"give Up Luxuries To Buy A House"

[19 year mortgage 8itch]

You disgust me, .

Yeah, I lied. Sue me.

[Imminent_plunge]

Yawn. In the 70s, parents were complaining about their offspring owning colour TVs, foreign holidays, cars, garlic, avocado pears and spaghetti Bol.

[winkie]

If it is advertised or hyped don't buy it.......all the best things in life always sell themselves.

[CentrinoDuo]

Yawn. In the 70s, parents were complaining about their offspring owning colour TVs, foreign holidays, cars, garlic, avocado pears and spaghetti Bol.

My parents thought me so well at some stage my mum was concerned how frugal I am :-)

Now that we are financially more stable than ever we can relax our spending.

[fluffy666]

The thing that irks the most is the assumption that there were no spendthrifts prior to 1980. I remember solving basic maths problems at school centred around interest payments on hire purchase. Well blow me, turns out no-one ever bought anything on HP 'cos they were all busy knitting their clothes and turning the allotments and definitely not getting pissed.

My old man said this one day "Young people want everything instantly these days". To which my Mum said "It's true, although you (Dad) were terrible at saving anything, and you still are." I had to laugh.

Key difference between now and then.. Then, you may have had to stretch yourself financially for that 'first rung', BUT.. after 2-3 years of living on baked beans, 10%+inflation (wages and prices) suddenly means you own half a house and your mortgage payments are a lot easier. You only had to be frugal for a short while.

Nowadays you try the same (outside London, inside London and you can't even try) and 10 years later you'll still be living on baked beans ...

[zugzwang]

+1

It's absolutely ***king surreal. Last time I looked at the Lloyds Group accounts, I think over 70% of the balance sheet was property related lending (mortgages or loans to property companies - commercial and residential), the bust has blown up the banks the wreckage of the bust has blown up the government's balance sheet and still these property clowns are talking about "it was never easy". It would be nice to get a little toke at whatever the hell they're smoking, just to take the edge off every now and again! I feel like there's been a nuclear detonation and the photons have whisked past burning off a little skin and in the brief pause before the shock-wave rolls in some ***kwit wants to get back to selling me an ice-cream, as if there was no bomb and there will be no shockwave.

It's also just so ignorant, as if house prices were totally unrelated to the prevailing credit conditions, as if we didn't have Northern Rock with their 125% LTV mortgages and the investment bank sponsored 'specialist lenders' with 90%-95% self-cert IO. To steal a phrase from Michael Burry, "the ignorance is wilful". I don't really believe that it's coordinated propaganda, but it might as well be.

Speaking of which. :angry:

Barclays is asking shareholders for almost £6bn of cash as the bank's new management team races to comply with a demand by the Bank of England that it plug a £12.8bn capital shortfall.As Antony Jenkins admitted on Tuesday the bank was increasing its provisions for mis-selling financial products by £2bn, he conceded that Barclays had been forced to change its plans as a result of the actions of the Bank of England, which showed the bank's finances were in a worse state than previously thought.

The size of the cash call on investors – in the form of a rights issue, which will be launched in September – is bigger than expected and follows a request by the Bank of England that it meet a new measure of financial health, known as the leverage ratio. Barclays shares were volatile in early trading, falling around 6% to 290p after the larger-than-expected rights issue was announced.

"After careful consideration of the options, the board and I have determined that Barclays should respond quickly and decisively to meet this new target. We have developed a bold and balanced plan to do so," said Jenkins, who was promoted to chief executive only 11 months in the wake of the Libor-rigging crisis.

The size of the capital gap identified by the Bank of England of £12.8bn is almost double the amount the City had been expecting and comes after a torrid 12 months for Barclays during which Jenkins' predecessor Bob Diamond quit, with two other senior colleagues.

[Bloo Loo]

It seems they all bought when interest rates were high.

This means they thought they were using Affordability criteria applied to todays ( and the last 10 years) mortgages.

In those days, 3 x first plus the second income was the criteria.

And yet they go on to say the outgo was £x per month so giving a price of £yK.

today, they use the £x per month v the family income and lever that up...and that in a time when interest rates are FORCED to remain low as for years, the same formula of affordability has leveraged the buyers up to such a debt level that a tiny increase in rates will finish them off.

The two times are NOT comparable...If they were, mortgages would be dirt cheap, and house prices 50% of what they are and the Banking system wouldnt be on life support from the self same borrowers.

[Orsino]

In her own muddled and contradictory way I think Sian Astley sums it up quite nicely:

Sian Astley, TV presenter

Many twentysomethings seem to want Hollywood and handbags, rather than pensions and property. They’ve been dissuaded from the idea that hard work reaps rewards. I didn’t have cash or family backing when I started with £1 and a 100 per cent mortgage, but houses were cheaper. It was possible to be canny and creative. You could work hard to climb the ladder.

Sacrificing the good life for the mortgaged life is still possible, but only in less “desirable” areas. You have to get stuck in, as well as ditching luxuries for a more frugal existence.

Yup, the young have been dissuaded from the idea that hard work reaps rewards. I wonder what debt-fuelled, liar-loan bubble of a rigged market could have given them such an idea. It's as if Sian has almost managed to put two and two together. Perhaps she should re-read her most revealing sentence:

Sacrificing the good life for the mortgaged life is still possible, but only in less “desirable” areas.

... and why would anyone except a complete moron - regardless of their age - want to do that?

[Bloo Loo]

In her own muddled and contradictory way I think Sian Astley sums it up quite nicely:

Yup, the young have been dissuaded from the idea that hard work reaps rewards. I wonder what debt-fuelled, liar-loan bubble of a rigged market could have given them such an idea. It's as if Sian has almost managed to put two and two together. Perhaps she should re-read her most revealing sentence:

... and why would anyone except a complete moron - regardless of their age - want to do that?

Clearly, even her view is not possible, otherwise we wouldnt be seeing the government weighing in with taxpayer backing for those self same FTBS...even IN the depressed areas.

[Riedquat]

God, what an offensive, moronic article from the completely and utterly clueless (i.e. about what I expect from her).

[Si1]

God, what an offensive, moronic article from the completely and utterly clueless (i.e. about what I expect from her).

+1

i don't know where to start

[Bloo Loo]

snip

... and why would anyone except a complete moron - regardless of their age - want to do that?

because in the office, in the pub, on the telly, walk the high street, and we have VIs TELLING you relentlessly that you will miss the boat if you dont.

FEAR is the driver for the entrant....the bait is untold wealth.

As is the MO of any Ponzi scheme.

[cybernoid]

after 2-3 years of living on baked beans, 10%+inflation (wages and prices) suddenly means you own half a house and your mortgage payments are a lot easier. You only had to be frugal for a short while.

Nowadays you try the same (outside London, inside London and you can't even try) and 10 years later you'll still be living on baked beans ...

Quite. Id LOVE to only have to live on baked beans for a couple of years and in exchange own half a reasonable house, what a world they lived in. And hard work led to reward, I can barely imagine it.

Often their sob stories end with their finally buying a house of their own in their early 20s from a single income! But they had no carpets and not much furniture for a while and thats the tough bit apparently. Nowadays we can get as much carpet as we like, a pity it won't fit very well around a park bench isn't it.

[dangermaus]

Best comment:

OxfordDon

Times have always been tough.

When I were young I used to live in a brown paper bag in't middle of lake. For dinner we'd lick road clean wi' tongue. We were lucky.

The youth of today don't know how well off they are.

[worried1]

Mainly the usual idiotic comments, but Stephen Bayley almost seems like he reads HPC with his comment about a 1 bedroom 'cell' costing £280k!

The thing that annoys me about this article is that they actually mention how much they bought their first houses for - clearly if you bought an average house for £25k in 1985, then for buyers now to be on an equal playing field, it would have to be worth £70k, not £170k. One even mentions a Wembley semi for £22k. I am not sure how long ago that was, but those houses are probably more like £450k now.

It is not like we are talking 100 years ago, this is 30 years ago and salaries have risen very little in certain professions in that time. Of course the much lower interest rates now aid affordability, but only really for those who are prepared to borrow massively counting on the fact that rates will stay low. Martin Roberts is moaning about his 15% mortgage on a £22k house, if rates go that high now for someone with a £200k mortgage that is £2,500 per month interest only! That would take a £40k+ salary just to pay off the interest on the mortgage.

The giving up luxuries thing has always been ridiculous. I spend a reasonable amount of money on luxuries (nice holidays, a few gadgets, eating out a bit) and if I really cut it all back, I'd probably save an extra £300 per month. That might seem to mount up quite quickly, but with a decent 2 bed flat currently about £350k, I'd need to cut all of that out for 10 years just to afford the deposit, except that I wouldn't because at the moment prices are going up by an extra 10% per year, thus wiping out those extra savings tenfold.

[fluffy666]

The giving up luxuries thing has always been ridiculous. I spend a reasonable amount of money on luxuries (nice holidays, a few gadgets, eating out a bit) and if I really cut it all back, I'd probably save an extra £300 per month.

It's worth pointing out that manufactured items, especially electronics, have seen sharp deflation over the past 30 years. Despite having more than my fair share of electronic 'stuff', it would cost roughly a month's take-home pay to replace every single consumer electronic item in the house. Ironically, my parents spent more than that just getting a Colour TV and freezer.. so who is spending more on 'gagets'?

Edit:

http://safalra.com/other/historical-uk-inflation-price-conversion/

Is a useful site for inflation comparison. For example, my parents bought a house for about £6k in 1973. That's about £66k now (current price circa £150k). And by 1978, wage-price inflation had halved the real-terms amount..

Edited July 30, 2013 by fluffy666

[chronyx]

The giving up luxuries thing has always been ridiculous. I spend a reasonable amount of money on luxuries (nice holidays, a few gadgets, eating out a bit) and if I really cut it all back, I'd probably save an extra £300 per month. That might seem to mount up quite quickly, but with a decent 2 bed flat currently about £350k, I'd need to cut all of that out for 10 years just to afford the deposit, except that I wouldn't because at the moment prices are going up by an extra 10% per year, thus wiping out those extra savings tenfold.

With the knock-on effect to those 'luxury' providers. In my case, I buy the best of the best food I can afford. So if I cut back it either gets land-filled, or if enough people do, the companies go out of business.

[olliegog]

It seems they all bought when interest rates were high.

This means they thought they were using Affordability criteria applied to todays ( and the last 10 years) mortgages.

In those days, 3 x first plus the second income was the criteria.

And yet they go on to say the outgo was £x per month so giving a price of £yK.

today, they use the £x per month v the family income and lever that up...and that in a time when interest rates are FORCED to remain low as for years, the same formula of affordability has leveraged the buyers up to such a debt level that a tiny increase in rates will finish them off.

The two times are NOT comparable...If they were, mortgages would be dirt cheap, and house prices 50% of what they are and the Banking system wouldnt be on life support from the self same borrowers.

I agree with most of this.

it is not the 'oldies' fault that the banks changed their lending criteria and threw money (at ridiculously low rates) at anyone with a pulse and this oversupply of cheap credit fuelled the boom and the greed.

most 'oldies' are grateful they have a house paid off (often before the housing market insanity) and do not have a BTL portfolio, and wish that house prices were lower so they could 'afford' to move to a smaller house. It is an interesting fact that the 2 bedroom bungalow is often the same price as a 3/4 bedroom 'family house' .

enough of the 'boomer bashing'

[The Knimbies who say No]

I agree with most of this.

it is not the 'oldies' fault that the banks changed their lending criteria and threw money (at ridiculously low rates) at anyone with a pulse and this oversupply of cheap credit fuelled the boom and the greed.

most 'oldies' are grateful they have a house paid off (often before the housing market insanity) and do not have a BTL portfolio, and wish that house prices were lower so they could 'afford' to move to a smaller house. It is an interesting fact that the 2 bedroom bungalow is often the same price as a 3/4 bedroom 'family house' .

enough of the 'boomer bashing'

You're hardly averse to dishing it out:

http://www.housepricecrash.co.uk/forum/index.php?showtopic=191898&st=46

Still waiting for a reply to #50....

[olliegog]

keep waiting - you deliberately misconstrued what I said so won't waste my time.

[cybernoid]

Despite having more than my fair share of electronic 'stuff', it would cost roughly a month's take-home pay to replace every single consumer electronic item in the house. Ironically, my parents spent more than that just getting a Colour TV and freezer.. so who is spending more on 'gagets'?

They are everything they accuse the young of and then some. Lived within their means? No, they borrowed money secured against a fantasy future value of their home and now expect the young to pick up the tab by buying at a stupid price. Don't want something for nothing? No, they want 3 times what they paid for their house. Hardworking get on your bike sorts who earned and deserve everything they have? No, wage inflation took care of an enormous amount of their debt and with only one partner working in most cases there was one layabout sitting around at home watching daytime tv, these same people today still dont work and yet read the daily mail tutting at all those at home on benefits. etc etc. 'Get on your bike' they yell from their recliners they haven't shifted out of for 40 years.

Todays crime I find unforgivable is having a dig at 'the young' at every given opportunity such as in those comments sections of newspapers whilst being utterly ignorant of how times have changed. Gadgets dont cost as much as they used to, houses cost a lot more than they used to. Simply putting those two thoughts together ought to explain a lot, but they are too lazy to look into it whilst accusing everyone else of being lazy.

NB, these are general points applying to those whose comments on newspaper articles identify them as having views and lifestyle similar to those I have parodied, any similarity to other boomers living or dead is purely coincidental. Read the instructions and always consult a physician, I cannot be held liable for any confused old people tripping over their extended recliners whilst contemplating their place in the universe and responsibility for any alleged wrong doing.

[cybernoid]

enough of the 'boomer bashing'

The day the comments sections of articles like that are clear of unthinking boomers is the day i'll stop pointing it out.

[Bloo Loo]

They are everything they accuse the young of and then some. Lived within their means? No, they borrowed money secured against a fantasy future value of their home and now expect the young to pick up the tab by buying at a stupid price. snip

this is errant nonsense.

Who is buying the houses over the last 15 years....where do the chains start..

Oh yes, the FTBs....they take on the biggest commitments...it is THEY who are fuelling the price boom in the main.

They had control but didnt exercise it.

Boomers ( early entrants to market..nothing they had control of) sat there taking profit.

[Bloo Loo]

They are everything they accuse the young of and then some. Lived within their means? No, they borrowed money secured against a fantasy future value of their home and now expect the young to pick up the tab by buying at a stupid price. snip

this is errant nonsense.

Who is buying the houses over the last 15 years....where do the chains start..

Oh yes, the FTBs....they take on the biggest commitments...it is THEY who are fuelling the price boom in the main.

They had control but didnt exercise it.

Boomers ( early entrants to market..nothing they had control of) sat there taking profit. and many FTBs get their deposits from???...oh yeah,,,BOMAD

SO stop it with the boomers caused it all nonsense...

[The Knimbies who say No]

keep waiting - you deliberately misconstrued what I said so won't waste my time.

Well, rereading the thread it seems I wasn't the only one to have done so. Perhaps you ought to make yourself clearer as it looked very much like you were erring from a defensible argument.