The 3.5 x Salary ideal - ever realistic again?

brit1234

EdInvestor wrote: »

This would be during the time of double digit interest rates though so not really relevant.

True that interest rates have been on average just about double digits for the last 40 years. However interest rates average about 9-10%. Below is a link to the BOE figures. They also show there were a lot of periods through out this time where interest rates were below 10%.

http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp?Travel=NIxIRx

You have to remember this period of low interest rates we live in was only a short term reality fueled by inflation busting goods from the east and as a result to prevent financial melt downs/ recessions after 9/11 and dot com bubble.

Now that places such as China are exporting inflation and commodities are being ever increasingly fought over interest rates will return to normal.

Hence 3.5 times mortgages being best practice in the current market. The banks seem to have also realised that this is the best and safest way for them to lend again.

The days of cheap credit are gone.

WTF?_2

EdInvestor wrote: »

This would be during the time of double digit interest rates though so not really relevant.

No, that's traditional long term guidelines for borrowing, not just during 'double digit interest rates'.

Interest rates are currently at a very low level - too low, given inflationary pressures. Assuming that it's OK to give out more money because the rates are momentarily low is stupid and shortsighted.

Houses were only bid up to their current, ridiculous, levels because lenders were giving out such massive loans (huge salary multiples, little or no deposit needed) with no regard to risk.

We've seen how that ended - near collapse of the financial system and almost certainly a nasty recession on the way.

lostinrates

pollyanna24 wrote: »

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I don't know. I still think it's unreasonable of people to expect to get the house they end up in (I'm thinking a decent 3 bed house here, not a mansion - maybe my expectations are too low) for x3.5 one salary.

But arent we talking about a FTB house? Anyway, the situation is that FTbs have often been waiting for so long to buy a house they are needing a 2/3 bed home now because despite being FTBs they are married and with kids/kids on the way.

[QUOTE}

If people saved up a decent deposit in the first place, they may be better off. We had £30K before we bought our house.

Where we live, houses are expensive. They are a lot cheaper in most other parts of the country, so people don't need to earn £60K to get a house.[/QUOTE]

I agree about saving for a deposit.DH and I have saved more than twice that in sterling and have a bit more than that in Euros. It wouldn't be enough for a forever house, its a good deposit for something better than a starter home esigned for people who are childess/petless. London prices it isn't enough. Living in home counties its kind of enough but not for a house we'd staying for 10 years (wary o buying short term with crunch). Add to that increased prices for commuting, whether public transport or car in London its more than it would be, for example, living on outskirts of Bristol and commuting in. The hours that profssionals work is often wildly unpredicatable: DH finished work later than the last tube EVERY NIGHT this week. Makes where we live even more of a consideration really: how far can you travel and still get time to sleep enough to be at work next morning.


Legal secrataries oten are clever dicks Dhs is a genius:A -but she could take her skills to any law firm and part of UK, DH can only really work in London. Eventally this will pay off and his one salary will be excellent, I appreciate that, but until then we have to live too. (NB our personal situation is a bit skewed because just as DHs work keeps him in London my work, if I were to return to it, would keep me out of London.)

I think our views our all so coloured by our particular hurdles in life that it can be very hard to appreciate in a discussion like this the dificulties which efect housing choice that don't face us ourselves. I find it valuable to start to appreciate others' requirements.

silvercar

When we first bought (1986) we got a 2 bed flat with 90% mortgage at 2.7 x our joint salaries. Then we were both new graduates with good job propsects in trainee roles. Those same flats are now available at roughly 2.5 x average south-east graduate starter salaries. So yes there has been major house price inflation but there has also been major salary inflation.

And spookily near to the posters in south herts.

PasturesNew

lostinrates wrote: »

Legal secrataries oten are clever dicks Dhs is a genius:A -but she could take her skills to any law firm and part of UK

When I left secretarial college in 1978, legal secretaries were being paid £2,600/year. Even now most salaries where I am now aren't much more than £14k for this job.

Hardly enough to get a mortgage.

I can do shorthand at 180wpm and type in excess of 105wpm. Yet if I were to look for any form of secretarial job these days the pay is appalling. And even temping it's only £6/hour.

In fact, if I do a random search for just the word 'secretary' on reed.co.uk within a 10 mile radius of where I am, the top pay is £18-21k ... and you'd be beating the competition off with a stick as there are only three jobs that pay that high for that job.

The whole role of Secretary/PA was de-skilled by placing PCs on everybody's desk and telling them they can type their own letters now as the PC has Word on it.

I moved into IT in 1986, but I've still got my skills/speeds and get to use them in every job I am in anyway.

When I moved recently, to fill in some time, I signed onto a couple of well-known (UK wide) agencies and was speed tested and they said I had broken every speed record their office had ever seen... then said "It's £6/hour round these parts". This was from a company I know is a household name in UK temping.

I used to get £6.60 for this type of work back in 1990/1991.

[Deleted User]

PasturesNew wrote: »

The whole role of Secretary/PA was de-skilled by placing PCs on everybody's desk and telling them they can type their own letters now as the PC has Word on it.

Last year I helped install a system in a hospital where all the radiology notes were automatically written up (rather than dictated onto tap then typed up)... I believe 4 people were moved into new jobs because their role was now redundant.

What's worse is that the work I'm doing at the moment may make members of my own team pointless by automating their jobs.

I've set myself a goal of earning £45k by the time i'm 30 (2 years away, aggh).. I work in IT but on the technical consultancy side of it. Might have my OH take a paycut so she can get more sensible hours (She's an A&E sister and typically works 12.5hr shifts)

God knows what you do if you live in the south east and don't have a trade/uni education

lostinrates

Well.....yes I agree that the role was devalued, as is standard of spelling and grammar etc

Legal and medical secretaries are often very skilled and specialised and often have a wonderfully in deph understanding of the sphere in which they work.

My fathers ('normal') secretary in central London is paid ITRO £60,000. I don't know what Dh's legal secretary is paid.

I just did a quick search on simplylawjobs.com:
http://www.simplylawjobs.com/search_jobs/advanced_search.php?mode=search&search_keywords=legal+secretary&search_refine=exact&search_job_type=4&search_days=10000&search_salary=1&search_sectors%5B%5D=0&search_location=0300&search_submit.x=113&search_submit.y=14

Some well above average salaries (and I bet you work hard for them, I'm not devaluing them)

I'm not saying that they are overpaid in the least.

PasturesNew

Many jobs have been quietly deskilled/removed over the years.

While the media focusses on call centres, these were never OK paying jobs in the first instance.

Mechanics have been replaced by fitters who simply replace parts.
Secretaries have been replaced by anybody that can type into Word so it looks like a letter.
Designers have been replaced by people who can produce designs cheapest/have a PC and know a bit about Photoshop.

I'm sure most people here can think of similar jobs that been devalued/deskilled over the last 10-15 years and would have been paying £18-25k but are now advertised at £12-16k.

Minimum wage brought a lot of jobs up in pay (I remember seeing a job in a Jobcentre in 1998 for a Taxi Office/Radio Controller person doing the night shift at £2/hour). However jobs which previously paid a living wage have pretty much sat at the same rates, waiting for minimum wage to catch them up. And in many cases that's now happened.

So we have many more people on minimum wage these days than are generally realised.

If you don't have a degree, you can work your socks off all your life to achieve a wage of £15-16k (that's doing well in many areas, say an Office Manager or similar). Whereas those with a degree are most likely to start their working lives on that sum (or be there within 1-2 years).

This 3.5x salary is an ideal that should be strived for again .... the thing this time is that salaries of the masses are actually a LOT lower than most people realise. If you're earning £25-50k, your friends are most likely to, so you're not aware of the lower paid masses. They're everywhere, you're just not seeing them.

Burlesque_Babe

dannyboycey wrote: »

Really? Affordability is determined by your income minus your credit commitments!! Sorry, I don't believe you.

Snaggles is an underwriter - probabaly best you do believe her :rolleyes:

lostinrates

PasturesNew wrote: »

.... the thing is this time is that salaries of the masses are actually a LOT lower than most people realise. If you're earning £25-50k, your friends are most likely to, so you're not aware of the lower paid masses. They're everywhere, you're just not seeing them.

PN I agree.

After Katrina I had a discussion with a leading political adviser and sociologist who seemed GENUINELY amazed at the level of poverty in USA. He told me nobody knew. I told him I knew. He told me nohing like this existed in UK, I offered to take him and show him areas of immense poverty in UK, even in th southest. He still doesn't believe me. :mad: :rolleyes: