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Bbc Breakfast This Morning - Mortgages In Retirement

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Apologies if there is a thread already, I couldn't see one. A classic BBC Breakfast piece.

The headline was that a high proportion of 25-34 year olds now realise that they will have to pay a mortgage well into retirement if they are going to buy a house.

Being the BBC, rather than question how we got into this state, they bought in a representative from the lenders and grilled him about why mortgage lending has not kept pace with current requirements.

His first response was that many lenders had increased their terms from 25 to 30 years. Then he mentioned that house price have risen many times faster than wages over the past few years.

There was a bit of a silence and they cut to something else. I get the impression he won't be invited back if he can't be trusted to follow the Government/BBC line a little bit better...

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Apologies if there is a thread already, I couldn't see one. A classic BBC Breakfast piece.

The headline was that a high proportion of 25-34 year olds now realise that they will have to pay a mortgage well into retirement if they are going to buy a house.

Being the BBC, rather than question how we got into this state, they bought in a representative from the lenders and grilled him about why mortgage lending has not kept pace with current requirements.

His first response was that many lenders had increased their terms from 25 to 30 years. Then he mentioned that house price have risen many times faster than wages over the past few years.

There was a bit of a silence and they cut to something else. I get the impression he won't be invited back if he can't be trusted to follow the Government/BBC line a little bit better...

Read as....HOUSE PRICES UNSUSTAINABLY HIGH.

Edited by TheCountOfNowhere

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Indeed. The thing that I found interesting about it is that paying mortgages past retirement is the one thing that used to be generally reviled even by the Government/VIs and everyone else who seems to love HPI.

Now even that is seen as an acceptable side effect of the wonder of constantly growing prices.

They didn't have any of the 25-34 year olds on the programme of course, but I do find it amazing that there are that many of them who would actually be pushing for lenders to peddle them mortgages past their retirement age. I suppose nothing should surprise me any more!

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I think under MMR even if you are offered a longer mortgage tenor affordability must be assessed on 25 year repayment basis, so the extent to which longer mortgage tenors can drive prices shouldn't be exaggerated.

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My friend was refused an extension to his current mortgage for the 25 yrs he asked for as it would have taken him over 65. They gave him 24yrs max. That was about 7-8yrs ago, just at the time of the crash.

Fast forward today into Bubble 2.0

Going to be massive , the next leg down. Lots of angry old pensioners will be out there....but OTOH , plenty of smiling youngsters (ie. those under 45). :)

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Give your grandchildren the ultimate present this christmas - an intergenerational mortgage.

Bought to you by the people who gave you timeshare coffins.

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Inter-generational mortgages next.

I'm not joking.

I spoke to a friend at the weekend and he actually brought this up as something he wants them to do.

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I spoke to a friend at the weekend and he actually brought this up as something he wants them to do.

Totally antidotal but I have also heard people say this! It's like they don't want anything to change! :huh:

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intergenerational / infinite / family mortgages have been a standard financial product in Switzerland for decades now.

Here is a blog post about it referring to a mortgage taken out in 1978

http://www.brianbollen.com/bbb_brian_bollens_blog/2011/08/swiss-mortgages-to-infinity-and-beyond.html

The UK equivalent would, I am sure, be different, but you can see how the swiss model works

"I could scarcely believe my ears when Herr Erhard Müller, the manager of the Wengen branch of the Cantonal Bank of Berne, told us in September last year that, having satisfied himself as to the quality of the asset in question, and the honesty and openness of the purchasers, he would not be asking us to repay the bulk of the principal on the mortgage he was planning to offer. Ever. We could if we wanted to, of course, but it would be entirely optional, subject to the continued good conduct of our account.
The infinite element of the mortgage is restricted, it should be noted, to a maximum of 66% of his valuation of a property’s market value. In Swiss terms this would be classed as a ‘first mortgage’. Additional borrowing is available to people living and paying income tax locally, bringing the total up to 80% of value; this is classed as a ‘second mortgage’ and needs to be repaid within 15 years, by retirement age at the latest."

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I spoke to a friend at the weekend and he actually brought this up as something he wants them to do.

It's the entitlement... not worried about debt-price-value... heads full of forever HPI.

Then of course the excuses along the way. Media/advertising made victims pay ever higher prices (this was in 2008 when prices had softened).. now they've just about doubled and more in my area.. still the same excuses for buy; "media/advertising/ collective-responsibility."

I can imagine some HPCers pinning Innocence Medals onto some of the worst criminals of all time.

Of course we've got all the excuses to come when prices fall - pushed hardest by the outright owners, who want debtors saved to lock in their own HPI. I want lower values, so I don't have to take the risk of so much debt (as would be required if I were to buy at these prices). I'm not carrying anyone else who outbid me along the way.

The #DontHave1Million kids actually want to be rich, and think they’re entitled to buy a $1,000,000 house. The overriding reason for this seems to be [a] they went to school a long time and they’re clearly special. Mom said so.

You’d think 30-year-olds who spent more than two-thirds of their lives in school would have figured this out.

On Friday I spoke with a couple who have $72,000 in liquid assets, most of it in RRSPs, a combined income of $125,000, are in their mid-30s with two kids (five and three) and have just been approved by a major bank for a mortgage of $800,000. They were moaning. “Do you understand how few houses there are for sale for $900,000,” she asked? “This is simply not fair. There is nothing decent or in a neighbourhood I’d let my kids run around.”

I patiently explained that putting all of their net worth into a house, plus taking on mountainous debt, was completely irresponsible. In 15 years when the kids need gobs of money for schooling, and they’re both over 50, they’ll still be struggling with a mortgage so fat it prevented them from saving. Of course by then rates will have normalized and house prices likely retreated. Hard to imagine a worse potential situation – all to get a house they feel entitled to.

http://www.greaterfool.ca/2015/04/17/the-entitled/

Edited by Venger

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Totally antidotal but I have also heard people say this! It's like they don't want anything to change! :huh:

Ah, but the antidote to an anecdote (i.e. an antidotal) is a data set... :P

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Inter-generational mortgages next.

I'm not joking.

Logical, but where does that put the equity in the house for the govt to take it's share for old age care? The first claim will be the banks and if the proles realise they will have nothing the housing market collapses. It seems a cunning plan.

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Obviously the plan is to get you to finish paying the mortgage off when in retirement and the following week you'll have to tap the equity to live off giving the house back to the bankers for them to sell on to the next sucker.

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