Halifax Figs for May -2.4%

WTF?_2

lostinrates wrote: »

I'm not trying to pick a fight, just to understand

Surely people only have had desire to borrow large amounts as that is what houses cost now: large amounts!

In the recent rapidly accelerating market where prices where rising dramatically savings for many couldn't build at the same rate as house prices were rising. -I'm not saying they necessarily should have bought, maybe those people would be better renting for life, but I can see why they didn't in that market.

Also, I'm afraid apart from very recent times I don't know about interest rates 'norms'. The saftey index I calculate for paying interest would be 12%, is that too low? I have to admit at giggling at the word histroical though, as It made me hope wages don't return to a historical £12 a week or anything like that, lol. Is it PERCENTAGES an ratios of average wages to average interests we should be looking at? (I really don't know )

Once the banks loosened up how much they would lend and who they would lend it to, it was inevitable that house prices would rise because more people could borrow more money to buy. Extra money competing for the same product = higher prices.

As prices rose, it stoked the demand for even higher lending.

Since prices were rising, the banks reckoned they could lend even more cash as after all the loan was secured against a high-valued and fast rising asset.

Repeat, until something happens to burst the bubble.


Result: Houses now cost a small fortune and prices bear no relation to the ability of people to pay for them. Such a market is never sustainable.

3.5x single salary, 2.5x joint with 10% deposit has been the traditional rule of thumb for affordability. This has been chucked out the window.

pickles110564

carolt wrote: »

Sadly, it's the denial stage....

Oh good afternoon, I thought denial meant you knew something was happening but burried your head in the sand?
As there is no crash and homes are selling for there true value what am i in denial about?

pickles110564

!!!!!!? wrote: »

3.5x single salary, 2.5x joint with 10% deposit has been the traditional rule of thumb for affordability. This has been chucked out the window.

Due you think they should head back to this level of lending?
If they did surely there will be even less people buying and more having to rent?
Win Win I think.

carolt

skap7309 wrote: »

Without wanting to wish anyone in financial difficulty any harm - that is PERFECT news for me. :j

Couldn't have said it better.

carolt

pickles110564 wrote: »

Oh good afternoon, I thought denial meant you knew something was happening but burried your head in the sand?
As there is no crash and homes are selling for there true value what am i in denial about?

Good afternoon!

Glad there is no crash. You're happy, I'm happy.

That's great.

pickles110564

carolt wrote: »

Good afternoon!

Glad there is no crash. You're happy, I'm happy.

That's great.

Back in a min got to feed my baby daughter.

lostinrates

Thank you !!!!!!?

I had also neglected to think of the joint income rather than the household income.

Edale

!!!!!!? wrote: »

Interest rates are still very low. Even the 'real' rates offered to mortgage borrowers are very competitive relative to historical norms.

It's just that people have borrowed/desire to borrow such massive amounts that makes rates look too high and leads to the squeals of pain every time they go up a fraction (or even when they stay the same). And heaven forbid that you would have to cough up some cash of your own as a deposit in order to get a house loan!

Interest rates are low but I am not so sure that mortgage costs are low when you factor in application fees, valuation fees etc etc. If you also look at buyers over the last 3-4 years who pushed themselves to the limit and are now seeing considerable increases in their mortgages, then interest rates are only one part of the story - Mortgage repayments are the key issue to many. When interest rates were higher in the 70s 80s and early 90s then at least you had the comfort of knowing your repayments would be roughly the same but your income would go up 10% per annum and inflation would erode the debt. How many people now have had pay rises of sub 2.5%? Certainly most public sector workers with some now being tied into 3 year deals.

I think we have a huge problem with a housing market which is like an oil tanker heading towards the shore at full steam. I think the question now is not if it will crash but what the government/bank of england will do to slow the tanker down before it hits.

baby_boomer

adr0ck wrote: »

one thing to bear in mind is that on average 2 people now provide the household income (both via full time jobs)

That's the banks' thinking - but how long does the average relationship today last :rotfl: compared to the average mortgage?

The % of UK households with 2 full time employees is lower than you might think. And how many of them will continue in full time employment for 25 years?

What % of households in the north of England have even 1 full time employee?

neverdespairgirl

pickles110564 wrote: »

A) when has that stopped a Labour government in the past?
they did help FTB's, all new developments have to have some affordable housing.

I always thought that was a bizarre phrase. 25% of housing to be "affordable"? That strongly implies that all the rest is massively too expensive!