Fears of ‘risky mortgage bubble’ as buyers stretch to afford homes

[spyguy]

24 minutes ago, houseface2000 said:

Is 5 x Salery really that risky to banks and borrowers though. After a 5 year fixed rate we went from 5 x salery on our first home to under 3x due to both getting pay rises and the debt we had paid off the mortgage. 

Uk real wages have fallen over the last 15 years.

Most workers are still around the same nominal income from 10 years ago. Quite a few on  a lot less.

The 'rising incomes' thing has not worked for 15 years.

[Sledgehead]

From the article:

Quote

Nearly 90 per cent of new cars are sold using finance deals ...

'Sold' implies somebody 'bought'.

But the majority of these are PCPs.

That ain't no buying. It's renting for three years.

[houseface2000]

3 hours ago, spyguy said:

Uk real wages have fallen over the last 15 years.

Most workers are still around the same nominal income from 10 years ago. Quite a few on  a lot less.

The 'rising incomes' thing has not worked for 15 years.

I get that but people progress within their career and earn more. Like for like jobs maybe the same nominally but people rarely stay in the same dead end job.

[a j]

5 minutes ago, houseface2000 said:

I get that but people progress within their career and earn more. Like for like jobs maybe the same nominally but people rarely stay in the same dead end job.

I think thats a fair point for people in their mid 20's, much less so for mid 30's onwards. The risks or stagnating or reducing incomes increase as you get older.

[houseface2000]

1 minute ago, a j said:

I think thats a fair point for people in their mid 20's, much less so for mid 30's onwards. The risks or stagnating or reducing incomes increase as you get older.

Yeah your probably right of the likelihood of stagnant if wages post 35.

[ingermany]

16 hours ago, lombardo said:

" In principle, debt is good for the economy. More debt means more spending "

 

What a joke.

It's an interesting point with an element of truth. Debt pushes up growth, even if borrowers can't repay it. In fact, especially if they can't repay it because it is free money. When BoE main mandate became pushing up GDP instead of price stability, this gave every incentive to promote irresponsible borrowing with cyclical borrower bail outs and resets. That has been the paradigm for over 15 years. Very different from 90s HPC when money seemed more real. 

[Habitationi Bulla]

Its all OK BOE interest rate meeting this week, they're bound to raise interest rates to put a cap on all this reckless lending.

Wonder what gems Carnage will come out with.

[regprentice]

9 hours ago, houseface2000 said:

I get that but people progress within their career and earn more. Like for like jobs maybe the same nominally but people rarely stay in the same dead end job.

Id say 2/3rds of people hit a 'groove' they are quite happy in. Ive worked lots of places from a distribution warehouse to the head office of a bank and consistently i think about 2/3rds of people dont seem to be going anywhere, they seem to feel the wages vs effort of a 'higher' job isnt incentive enough for them.

For example im a 40% tax payer with a student loan, my next payrise could be £8-10k if its a grade promotion but after tax, ni, pension, student loan and losing my child benefit as ill be over 60k annual then i will be lucky to take home 25-30% of that £8-10k payrise.

A lot of people i know are moving into contracting to soften the tax hit. But i'm told once you start contracting at a certain level , be it project manager, business analyst etc, then you cant progress beyond that in your career. You are a resource to perform that function and nothing else. 

[Blod]

20 hours ago, Habitationi Bulla said:

Its all OK BOE interest rate meeting this week, they're bound to raise interest rates to put a cap on all this reckless lending.

Wonder what gems Carnage will come out with.

Extra BS and no action as as per normal.

[TheCountOfNowhere]

On 29/07/2017 at 7:00 PM, spyguy said:

Uk real wages have fallen over the last 15 years.

Most workers are still around the same nominal income from 10 years ago. Quite a few on  a lot less.

The 'rising incomes' thing has not worked for 15 years.

The boomers sell this magical bubble to their children off the back of....wages went up and paid off house easily.

UK wages in decline....nothing will be paid off easily.

That's a pyramid scam for you.

 

[spyguy]

24 minutes ago, TheCountOfNowhere said:

The boomers sell this magical bubble to their children off the back of....wages went up and paid off house easily.

UK wages in decline....nothing will be paid off easily.

That's a pyramid scam for you.

 

60s-90s you had medium to high wage and price inflation, with wage inflation slightly ahead of price inflations.

Wage//price increas of ~10%/year and that large mortgage with soon halve in nominal terms - less than 6 years.

Low low to zero wage inflation and low to medium price inflation the game changes. A lot.

After 5 years, that large mortgage is even larger.

[houseface2000]

1 hour ago, spyguy said:

60s-90s you had medium to high wage and price inflation, with wage inflation slightly ahead of price inflations.

Wage//price increas of ~10%/year and that large mortgage with soon halve in nominal terms - less than 6 years.

Low low to zero wage inflation and low to medium price inflation the game changes. A lot.

After 5 years, that large mortgage is even larger.

I think low rates are helping people pay a large percentage of therir mortgage off quickly though. A 5x joint salery "massive mortgage" on a 20 year term, 5 year fix is still cheaper than renting round here.After that 5 year period you have paid off a substantial sum of your £200k mortgage regardless of the fact wages are rising very slowly.

[thewig]

"Fears of turkey kidnapper at large as more turkeys go missing from shed in runup to Christmas"

 

"I've never seen anything like it in all my ten months in this shed, and I've seen pretty much everything" said one senior turkey, a buy to let mogul who has amassed a portfolio of over 20% of the entire shed by renting out empty seed trays to unsuspecting chicks and just banging the rents up.

[spyguy]

52 minutes ago, houseface2000 said:

I think low rates are helping people pay a large percentage of therir mortgage off quickly though. A 5x joint salery "massive mortgage" on a 20 year term, 5 year fix is still cheaper than renting round here.After that 5 year period you have paid off a substantial sum of your £200k mortgage regardless of the fact wages are rising very slowly.

Youd hope so but youd be wrong.

Look at how credit has expanded in the last 10 years.

Every person I know who had either an IO mortgage or a high LTV has been spending the IR savings. Theya re sort of people; thats why they got an IO or high LTV mortgage.

[Funn3r]

On 29/07/2017 at 3:08 PM, adarmo said:

The number of people in my office who are only 10 years older than me all openly admit (and quite fondly at that) how they lied on their mortgage applications back in the day 

You almost couldn't not lie. I remember a one particular phone call from years ago, that's how much impression it made on me. I was trying to get a mortgage for some amount  (which would seem like spare change now I expect) and the agent was desperate for me to borrow double what I was asking for. I told the truth about my income and she kept saying "well what about overtime how much do you get, how much might you get supposing a lot of work suddenly came in?" "Bonus, maybe you might get a bonus I mean it could happen?". Even to a know-nothing young lad it was obvious what she wanted me to say. I was worried about the whole thing and stuck to my actuals. Afterwards my friends told me how stupid I was I should have stretched myself to get the biggest mortgage I could.

[spyguy]

On 29/07/2017 at 3:08 PM, adarmo said:

I guess it depends on what people do to earn that money. If you are in a stable profession then more likely you stay up there. If you're a shoot-the-lights-out sales boy then your earnings will be far more volatile. I do think they do an awful lot of due diligence around this these days. I was surprised by the change I saw when getting my mortgage approved a couple of months ago. 

Personally I think that the multiples should be much lower and that would have a positive impact (bring prices down). Don't know if that will ever happen. At least we aren't in a position where they're dishing out self certs again. The number of people in my office who are only 10 years older than me all openly admit (and quite fondly at that) how they lied on their mortgage applications back in the day and now live in super expensive houses, or have paid off the mortgage in full and are looking at a second home with their endowment payout. Even if they keep pushing with MMR I think that it'll take years for the effects of the past to flush out. 

These will be screwed. Unless theyve paid off ~50% of the debt.

Im not sure I believe the 'paid of the mortgage in full' bit, not for Reading.

Reading house prices are very dynamic. They go up like London, but fall like Skegness.

 

 

[DrMartinSanchez]

On 30/07/2017 at 7:28 AM, Habitationi Bulla said:

Its all OK BOE interest rate meeting this week, they're bound to raise interest rates to put a cap on all this reckless lending.

Wonder what gems Carnage will come out with.

Inflation slowing down.

[Option5]

12 minutes ago, DrMartinSanchez said:

Inflation slowing down.

Something from the FT.  And so it begins.............

Moody’s has lowered its outlook for a large part of the UK structured finance sector to negative from stable, citing higher household indebtedness and a weaker macroeconomic backdrop. The rating agency expressed concerns over the collateral for a range of structured finance sectors, where loans are packaged up and sold on as bonds on the capital markets. It has reduced its outlook from stable to negative for asset-backed securities based on auto loans, credit cards, buy-to-let mortgages and so-called “non-conforming” mortgages that do not meet high street lending standards.

“Rising levels of household indebtedness and a weaker macroeconomic environment are the key drivers behind our decision…,” Moody’s said on Monday. It pointed to an economic environment in which “higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed”. The Bank of England has recently expressed concerns over faster than expected levels of consumer credit growth in the UK, which has outpaced household income growth. Moody’s decision is a sign that such issues are seeping into the UK’s structured bond markets, which is an important source of funding for consumer borrowing. The bonds are typically bought by institutional investors, including pension funds and insurance companies, as well as banks. The rating agency also said that macroeconomic disruption from Brexit negotiations could be significant, pointing to a “substantial probability that negotiations will fail and no agreement will be reached”.

 

[adarmo]

1 hour ago, spyguy said:

These will be screwed. Unless theyve paid off ~50% of the debt.

Im not sure I believe the 'paid of the mortgage in full' bit, not for Reading.

Reading house prices are very dynamic. They go up like London, but fall like Skegness.

 

 

This particular individual is Bracknell. Well and truly cleared it. A second home is now on the cards..........  

[ThePrufeshanul]

According to https://www.glassdoor.com/Salary/Moody-s-Salaries-E11303.htm an assistant VP/analyst at Moody's earns an annual salary of  $151k and they have only just noticed that the outlook for the economy is negative.

BY my calculations every contributor on here is due a huge pay rise!

[Democorruptcy]

So the BoE's response to "fears" of a mortgage bubble is to increase the Term Funding Scheme from £100bn to £115bn.

http://news.sky.com/story/the-15bn-stimulus-the-bank-does-and-doesnt-want-10972127

[Guest]

At the end of the day if these people want to buy these properties and these crazy prices because of social stigma and peer pressure, then that's their lookout, not one single BOE or government policy should take into account their financial gamble in the future.

I am giving the finger to people that look down on me as I live a debt free life, eat like a king and keep myself strong physically, mentally and socially as I build a risk margin into my business and the certain fallout that is to come with me able to easily carry comfortably should my income fall 60% and probably could handle more than that, That is long as my landlord does not raise my rent three fold.

The only  ounce of sympathy with me in so called entrepreneurial Britain is where are the choices for many of it's people, rent is stinking high, property prices and mortgages are stinking high. Where are the Steve Jobs, Elon Musks and Bill Gates in the alternate housing business that the UK is crying out for, A way of housing people in clean, safe, cosy, joyful housing at affordable prices or is it really the case that the past 5 governments have made it impossible for them, lose lose is the only option for us all as the bankers coin it in.

[Calcutta]

3 minutes ago, wotsthat said:

At the end of the day if these people want to buy these properties and these crazy prices because of social stigma and peer pressure, then that's their lookout, not one single BOE or government policy should take into account their financial gamble in the future.

I am giving the finger to people that look down on me as I live a debt free life, eat like a king and keep myself strong physically, mentally and socially as I build a risk margin into my business and the certain fallout that is to come with me able to easily carry comfortably should my income fall 60% and probably could handle more than that, That is long as my landlord does not raise my rent three fold.

The only  ounce of sympathy with me in so called entrepreneurial Britain is where are the choices for many of it's people, rent is stinking high, property prices and mortgages are stinking high. Where are the Steve Jobs, Elon Musks and Bill Gates in the alternate housing business that the UK is crying out for, A way of housing people in clean, safe, cosy, joyful housing at affordable prices or is it really the case that the past 5 governments have made it impossible for them, lose lose is the only option for us all as the bankers coin it in.

The council would be all over them. Trailers, shipping containers, f'ing refugee camps would be better than some of the HMOs we're being pushed into. But the council's just won't allow it. You're not even allowed to sleep in your car on your own land if they decide to fight you on it. 

Wonder how many of them are LLs...

[Guest]

45 minutes ago, Calcutta said:

The council would be all over them. Trailers, shipping containers, f'ing refugee camps would be better than some of the HMOs we're being pushed into. But the council's just won't allow it. You're not even allowed to sleep in your car on your own land if they decide to fight you on it. 

Wonder how many of them are LLs...

Its funny, all those monoplies pre Thatcher are no nearly gone, and in most cases I think brilliant. But Housing is the one complete opposite, there is no choice, just pay a lot or pay a lot, there is nothing else

[longgone]

10 minutes ago, wotsthat said:

Its funny, all those monoplies pre Thatcher are no nearly gone, and in most cases I think brilliant. But Housing is the one complete opposite, there is no choice, just pay a lot or pay a lot, there is nothing else

You could fook off. Just a thought. 

Or

Buy cheap agricultural land build silo/earth shelter home and hide it but get your bank account registered there. Survive 4 years hey presto new home.