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Income Multiples And Deposits

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Are things really all that bad?

Council of Mortgage Lenders statistics show the following as at May 05:

First time buyer income multiples - 3.19

First time buyers % advance - 87% (ie 13% paid as deposit)

http://www.cml.org.uk/servlet/dycon/zt-cml...l_Table-PR2.xls

These figures don't look as bad as some of the posts on this site make things look.

Any comments?

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Are things really all that bad?

Council of Mortgage Lenders statistics show the following as at May 05:

First time buyer income multiples - 3.19

First time buyers % advance - 87% (ie 13% paid as deposit)

http://www.cml.org.uk/servlet/dycon/zt-cml...l_Table-PR2.xls

These figures don't look as bad as some of the posts on this site make things look.

Any comments?

But on current %'s they account for about 2 in 10 of ftb's the rest are out of it.

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Graphed for your pleasure....

IMO if the average FTB multiple is 3.19, and average household income is 34k (2003 data)

3.19 * 34 = £108,000 average FTB loan?

13% deposit = £14,040

This means the average FTB property is only £122,040! and that includes house holds with dual incomes.

If the average ftber now has a deposit of 14k, and most of us are living 3k beyond our means every year, that doesnt leave alot of potential Ftbers left, and if the average FTbers house is only 122k there really isnt much left out there they can afford. These Ftbers who are scraping together to buy the cheapest property possible, from the data seem to be the last ones with significant deposits saved, the data seems to suggest it is the very end of the line.....

especially when 'average' house prices are 50%, 100% + more expensive than Ftbers average. Just thought average Ftbers house price to average house price against time would make an interesting graph..

APPENDIX :

Average HouseHold Incomes

http://news.bbc.co.uk/1/hi/programmes/insi...ney/3132575.stm

FTBMultiples.JPG

post-552-1129298410_thumb.jpg

Edited by moosetea

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IMO if the average FTB multiple is 3.19, and average household income is 34k

Most FTBs who can actually afford to buy now must either be lying, have a big gift from their parents, or be a very long way from 'average'.

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Most FTBs who can actually afford to buy now must either be lying, have a big gift from their parents, or be a very long way from 'average'.

The figures are for ftb's that can afford to buy. I wonder how many potiental ftb's earning the median ~£18k are looking in wishing?

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I also see that the % of loans to FTBs has historically been over 40% of all loans.

Now it is 29%.

FTBS = new money in the market

People can't keep swapping their homes forever between existing homwewners. Sooner or later some people are gonna die or sell out, and who they gonna sell to?

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34k average income!! All I can say to that is that they obviously dont live round my way or they must have some HUGE deposits!! :angry:

Edited by brochie

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Jesus.

Even in the height of the last boom before the 1989-91 crash FTBs were still around 50% of the market and income multiples were 2.4 for FTBs........ currently only 30% of buyers are FTBs it's never been so low and the income multiple is 3.2 ( 34% higher ).

If 7 out of 10 transactions in the market are movers......... then whose buying the vacated houses?

50% FTBs 50% movers...... so 1:1 ratio, so every time a home owner trades up a new buyer steps in at the bottom = balanced market. All the way back upto 2000 that was the case.

Currently 30% FTBs 70% movers...... 1:2 ratio, for every two house movers only 1 FTB is stepping in. That means that homeowners are buying amongst themselves. Accumulating property and more debt each time they move.

34k average income!! All I can say to that is that they obviously dont live round my way or they must have some HUGE deposits!! :angry:

Yes but remember that todays FTBs the ones that are left, aren't fresh faced young things, they are more likley to be either divorcees with a settlement as a deposit, or couples in their early 30s.

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      • down 5% +
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