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Pent Up

First Time Buyers Still Struggling

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Despite house prices that remain comfortably below their 2007 peak and interest rates at record lows, first time buyers still find house prices unaffordable, according to an analysis by Coutts, the private banking arm of RBS.

Carl Astorri, chief economist, notes that while official data from the Council of Mortgage Lenders suggest that average mortgage interest at 12.7 per cent of income, is the lowest it has been since early 2004, it is a calculation that overlooks key aspects of homebuying.

For one thing, the average deposit required of first time buyers is far higher than it has ever been, totalling 20 per cent of the purchase price in May of this year and, in the recent past, 25 per cent of the purchase price. “If you don’t have access to the Bank of Mum and Dad to borrow from, you can borrow elsewhere or you can save up for a very long time,” Mr Astorri said.

And unsecured borrowing, while available, is not cheap. Assuming the first time buyer borrowed the 20 per cent deposit, even at today’s low interest rates, the combined cost of the mortgage and repayment of the unsecured borrowing would lead to monthly repayments that are 20.2 per cent of monthly pre-tax income. If interest rates were to rise by, say, 2 percentage points, the cost would rise to 28.1 per cent of pay. The last time that mortgage repayments were that high relative to income was in late 1989 and early 1990 when prices and rates were peaking and a wave of foreclosures was about to unfold.

The alternative, Mr Astorri said, was saving. At current prices, a first time buyer saving 10 per cent of pay would need to save for 10.2 years before raising the required downpayment.

Sounds good to me. Just wish it would happen!

Edited by Pent Up

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First time buyers still struggling.....why is that? One of the reasons has to be the age that you decide to become a first time buyer and what you do with your time before then......in the 70s and 80s you started saving and buying at a younger age, you started on life's path without debt, few went to university and university was free.

You left school with good qualifications that meant something, the o and a levels were far more taxing than they are today and far harder to pass with good grades.....if you did not choose to go to college you went out into the workplace to start earning and learning at ages 16 to 18 debt free and able to save towards the future.... you worked for extra qualifications in your own time or in evening classes or even day release. By the time you were in your early 20s you should have saved a good deposit maybe have met someone that had also saved a good deposit, had good work experience behind you and five years of promotion behind you.....then you bought your first home and started your family.

Today it is all back to front and upside down. ;)

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You left school with good qualifications that meant something, the o and a levels were far more taxing than they are today and far harder to pass with good grades

I hate this meme. Looked at an A-level science paper lately? I tutor A-level Chemistry and Biology privately, and I can assure you that they are tough subjects which even bright and dedicated students have to work hard for. Yes, the number of students getting As has gone up since the 1960s, but now the top 20 universities have much higher entry requirements, so is it any easier for them?

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Heard from a friend the other day who is trying to buy a crappy new built flat using a crackpot govt. scheme, something along the lines of the buyer puts down 5% and the taxpayer (or developer?) puts down the other 20%. She feels forced down this route because she cannot afford the £40k deposit required to buy the £160k slave box, not sure what the exact details are of the deal. The poor sod is working two jobs to try and buy this thing on her own too. What makes matters worse is there are nicer pre-owned houses for the same money, but the scheme is only for new builds.

I cannot compete with desperadoes like this and nor do I want to, but that's what Britain has become, a nation of desperadoes.

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I hate this meme. Looked at an A-level science paper lately? I tutor A-level Chemistry and Biology privately, and I can assure you that they are tough subjects which even bright and dedicated students have to work hard for. Yes, the number of students getting As has gone up since the 1960s, but now the top 20 universities have much higher entry requirements, so is it any easier for them?

But then there is the other side.

I have worked in a University, and anecdotaly the standard of the kids coming in is far lower than it used to be - according to those who have been there a while. On the course I was involved with all had straight A's in the traditional 'proper'subjects but I am told are not being taught them in enough depth compared to what they used to and so catch up classes for the students are more common than they used to be.

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I have worked in a University, and anecdotaly the standard of the kids coming in is far lower than it used to be - according to those who have been there a while.

Plus the winters were colder, and we just don't get the long, hot summers that we used to in the old days...

I think it's difficult, if not impossible to make meaningful comparisons between examinations 5 decades apart. The subject matter in my own discipine (biology) has changed so radically even in the last 15 years. I'm a postdoctoral scientist and have been through some highly ranked universities and still I am often surprised at how challenging the material is that English 16-18 year olds are studying. In my experience, it is very good preparation for the rigours of undergraduate study and even becoming a scientist. If there is a problem, it is that some secondary school teachers are simply not up to teaching this material.

The old farts who go on about how easy A-levels are today should hold their tongues until they have actually looked at them.

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Plus the winters were colder, and we just don't get the long, hot summers that we used to in the old days...

I think it's difficult, if not impossible to make meaningful comparisons between examinations 5 decades apart. The subject matter in my own discipine (biology) has changed so radically even in the last 15 years. I'm a postdoctoral scientist and have been through some highly ranked universities and still I am often surprised at how challenging the material is that English 16-18 year olds are studying. In my experience, it is very good preparation for the rigours of undergraduate study and even becoming a scientist. If there is a problem, it is that some secondary school teachers are simply not up to teaching this material.

The old farts who go on about how easy A-levels are today should hold their tongues until they have actually looked at them.

Nail head....so what is to be done about that may I ask....send them back to school I say. ;)

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It's symptomatic of the loony liberal left that no-one fails.

An o-level grade d was in my time a fail. now an f is a pass.

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with many mortgages at or near the end of their term, what use is an average of mortgage payments being x% of income.

if actual payments WERE 12% of income for new borrowers and FTBs, they would be selling all they could build.

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It's symptomatic of the loony liberal left that no-one fails.

An o-level grade d was in my time a fail. now an f is a pass.

GCSEs replaced O-levels in 1986, under the loony liberal left government of, er, Margaret Thatcher.

wiki

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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