70PC Posted October 30, 2023 Share Posted October 30, 2023 "Young Londoners desperate to get on the housing market are signing up at an alarming pace to “marathon mortgages” that last at least 35 years, warn financial advisers. High numbers of under 30s are buying houses or more usually flats with mortgage deals that extend beyond a typical retirement age of 67 in the latest sign that there is a huge gap between demand and supply in the capital’s property market. While the longer-term deals cut monthly repayments, they also hugely increase the size of the total debt in ways some warn could later be seen as a mis-selling scandal encouraged by big banks. Figures from Experian show that in 2020 11% of under 30’s in London who opened a mortgage did so with a term of 35 years plus.In 2023 this figure has risen to 27%." https://www.standard.co.uk/business/marathon-mortgages-london-banks-house-prices-interest-rates-35-year-borrowing-property-loan-b1116745.html Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted October 30, 2023 Share Posted October 30, 2023 How the hell did the regulator get away with approving these longer-duration mortgages deep into retirement. I raise this issue re: the bank I was working for a while back - because risk aspects seem to have been thrown out the winda... I mean... mortgage deep into retirement while we are now allowed to cash in our pensions early... removing the stability of income in retirement. The politicians and regulators are rotten to the core imo - they are acting in the short-term interest of banks... undermining the broader stability of the economy. Rant over. Quote Link to comment Share on other sites More sharing options...
frederico Posted October 30, 2023 Share Posted October 30, 2023 Hmm , under 30, 35 years, retirement at 67 yet mortgage lasting into retirement, there’s the real problem, people can’t do simple math Quote Link to comment Share on other sites More sharing options...
The Angry Capitalist Posted October 30, 2023 Share Posted October 30, 2023 1 hour ago, 70PC said: "Young Londoners desperate to get on the housing market are signing up at an alarming pace to “marathon mortgages” that last at least 35 years, warn financial advisers. High numbers of under 30s are buying houses or more usually flats with mortgage deals that extend beyond a typical retirement age of 67 in the latest sign that there is a huge gap between demand and supply in the capital’s property market. While the longer-term deals cut monthly repayments, they also hugely increase the size of the total debt in ways some warn could later be seen as a mis-selling scandal encouraged by big banks. Figures from Experian show that in 2020 11% of under 30’s in London who opened a mortgage did so with a term of 35 years plus.In 2023 this figure has risen to 27%." https://www.standard.co.uk/business/marathon-mortgages-london-banks-house-prices-interest-rates-35-year-borrowing-property-loan-b1116745.html This is a very dangerous trend. I think if this gets to become normal I am leaving the country because at that point the economy becomes modern serfdom. I can't say I am surprised by this, however. Quote Link to comment Share on other sites More sharing options...
Pebbles Posted October 30, 2023 Share Posted October 30, 2023 I said this would happen. Certain posters said that these longer mortgages would remain rare. well they didn't. We need restrictions in credit and affordability. But we are seeing it going the other way from including dual incomes in mortgages to extending terms of mortgages and lending multiples. Quote Link to comment Share on other sites More sharing options...
MerchantNavy Posted October 30, 2023 Share Posted October 30, 2023 Had a couple from London move in near us. They earn around £70k combined. One is a teacher (head of year) and the other is carpenter. Maxed out their mortgage, £265k mortgage with expected 30 years run time. They are already 40 so must have put expected retirement at 70! Deposit put down was £140k. All so they could have a 5 bed (and a loft room) despite not having children. Absolute madness. The only thing going for them was the condition of the house. Immaculate. Quote Link to comment Share on other sites More sharing options...
Dreamcasting Posted October 30, 2023 Share Posted October 30, 2023 8 minutes ago, The Angry Capitalist said: This is a very dangerous trend. I think if this gets to become normal I am leaving the country because at that point the economy becomes modern serfdom. I can't say I am surprised by this, however. Good luck, because they've got you stitched up by something wherever you go 👿 Quote Link to comment Share on other sites More sharing options...
Lagarde's Drift Posted October 30, 2023 Share Posted October 30, 2023 9 minutes ago, MerchantNavy said: Had a couple from London move in near us. They earn around £70k combined. One is a teacher (head of year) and the other is carpenter. Maxed out their mortgage, £265k mortgage with expected 30 years run time. They are already 40 so must have put expected retirement at 70! Deposit put down was £140k. All so they could have a 5 bed (and a loft room) despite not having children. Absolute madness. The only thing going for them was the condition of the house. Immaculate. They must be banking on inflation and wage growth to wipe out their debt. Quote Link to comment Share on other sites More sharing options...
Orb Posted October 30, 2023 Share Posted October 30, 2023 1 minute ago, Lagarde's Drift said: They must be banking on inflation and wage growth to wipe out their debt. Which, over 30 years, they're more likely to get, no? Quote Link to comment Share on other sites More sharing options...
Housepricecrash91 Posted October 30, 2023 Share Posted October 30, 2023 Yep, 35 year plus mortgages are not ideal and most likely should be banned to control house price growth and to stop banks making a killing from hard working people. Unfortunately most people are dumb in this country, so they will sign up to anything as long as it allows them to borrow more. Inflation and wage growth will probably erode the debt over time....Also at some stage a lot of people will inherit money, which can be used to pay down the debt before 35 years. Quote Link to comment Share on other sites More sharing options...
longgone Posted October 30, 2023 Share Posted October 30, 2023 Wage growth LoL, look at the pathetic chitbox they are commiting to buy in the first place. Amazing what the plebs will do for cheap bricks and plastic tat. Just limit lending to 3x single wage or 3.5 for a couple and make london minimum wage 55k. Quote Link to comment Share on other sites More sharing options...
msi Posted October 30, 2023 Share Posted October 30, 2023 57 minutes ago, Pebbles said: I said this would happen. Certain posters said that these longer mortgages would remain rare. well they didn't. We need restrictions in credit and affordability. But we are seeing it going the other way from including dual incomes in mortgages to extending terms of mortgages and lending multiples. You mean the restrictions that were abolished by Thatcher? Quote Link to comment Share on other sites More sharing options...
Lagarde's Drift Posted October 30, 2023 Share Posted October 30, 2023 1 hour ago, Orb said: Which, over 30 years, they're more likely to get, no? Past performance is no guarantee, but on balance, that is probably a correct assessment imho. Quote Link to comment Share on other sites More sharing options...
Housepricecrash91 Posted October 30, 2023 Share Posted October 30, 2023 41 minutes ago, longgone said: Just limit lending to 3x single wage or 3.5 for a couple and make london minimum wage 55k. This. Not sure who thought 5 times income was a good idea. Imagine if this was brought in... It would be political suicide, as house prices would plummet. Quote Link to comment Share on other sites More sharing options...
longgone Posted October 30, 2023 Share Posted October 30, 2023 14 minutes ago, Housepricecrash91 said: This. Not sure who thought 5 times income was a good idea. Imagine if this was brought in... It would be political suicide, as house prices would plummet. Sadly you have a battle between those who own everything and those who work for fiat to pay for it over a lifetime, they want the worker on the hamster wheel, why have one gear when you have have two with wife working, why not have a 3rd or 4th gear by making their strides artificially bigger with cheap fiat. Quote Link to comment Share on other sites More sharing options...
desiringonlychild Posted October 30, 2023 Share Posted October 30, 2023 I have a long mortgage which I took out at 27 but I overpay £800-1000 every month so what's the difference between that and shortening the term? It gives me more flexibility if I needed to pay childcare fees (until age 3) rather than quit work. If I didn't work, my husband would have to earn £160k per month (student loan paid off next year) to earn our current household income. And me not working would make it even less likely we can pay off the mortgage within a decent time frame. household earnings have increased from £75k to £120k in 4 years. Quote Link to comment Share on other sites More sharing options...
A.steve Posted October 30, 2023 Share Posted October 30, 2023 29 minutes ago, desiringonlychild said: If I didn't work, my husband would have to earn £160k per month... You sound like a demanding wife! £160k per month implies £1,920,000 annually. 2 hours ago, MerchantNavy said: All so they could have a 5 bed (and a loft room) despite not having children. Absolute madness. I really wanted a 2-bed house - but my requirements for non-bedrooms meant I couldn't meet that without at least 4 bedrooms. Downstairs space, storage space, garages, overall location/local-environment and outdoor space can also be important to people without children. I also think we're about to see substantial inflation. When I supermarket shop, I monitor prices of things that would be essential basics for people without much disposable income. I perceived prices had risen (like for like) on several of those items by about 20-30% in the past 3 months... it wasn't everything... one item had fallen by 15% - but the bias was upwards by a lot more than the overall CPI/RPI would suggest. These things do not represent a significant proportion of my budget - but I think they will force wages to rise - and with that... so will medium-term inflation and expectations thereof. I think interest rates may rise further - but... for your aspirational childless neighbours... assuming they can remain solvent... I think it will work out for them long-term. Quote Link to comment Share on other sites More sharing options...
A.steve Posted October 30, 2023 Share Posted October 30, 2023 1 hour ago, msi said: Quote We need restrictions in credit and affordability You mean the restrictions that were abolished by Thatcher? Can you be more specific? I'm aware of various epic errors by Thatcher that were either mistakes or calculated malicious acts. I see them more as the former than the latter - but I can understand why others would see it the other way. I guess, with Thatcher, it depends upon whether you think Thatcher understood that a declared M3 expansion monetary target could not be expected to restrict the money supply - or not. I'm inclined to believe that she did not have the necessary intellectual capacity (though she had many other extraordinary abilities.) My opinion is coloured by an extraordinary experience I had - shortly after she was no-longer PM... when I was in the same room (in a school, with a lot of other people). I didn't speak - though there was a narrow opportunity to do so - I only observed. My lasting impression was that Thatcher was struggling with mental health problems... She did not have her $41t together. It was obvious to me why she could no longer retain the PM role. Quote Link to comment Share on other sites More sharing options...
MARTINX9 Posted October 31, 2023 Share Posted October 31, 2023 3 hours ago, MerchantNavy said: Had a couple from London move in near us. They earn around £70k combined. One is a teacher (head of year) and the other is carpenter. Maxed out their mortgage, £265k mortgage with expected 30 years run time. They are already 40 so must have put expected retirement at 70! Deposit put down was £140k. All so they could have a 5 bed (and a loft room) despite not having children. Absolute madness. The only thing going for them was the condition of the house. Immaculate. The teacher will be on the generous teachers pension scheme - so they will probably be able to carry on paying the mortgage into retirement. Assuming of course the government delivers on all these promised pension payments for all their unfunded public sector schemes across the NHS civil service, schools etc. The carpenter - perhaps not. Quote Link to comment Share on other sites More sharing options...
bartelbe Posted October 31, 2023 Share Posted October 31, 2023 Desperate prop for a collapsing market. Too little too late. Quote Link to comment Share on other sites More sharing options...
desiringonlychild Posted October 31, 2023 Share Posted October 31, 2023 42 minutes ago, A.steve said: You sound like a demanding wife! £160k per month implies £1,920,000 annually. I really wanted a 2-bed house - but my requirements for non-bedrooms meant I couldn't meet that without at least 4 bedrooms. Downstairs space, storage space, garages, overall location/local-environment and outdoor space can also be important to people without children. I also think we're about to see substantial inflation. When I supermarket shop, I monitor prices of things that would be essential basics for people without much disposable income. I perceived prices had risen (like for like) on several of those items by about 20-30% in the past 3 months... it wasn't everything... one item had fallen by 15% - but the bias was upwards by a lot more than the overall CPI/RPI would suggest. These things do not represent a significant proportion of my budget - but I think they will force wages to rise - and with that... so will medium-term inflation and expectations thereof. I think interest rates may rise further - but... for your aspirational childless neighbours... assuming they can remain solvent... I think it will work out for them long-term. £160k per year obviously- typo. It's just taxes and NI- we currently sand £120k combined.. Quote Link to comment Share on other sites More sharing options...
A.steve Posted October 31, 2023 Share Posted October 31, 2023 17 minutes ago, desiringonlychild said: £160k per year obviously- typo. It's just taxes and NI- we currently sand £120k combined.. :-) Nothing is obvious in these inflationary times. If I were to be supported by a wife's income... I could burn through £2m/anm easily. The problem with wasting time earning money is that you don't have enough time to work out how to spend it. That said, I'm curious about your arithmetic for the equivalence of those combined and equivalent single income figures. Quote Link to comment Share on other sites More sharing options...
spyguy Posted October 31, 2023 Share Posted October 31, 2023 9 hours ago, msi said: You mean the restrictions that were abolished by Thatcher? There has been no proper legal restrictions or regulation of UK mortgages until MMR in 2014. Quote Link to comment Share on other sites More sharing options...
desiringonlychild Posted October 31, 2023 Share Posted October 31, 2023 (edited) 6 hours ago, A.steve said: 🙂 Nothing is obvious in these inflationary times. If I were to be supported by a wife's income... I could burn through £2m/anm easily. The problem with wasting time earning money is that you don't have enough time to work out how to spend it. That said, I'm curious about your arithmetic for the equivalence of those combined and equivalent single income figures. My husband currently earns £75k with a non contributory 10% pension. Only £5k on student loan balance so we will pay it off by the end of the year and I don't have a student loan. This will equate to nett £4370 and I earn nett £2730. That is combined £7100. I just reran the numbers and assuming that he wouldn't have non contributory pension in a more highly paid role (not a bad assumption as this is his first role with non contributory pension), he would need to earn £145k to get nett £7103. So not £160k but still needs to double his income! Edited October 31, 2023 by desiringonlychild Quote Link to comment Share on other sites More sharing options...
A.steve Posted October 31, 2023 Share Posted October 31, 2023 9 minutes ago, desiringonlychild said: I just reran the numbers ... Whooooo-hooooo! I just made you £15k/anm richer using nothing more than your own arithmetic. 😉 Quote Link to comment Share on other sites More sharing options...
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