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Telegraph - Uk Housing Market Is Stuck On The Second Step


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The second step on the housing ladder is only likely to be possible if you had a windfall or pay rise. With wages static, for most people the housing ladder is a thing of the past.

The alternative is to lend ever increasing salary multiples, extend the mortgage term and for the boe to reduce rates, all of which has of course been exhausted. So it is now the day of reckoning.

Very good and apt summery.....going nowhere.

http://www.youtube.com/watch?v=3jMvmEChnH4

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snip

Second couple-7 years into a 82k mortgage and unable to trade up? Perhaps they earn very little but it seems implausible that they would not have cleared a good fraction of that by now. Should be 20%through the balance at least. Besides, how are they goin to repay the trade up mortgage if they are struggling with this one? Four years on the market too.

snip

borrowing to the hilt does not allow overpayments...even on repayment terms, they would have acquired little equity due to repayment on a 25 year mortgage.

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"Tom Green and his wife, Keira, bought a flat in Solihull, near Birmingham, in February 2008 as the property market reached its peak. "We took on a 125% mortgage from Northern Rock – at that time it was sold as 'your property will increase in value, so it's no problem'," he says. "

PRAT.

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"Tom Green and his wife, Keira, bought a flat in Solihull, near Birmingham, in February 2008 as the property market reached its peak. "We took on a 125% mortgage from Northern Rock – at that time it was sold as 'your property will increase in value, so it's no problem'," he says. "

PRAT.

priming up for a mis-sellingclaim.

Sadly, the house purchase and the mortgage sale are not related, other than you pledge the property the moment you acquire it.

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borrowing to the hilt does not allow overpayments...even on repayment terms, they would have acquired little equity due to repayment on a 25 year mortgage.

If there are no arrears, they should have repaid between 13% and 15% of the initial borrowings on a repayment basis by now(25 year term).

On a 100% mortgage, they ought to have over £10k repaid by now. But on a 100% basis, where was the deposit for the next place coming from if the repayments were a struggle? Ah yes, never-ending HPI.

They seem to be complaining that the music has stopped, even though for them it's clear it had to at some point. Can't save a bean but expecting to trade up anyway? Fantasists.

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If there are no arrears, they should have repaid between 13% and 15% of the initial borrowings on a repayment basis by now(25 year term).

On a 100% mortgage, they ought to have over £10k repaid by now. But on a 100% basis, where was the deposit for the next place coming from if the repayments were a struggle? Ah yes, never-ending HPI.

They seem to be complaining that the music has stopped, even though for them it's clear it had to at some point. Can't save a bean but expecting to trade up anyway? Fantasists.

You're making a big assumption here, that they've got a repayment loan.

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You're making a big assumption here, that they've got a repayment loan.

I suppose the assumption is more "They have made adequate plans to provide for their chosen lifestyle". The numbers suggest (without knowing any details) that they ought to be fine, but something has gone so awry they appear in a national newspaper to highlight their plight. Proof by contradiction => they have done no such planning, or other unforseen circumstances have scuppered their contingency arrangements. I wonder which it is..?

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I venture that the phrase "property ladder" is the error.

The "boomer" generation may look at the scenario now, and wonder why the "ladder" isn't working when interest rates in their day were much higher and inflation was over 20% in the 1970s. "It was much harder back then".

But this is to miss the key to the so-called "property ladder". Yes, price inflation was rampant. But, wage inflation came with it. And that's the type of inflation which created the "ladder" effect in the first place by inflating the nominal debt away.

These days, inflation in the cost of basics is probably about the same, in the region of 20%, except the figures are fiddled to make it appear that inflation is low by comparison by weighting against the cost of the things we have to buy and in favour of lesure activities and discretionary spending.

And at the same time, wages are falling in real terms and full-time roles are being replaced by part-time ones.

If the boomer generation connected these things together, they would then see the reasons why the "second step" is being made impossible, because it isn't some inbuilt function of the property market which just sort-of-happens, it was a fluke of economics at that time, and globalisation and desperate governments are preventing it from happening again.

Finally, the property market has many of the characteristics of a Ponzi scheme most notably that it has to have new money flowing in at the bottom for the pyramid to work, and that's why in modern times it has to crash and reset about once every 18 years to then rise again. We haven't had that proper reset yet.

Edited by DTMark
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NewBuy mortgage scheme for first-time buyers to expand to 'second-steppers'

Government planning to extend mortgage offer to help those buying their second homes as bottleneck grips housing market

http://www.guardian.co.uk/money/2013/mar/12/newbuy-mortgage-underwriting-scheme-expanded

Ministers are planning to extend a government offer to underwrite mortgages for people struggling to buy a home from first-time buyers to so-called "second steppers", as part of a concerted plan to get the housing market moving again.

The move comes amid growing evidence that a new bottleneck has emerged in the housing market with people looking to buy their second homes trapped in negative equity or struggling to raise a big enough deposit.

The Department for Communities and Local Government (DCLG) is working on a package expected to be unveiled before the budget that will offer help to second steppers by extending the NewBuy scheme, under which the government and private sector have helped underwrite mortgages principally for first-time buyers of new-build homes, to existing homeowners with limited or negative equity.

A survey by Lloyds TSB earlier this month found 61% of second steppers have been stuck on the property ladder for 12 months and 20% now believe it is harder to move up the ladder than to get on it in the first place.

The average age for a second purchase is now 41, restricting the supply of starter properties. In some areas approximately 30% of homeowners are in negative equity, preventing them from moving on and constraining the supply of first-time buyer homes. Raising a deposit was the biggest barrier – the average deposit required for a second stepper in 2012 was £58,836, almost double the deposit required in 2002 of £31,189.

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So they're saving that the average "step on the housing ladder" is six years, the same amount of time that I've been in my current rental house. I thought that one of the arguments in favour of buying was to "put down roots and get on with your life".

Buying a home where I live would cost me a year's rent in fees taxes etc

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