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Mortgage Salary Multipliers, Are They Dropping?

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Am I right that currently you can get 5x joint salary mortgages, which is roughly double what you could get 20 years ago?

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In my personal experience, roughly, yes.

Does it not fill you with joy and excitement? You should feel grateful for the opportunity to access so much debt, dear boy ;)

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Am I right that currently you can get 5x joint salary mortgages, which is roughly double what you could get 20 years ago?

I remember (3x main + 1 x second) income being the multiples 20 years ago. That was for two mortgages I had in the mid 90's.

So if main was 25K and second was 15K then.....(ignoring inflation)

20 years ago => limit was 85K

If 5x joint now => limit is 200K

So...

House prices = Credit Availability.

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My bank has a "feature" whereby it calculates your affordability and lets you know how much you can borrow. I like to dabble with it for fun. I have noticed in the past couple of months it has been offering me less and less, yet my circumstances are no different. I think they know something they aren't admitting.

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If interest rates were higher, multiples would be lower. Higher multiples 'make sense' when debt is cheap to service.

Trouble is, now that so many people have mortgages at high multiples, higher interest rates would ruin them, and house prices would tumble. Ergo, interest rates cannot be put up.

Except ... what happens if inflation shoots up, due to some unforeseen event? Are interest rates still supposed to be about controlling inflation? If yes, interest rates will go up, and we will have some more 'interesting times'.

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If interest rates were higher, multiples would be lower. Higher multiples 'make sense' when debt is cheap to service.

Trouble is, now that so many people have mortgages at high multiples, higher interest rates would ruin them, and house prices would tumble. Ergo, interest rates cannot be put up.

Except ... what happens if inflation shoots up, due to some unforeseen event? Are interest rates still supposed to be about controlling inflation? If yes, interest rates will go up, and we will have some more 'interesting times'.

Followed by 20 years of bleating feckless claiming that they got ******ed over by the government and that that nobody could have foreseen interest rates rising. I know people who've only just stopped bitching about that from the 90s crash, and then only because they've finally got some equity in their houses again.

Problem is, I honestly don't see rates rising now until the BoE lose control. Which is not to say I'd be taking out a gargantuan mortgage in the expectation that the BoE know what they're doing, but millions of others will.

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Nationwide seem to be offering to lend us almost 100k more than they were in January..

(which is about 200k more than I am comfortable borrowing!)

Hopefully they will start tightening it up so people don't take the risk and over extend themselves - if I borrowed the full amount on offer, think I would be heading for repossession-ville pretty quickly!

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Nationwide seem to be offering to lend us almost 100k more than they were in January..

(which is about 200k more than I am comfortable borrowing!)

Hopefully they will start tightening it up so people don't take the risk and over extend themselves - if I borrowed the full amount on offer, think I would be heading for repossession-ville pretty quickly!

Last year I asked about borrowing a small amount, my plan was to buy a flat somewhere I like. Then rent in all the places I have to work but have a nice actual place of mine to retreat too. I was gonna put a big deposit and pay it off as soon as I could

I asked about borrowing 45k

the bank came back to me and said the most they will offer is 270k for a second home! LOL

I thought right there is why we have HPI.

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I remember (3x main + 1 x second) income being the multiples 20 years ago. That was for two mortgages I had in the mid 90's.

So if main was 25K and second was 15K then.....(ignoring inflation)

20 years ago => limit was 85K

If 5x joint now => limit is 200K

So...

House prices = Credit Availability.

Always has been....

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They don't trap people in debt to let them off.

Boom+Bust is policy, the vultures are waiting to pick the bones of the starry eyed ladder ascenders.

The cash rich will swoop , buy up cheap property and rent it out til the next generation can be fooled

by house prices only go up. Sell when it tops and sit tight til it bursts again.

Rinse and repeat.

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I remember (3x main + 1 x second) income being the multiples 20 years ago. That was for two mortgages I had in the mid 90's.

So if main was 25K and second was 15K then.....(ignoring inflation)

20 years ago => limit was 85K

If 5x joint now => limit is 200K

So...

House prices = Credit Availability.

Lower wages 20 years ago?

Then at £18k & £6k, 3x main plus 1x second = £60k, which is why the average house was £60k in the late 90's

The switch to joint income multiplies has tripled prices when wages haven't even doubled.

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Lower wages 20 years ago?

Then at £18k & £6k, 3x main plus 1x second = £60k, which is why the average house was £60k in the late 90's

The switch to joint income multiplies has tripled prices when wages haven't even doubled.

There are 2 big changes over the past 20 years..

The move to treat joint income as 3x both rather than 3x main + 1x second income... That's forced a lot of families into the position where both people have to work full time.

The reduction in interest rates and a subsequent increase in multipliers from 3x income to 5x income.... Hopefully as prices drop this insanity will disappear...

Edited by eek

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There are 2 big changes over the past 20 years..

The move to treat joint income as 3x both rather than 3x main + 1x second income... That's forced a lot of families into the position where both people have to work full time.

The reduction in interest rates and a subsequent increase in multipliers from 3x income to 5x income.... Hopefully as prices drop this insanity will disappear...

It'll take another 20 years to reverse

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