm going to go buy 2 more houses

Buy to Let here I come :T

How will you afford that?

carpetbelly

Paul_N wrote: »

Correct me if I'm wrong here but doesn't affordability depend on current interest rates? Naturally your affordability will be more when rates are low, but rates do go up as well. I'm assuming the 3.5x salary multiplier was introduced so that people can afford to pay their mortages in times of both low interest rates and high interest rates.

With the average mortgage over the course of 25 years, going by what you can afford in year one of the mortagage seems pretty silly to me.

Affordability depends on various factors. Incomings/Outgoings/Interest Rates/Amount of Loan/LTV of Loan/Length of Loan (over25yrs to get onto the ladder isn't unheard of) and probably some more I cant think of at the moment

Also, it's not being what you can afford for one year, it's can you afford the payments you have to make. Most people fix for a couple of years so it's basically, can you afford the payments for the fixed. But bewarned on the SVR you will pay more so you have to be aware of this and this is pointed out.

But then banks also assume people are more financially savvy and expect people to try to refix at the end of their deals.

3.5x multiple from what I can understand was nothing more than a good assumption of what people could afford. It's only been in the last few years (decade or so) that more effective credit scoring practises have come into effect. More important data being held by credit bureaus about affordability/indebtedness. More data held by your own banks about your incoming/outgoings that allow them to make a more accurate decision that you could probably get from aonther bank but then another lender might offer you a more favourable deal to just get your business.

People wanting 3.5x salary are living in the past and aren't accepting things move on.

ruggedtoast

carpetbelly wrote: »

Nice of you to miss out my first sentence there


That knocks 100% mortgages on the head. 6 times salaries, why not? What's wrong with affordability as a measure of borrowing over salary multiples?

I never mentioned lietobuy, you have now. I'm not going to defend lietobuy. SubPrime, again, something you've just brought up and not me.

But you seem to have gone from blaming BTL to now lietobuy and subprimes. Can you not make your mind up?

Actually last time I looked Buy To Let was another mortgage product that allows people to buy houses at way above what would normally be considered.

I see that you dont accept the concept that extending vast amounts of credit to people so they can buy something that used to be cheap but is now expensive just because everyone else buying it has been extended vast amounts of credit might in some way be bad.

But, if you have to borrow 6 times your yearly salary to purchase something that in most other countries is considered a basic necessity then somethings wrong. And no its not about a lack of supply , immigration, its about people being sold a complete con by the government and a few hedge funds.

Lomion

Guy_Montag wrote:

How will you afford that?

Cash. I have the money now for 1 more @ £120k....would rather wait another year and get the 2nd though

Or I could get 50% BTL mortgages and get 4...hmmmmm.....

carpetbelly

ruggedtoast wrote: »

Actually last time I looked Buy To Let was another mortgage product that allows people to buy houses at way above what would normally be considered.

What would normally be considered? What is normal?!

ruggedtoast wrote: »

I see that you dont accept the concept that extending vast amounts of credit to people so they can buy something that used to be cheap but is now expensive just because everyone else buying it has been extended vast amounts of credit might in some way be bad.

It isn't a right to own your own home and yet people seem to think it is. Credit isn't a right. It never has been even when the houses were cheaper. Even though houses were cheaper from what I've been told it was harder to get the credit. Didnt you used to have to save regulary with a building society and if they said no, what then? Start saving regulary with another? What's fairer, the system that had cheaper houses and made it harder to get credit for people to buy the houses or the more expensive houses where people find it easier to get credit?

ruggedtoast wrote: »

But, if you have to borrow 6 times your yearly salary to purchase something that in most other countries is considered a basic necessity then somethings wrong.

I'm sorry but I had to laugh. Only this country in europe is so obsessed with purchasing your own house. Renting long term is quite acceptable on the continent. Owning your own home isn't a basic necessity.

ruggedtoast wrote: »

And no its not about a lack of supply of immigration, its about people being sold a complete con by the government and a few hedge funds.

I never mentioned immigration. But everything boils down to supply and demand at an agreed cost at the end of the day.

SquatNow

Stop That! Stop that RIGHT NOW.

This sounds suspiciously like a house price crash thread.

Now see here.... you've all been told before.... house prices only go UP.

You've all talked about house prices being dropped... so you are all going to get our MSE accounts cancelled. This thread will be deleted, then they will be forced to come around to the houses of everyone thats seen it and wipe their minds.

You must remember the 2 biggest rules of MSE.
1) Don't talk about house prices crashing.
2) DON'T TALK ABOUT HOUSE PRICES DROPPING.

House prices only go up. Anyone who says otherwise is either an escapee from an insane asylum or a nazi-communist-baby-eater.

Nothing to see here, more along now.

MODS: Please deleted this thread and block the accounts of everyone who either posted in it, seen it or thought about it.

MABLE

Guy_Montag wrote: »

How will you afford that?

The poster probably has a Vanquis credit card.

Romani_Ite_Domum

carpetbelly wrote: »

Affordability depends on various factors. Incomings/Outgoings/Interest Rates/Amount of Loan/LTV of Loan/Length of Loan (over25yrs to get onto the ladder isn't unheard of) and probably some more I cant think of at the moment

You are correct to some extent. The thing is, over the last few years the affordibilty measure has been pushed to the limit and has added to the boom.

As the financial institutions cannot come up with new ways to increase affordability, then IRs ( and inflation) now dictate affordability.

The other thing that has kept affordablity alive is credit. Many people would not be able to afford the mortgage payments if they did not rely on other forms of debt. HPI has allowed this. House price deflation will not.

geoffky

rising house prices are so yesterdays news

ruggedtoast

Ok here goes:

What would normally be considered? What is normal?!

It is not normal for a private individual to have access to geared investments. If anything in this situation they are being used as a proxy as the investment is sold off through CDO's (Collateral Debt Obligations) , with the investor and whoever has bought the securities taking the risk. This is not normal and never has been and has resulted in the credit crunch.

It isn't a right to own your own home and yet people seem to think it is. Credit isn't a right. It never has been even when the houses were cheaper

A right is a human construct that has to be negotiated, actually the UN considers the right to shelter a basic human right. There is nowhere else in the G7 where people earning an average wage for their country are unable to obtain suitable long term shelter to have a family. For a variety of reasons which is all too painfully obvious for anyone who has to use private landlords in the UK, especially the BTL idiots you seem to love so much, renting in the UK is not an acceptable substitute to buying a family home to live in long term.

What's fairer, the system that had cheaper houses and made it harder to get credit for people to buy the houses or the more expensive houses where people find it easier to get credit?

You dont seem to understand how the current situation has arisen. Its nothing to do with being fair. Its about an essential commodity being inflated out of peoples reach by speculative investors funded through credit with no adequate state sponsored alternative. House prices are over valued BECAUSE of cheap credit. Cheap credit does not exist in response to house prices.

I'm sorry but I had to laugh. Only this country in europe is so obsessed with purchasing your own house. Renting long term is quite acceptable on the continent. Owning your own home isn't a basic necessity.

I dont wish to be rude but I have to laugh as well. You seem to have based your entire economic and social theory on a GCSE General Studies textbook. Renting long term IS quite acceptable on the continent because renting there is a totally different proposition. i.e. European tenants have rights that are unimaginable to someone on an AST in Britain, where we see renting as something which exists entirely to make money for landlords, and the tenant as an inconvenience.

I never mentioned immigration. But everything boils down to supply and demand at an agreed cost at the end of the day.

Straight from that good old general studies text book again isnt it? Prices are fixed by demand intersected with the ability to pay. This is a totally different paradigm to the commonly held assumption of supply and demand, and unfortunately, one that Mortgage lenders and G. Brown understand only too well.