Three Times Your Income

[South Lorne]

.....if a person's monthly expenditure is 105% of income before the mortgage what is the point....?.....

[dubsie]

Average house price will be £90,000 by the end of the summer....First time buyer house £60,000 and one person starter flat £45,000.

[dances with sheeple]

not a chance in hell of this happening. would be amazing if it did but the Govt. owned banks are not going to allow their balance sheet implode (even further) by insisting on 3x mortgages. not when they can just print money until there is enough to hand out like confetti.

but they are stuck between a stalled housing market with no loans being made and the possibility that many will default on their loan if they can`t sell? They might be gambling that many will keep paying back even in NE because the threat of renting or going into social housing is just too scary, and that many will default anyway due to unemployment, so getting the market going again at lower multiples is the lesser of two evils?

[dances with sheeple]

Average house price will be £90,000 by the end of the summer....First time buyer house £60,000 and one person starter flat £45,000.

And that is the way it should be, bring it on!

[dubsie]

And that is the way it should be, bring it on!

It's a pitty Brown didn't do this 10 years ago. The amount of misery this crash will cause will be enormous.

[Mikhail Liebenstein]

Maybe they are going for getting the crash over as quick as possible ? I don't think so but you never know. 18 months to an election. They have realised this is not going to be over unless they force it through ? Get multiples down, get prices down. Fastest, swiftest crash in history. Things getting better by the time of the election ?

I don't believe it for a second but you never know with this lot.

I don't know. If we could wake up tomorrow and prices were down 60%, then buyers would return, estate agents, developers etc could start to make a living and everyone who bought after the event would have plenty of disposable income to by new furniture etc. This would be the basis for an immediate economic recovery.

Of course if you bought before this, you might want to consider bankruptcy, otherwise you'll just remain a kind of second class citizen with a huge debt and probaby 20 years worth of negative equity.

[Alistair darlings mole]

It won't happen. end of

[Leonard Hatred]

I don't know. If we could wake up tomorrow and prices were down 60%, then buyers would return, estate agents, developers etc could start to make a living and everyone who bought after the event would have plenty of disposable income to by new furniture etc. This would be the basis for an immediate economic recovery.

I suspect that most Britons' ignorance means that they would reject this solution (i.e. reality), and would rather have megabailouts and money printing week after week until the economic numbers started getting bigger again

[MrNobody]

A thread has started on Singing Pig, could get interesting:

http://www.singingpig.co.uk/forums/thread/738989.aspx

by the way does anyone else know of other forums where Buy to Let people gather? I love to watch them squirm

<evil cackle>

[dances with sheeple]

I think a x salary multiple is unworkable and what about people with irregular incomes?

Better to have a minmum deposit level like 25% as at least that is paid up front give protection to the lender.

At the end of the day you can still loose your job at 3x salary and you can also not save anything.

By imposing this your going to destroy the "value" of homes (not me against that just cannot see it happening).

True, but in a stable, or crashed market, with the average house at 100k, the bank can repo and re-coup most of their loan?

At the moment they must repo because it is the only recourse they really have, but they are not able to get anything like the original amount of the loan for the property. This measure, if passed, is of great benefit to the banks.

[Democorruptcy]

Dear oh dear there are some gullible people about.

Moving interest rates down to zero means "Quick people go buy a house as your money isn't getting a decent return"

Quantitative easing means "Quick people go buy a house as your money is going to become worthless"

Mortgages are going to become 3 times salary means "Quick people go buy a house while you can still get a higher mortgage".

This is just another scare tactic to part people from their cash and help sell houses not reduce their value. It will NEVER happen.

[dances with sheeple]

I suspect that most Britons' ignorance means that they would reject this solution (i.e. reality), and would rather have megabailouts and money printing week after week until the economic numbers started getting bigger again

They are not in a position to reject or accept anything though, the banks can do what they like, which has been amply proven over the last decade. The Conservatives will be fully on board on this one.

[MrNobody]

<snip>

This is just another scare tactic to part people from their cash and help sell houses not reduce their value. It will NEVER happen.

I thought that to but the telegraph Q & A is making me think again

http://www.telegraph.co.uk/finance/persona...ffects-you.html

Edit: PS wouldn't it make people lower the price of their house in the expectation no-one could ever afford it whether this becomes true or not? If thats the case I'm still game.

Edited March 16, 2009 by MrNobody

[dances with sheeple]

Dear oh dear there are some gullible people about.

Moving interest rates down to zero means "Quick people go buy a house as your money isn't getting a decent return"

Quantitative easing means "Quick people go buy a house as your money is going to become worthless"

Mortgages are going to become 3 times salary means "Quick people go buy a house while you can still get a higher mortgage".

This is just another scare tactic to part people from their cash and help sell houses not reduce their value. It will NEVER happen.

It doesn`t, it means quick people sell your house while you can still get a higher price

Edited March 16, 2009 by dances with sheeple

[Mikhail Liebenstein]

It won't happen. end of

Why not? It would probably work.

Think about it.

If new multiples are left low at 3 times income, then yes there will be people who have over borrowed and effectively paid double what they should, but perhaps the Government /BoE will keep interest rates ultra low to make those ridiculous mortgages repayable.

Meanwhile the contraint on new borrowers is the multiple, so even though they could in theory borrow large amounts because interest rates are so low, they won't be allowed to.

This would almost certainly lead to an instant economic recovery, without a return of stupidly high house prices.

The problem might arise if someone in substantial negative equity wishes to move, but then the Government could back the the transfer of the negative equity to the new property.

It would create a form of economic second class citizen, but these second class citizens might not go bankrupt, and perhaps with a few years of high inflation they might eventually be released from their debt prisons.

[bobed]

http://www.telegraph.co.uk/finance/persona...ffects-you.html

Q: Will these changes have any affect on house prices?

A: Melanie Bien, a director of independent mortgage brokers Savills Private Finance says: "'If borrowers are unable to obtain mortgages greater than three times their salary, property prices could potentially fall considerably further than the 10 per cent or so forecast for this year. Borrowers simply won't be able to obtain a big-enough mortgage to get the property they want, particularly as they will also need to put down a sizeable deposit as lenders remain unwilling to lend at higher loan-to-value. Sellers will have to drop prices further if they are to achieve a sale."

Ray Boulger of the mortgage brokers John Charcol added: "It seems inevitable that this will have a negative impact on house prices particularly as the average house price is more than three time the average salary." According to the Halifax the average house price is £160,327, with the average income being £26,000.

[starsky]

3x salary is not going to happen. 4 or 4.5 maybe.

[Harry Monk]

<sibley> This will be the end for HPC </sibley>

[dances with sheeple]

I'm afraid I just cannot see ANY strict boundaries or limits being imposed by the FSA on mortgage lending firms....... especially not with prices falling like a stone.

I do however think in a scenario say where there is excessive house price inflation, but raising rates would damage the economy that some form of action like this that limits mortgage availability might well have a role in controlling prices while not using the blunt tool of interest rates which might damage wider economic growth...... but for now we are in a slump so this kind of activity is a non-starter in my view and will never ever get off the ground.... its all puff and PR to try and get accross that the Govt and the FSA is doing something over lending prudence.

I don`t agree, lending is already limited by the deposit requirements, this is just a public warning to delusional would be sellers that it is officially over, they are being given some space to get their prices cut and get out if they can. The crash is not happening fast enough for the banks.

Edited March 16, 2009 by dances with sheeple

[tegan]

Average house price will be £90,000 by the end of the summer....First time buyer house £60,000 and one person starter flat £45,000.

And I'd lobe to see it happen, but I fear the consequences will be dire. I don't know if anybody can provide some more exact figures, but I suspect that for every 1k a single house goes down in price the banks could lose 10k, 100k or more. Which would be fine if Brown hadn't handed over the keys to the public finances directly over to the banks so they can use our cash and the cash of future generations to fill in their black holes of bad debts.

So on the one hand, 50% falls great, on the other, Brown has handcuffed us to the banks. They go down - we go down with them.

[CrashedOutAndBurned]

To be honest, I think that those in power that we're into a full blown crash that's so ugly the idea of speculating on a basic human need until prices hit the stratosphere may never be entertained again. There are a thousand ways to have a punt - leaves homes out of it.

Good idea.

Now why didn't the FSA do the bleedin' obvious ten years ago?

[dances with sheeple]

Hmm...well, at one part it says;

"In all but the most exceptional circumstances, it will become 'normal practice' for loans to be limited to a maximum of three times the borrower’s salary."

I've heard this sort of statement before. It quite often ends up that the phrase "exceptional circumstances" is interpretad as anything but. I remember about 5 or 6 years ago there was an incredulous article on the lunchtime news (or workig Lunch or similar) that some lender was offering a mortgage based on 6 times income. The nice chap from the lender assured everyone that the those who would were expected to qualify for this product would be very few and far between, the lowerst risk people there were, with huge salaries, in solid jobs, wanting to buy the least risky housing. I think he even may have mentioned that onyl a handfull of people woudl ever qualify and even fewer woudl bother applying.

Well, less than 2 years later a shelf-stacker coudl have got the same deal. Exsceptional circumstances rarely stay exceptional for long.

Agreed, but that was then this is now. The authorities know that situation can never happen again, they just need the sheeple to get the point.

[Zorba]

As i said earlier all be it a bit long winded, 3x the ave wage is happening now all but in name.

Halifax want a 60% deposit on their new mortgages for both residential and BTL.

The Hailfax say the ave wage is £30,000 today, crazy i know but that is their figure, so

the ave house price with the Halifax today is £160,000.

If you minus a 40% deposit from £160,000 that will give you £96,000 left for the mortgage and a £64,000 deposit.

3x the ave wage, £30,000 x 3 = £90,000 mortgage, £6,000 on the card if you still have one, sorted.

Edit got all my sums wrong ffs

Have you fixed the numbers now post edit ? A 64K deposit is quite large.

Halifax website tells me they "may" offer a single FTB on 30K, a loan of 144K

on a property valued @ £160k - considerably more than 3x.

If the max loan did become 3x single salary then there's your crash right there.

Unfortunately I cant imagine Broon doing a complete U-turn from doing all he can

to prop up the market to insisting on 3x multiple maximum.

Z

[frozen_out]

If the max loan did become 3x single salary then there's your crash right there.

Unfortunately I cant imagine Broon doing a complete U-turn from doing all he can

to prop up the market to insisting on 3x multiple maximum.

Not a nominal one though if we get a sharp burst of wage inflation.

I just wonder what tricks are being pulled behind the scenes here. Double evryones wages then cap lending at 3x salary. Be a nice idea if it could ever work.

[bootfair]

having watched the latest farce regarding alcohol prices I really believe this is another opportunity for Gordon to come steaming in, saving all those FTBs -= who have now been scared they wont be able to ever afford a house if the multiple is only 3 and the desperate sellers who are now scared they will lose even more on their houses.

Only two months ago Gordon was asked about affordability and clearly said, it was not the price, it was the cost of the mortgage payments that was the factor of affordability.

..hes in a telephone box right now, changing into his special tights...

Its a set-up - FSA scares the sheeple - after a bit of bleating Gordon comes along to assert his authority and tell the FSA what's what..

[

quote name=Uberbear-Wan' date='Mar 16 2009, 08:10 AM' post='1743050]

http://www.propertyweek.com/story.asp?sect...3136243&c=1