It's not rocket science, is it?

neverdespairgirl

dhassen wrote: »

Don't have two kids though..... iv'e heard those things are expensive to run

Yes, they make Alun Sugar's car look cheap to run.

My darling son ate 8 fishfingers for lunch today. And rice, peas, and a sweetcorn cob. As he's only 3 and 2.5 stone, not sure where he puts it!

andys15

dhassen wrote: »

andys, if you can feel the pinch, what the hell do you spend your money on??? lol We're still renting at the moment but apart from noticing mortgages are getting more expensive we haven't felt any effect of the crunch (yet lol)
Don't have two kids though..... iv'e heard those things are expensive to run

Everything is getting more expensive. Ok I know I earn a good wage now(very hard times over the years). I notice the pinch now in terms of what I used to earn,and thinking how I ever managed and how others do. A couple of years ago my salary was £27000, rent, outgoings etc, 1 income 2 kids, it was a struggle, and if I was still on that income, petrol, food increases etc would have took its toll by now I believe. I also believe that a hell of a lot of people(like I used to) are paying the minimum payment on there credit cards. All well and good, but I remember VIRGIN CC upped my interest rate to 33% for no reason(never missed a payment etc). On a £4000 CC I was only paying £2 a month off the actual balance.What is going to catch out most people is the fact that transfering balances onto another CC is going to get harder and harder if not inpossible.
If £28000 is the average wage, and house prices drop by 50% to make average house £75000, we will be in a recession, and I dont know how any "average" first time buyer will be able to get on the ladder.

Woby_Tide

neverdespairgirl wrote: »

Yes, they make Alun Sugar's car look cheap to run.

My darling son ate 8 fishfingers for lunch today. And rice, peas, and a sweetcorn cob. As he's only 3 and 2.5 stone, not sure where he puts it!

....behind the radiator as you'll find out to your despair when the heating comes back on next autumn

Paul_N_4

andys15 wrote: »

This is exactly the reasons why I cant understand why people are jumping for joy in the fact that house prices may crash. Most of the people who are rubbing there hands in anticipation of a crash will still be screwed anyway...

I think you're wrong there. Yes I agree most FTBers will still be screwed for some time, but the majority of people rubbing their hands in anticipation of a crash (people on this website) I expect have larger cash reserves than you might imagine. They're well placed to take advantage of lower house prices with an eventual small mortgage requirement. Getting a mortgage, or paying a mortgage will not be a problem for most of those people I suspect.

Jorgan_2

neverdespairgirl wrote: »

Yes, they make Alun Sugar's car look cheap to run.

My darling son ate 8 fishfingers for lunch today. And rice, peas, and a sweetcorn cob. As he's only 3 and 2.5 stone, not sure where he puts it!

You wait, my 13yr old can eat more than me and is 6' tall. At least I don't have to worry about buying size 12 shoes anymore, I just borrow his.

neverdespairgirl

I don't think my borrowing Isaac's size 5s would help me much (-:

I know teenagers are supposed to bankrupt you with food bills, I didn't know toddlers did as well!

WTF?_2

andys15 wrote: »

This is exactly the reasons why I cant understand why people are jumping for joy in the fact that house prices may crash. Most of the people who are rubbing there hands in anticipation of a crash will still be screwed anyway. Mr or Mrs average first time buyer waiting to pounce, still wont be able to afford a house which has dropped by 50%. I dont know what the average price is, I believe about £170000. So say it becomes £80000. They will probably need say £8000 deposit, best case scenario. So a £72000 mortgage. Average salary £28000, so 2.5% the wage . If they get a decent rate of 6% its all looking super. Now factor in all your statements and the average man is screwed.

I disagree. Anyone who has been prudent enough to save a decent deposit (at least 10%) should have no problems getting a mortgage for a sensibly priced purchase. ie. Within 3.5x of their salary or 2.5x joint salary for a couple. They no longer face having to take on a crazy multiple of their salary that's going to make them virtual debt slaves.

Furthermore, even if mortgages are expensive now (they're not really, more like average cost) there is the prospect of lower rates in the future, at which point the buyer can refinance.

Paying less and therefore borrowing less is always a better strategy when the period of repayment (typically 20-25 years) will see wildly varying rates.

My take home pay is £82000, I have just bought a house which is 2.7 times my salary. Where I work we all earn roughly the same, and we are all noticing the pinch. I dont live an extravagent lifestlye, dont have the expensive sky package, fancy car(7yr old), loads of holidays. I have 2 kids and live in an average 3 bed detached. I remember being on just below the average wage, and we lived just the same as I do now(but more credit cards, which were all maxed out). I really dont know how people on the average wage survive in this day and age. And I really dont think a drop in house prices of 50% will help them out. The gits who it will help out is people who have pushed up the prices over the years and got out recently.

The people who really face being wiped out are those who unwisely took on more debt than they could safely handle. This debt is getting more expensive to service, harder to extend and essential living costs are rising rapidly.

It's sad for the people who bought into the housing hype and didn't do too much thinking before signing the monster mortgage but they are adults and as such really are expected to do their sums before taking on the biggest financial of their lifetime.

IveSeenTheLight

Generali wrote: »

It's an interesting bit of analysis but I think that comparing disposable income to repayment mortgage outgoings would be more interesting.

I don't have the info you want, but could theoretically increase the percentage of mortgage payment to Income by 30% to account for taxes, NI, pensions etc to get a rough estimate, but where do you draw the line.

IveSeenTheLight wrote:

Mortgage Affordability (UK Average) (Mortgage repayments as a percentage of income)
MAX = 36.67% (Q3 90)
MIN = 12.97% (Q2 02)
AVG = 19.59%
Current = 24.73% (Q1 08)

Multiplying these by the 30% I roughly picked out of my head given the approximate NI, income, pensions etc deducted from wageslip would result in: -
Mortgage Affordability (UK Average) (Mortgage repayments as a percentage of income)
MAX = 47.671% (Q3 90)
MIN = 16.86% (Q2 02)
AVG = 25.47%
Current = 32.15% (Q1 08)

I do wonder with interest what peoples perceptions of affordability is.
Is it paying for rent / mortgage, food, bills etc or is it not being able to eat out, go to cinema, buy new cars, go on holiday abroad etc.

I read an interesting thread relating back to life in the 70's where people made their own clothes, hardly ate out, only went on holiday to caravans / camping 50 miles from home etc if they were lucky and compared to life now.

It seems our perception of affordability has vastly changed over the decades
Is an average cost of 32.15% of net income so unnaffordable?

IveSeenTheLight

neverdespairgirl wrote: »

Yes, they make Alun Sugar's car look cheap to run.

My darling son ate 8 fishfingers for lunch today. And rice, peas, and a sweetcorn cob. As he's only 3 and 2.5 stone, not sure where he puts it!

Bit drastic, but maybe you need to chop off his hollow legs

IveSeenTheLight

!!!!!!? wrote: »

Furthermore, even if mortgages are expensive now (they're not really, more like average cost) there is the prospect of lower rates in the future, at which point the buyer can refinance.

If you believe that mortgages are now only average, then there is the prospect they can go above that average as well as below