MRMX9 Posted June 29, 2006 Share Posted June 29, 2006 Today's Daily Mail front page has an interesting headline claiming on average people are spending 42% of their salary on mortgage payments. A bit scary if rates ever go up significantly! The Express is also running the 1trillion pounds of mortgage debt story on the front page - but being the Express they think all these people in debt is great news (sign of a booming housing market which will never end!). Quote Link to comment Share on other sites More sharing options...
sign_of_the_times Posted June 30, 2006 Share Posted June 30, 2006 (edited) Today's Daily Mail front page has an interesting headline claiming on average people are spending 42% of their salary on mortgage payments. A bit scary if rates ever go up significantly! The Express is also running the 1trillion pounds of mortgage debt story on the front page - but being the Express they think all these people in debt is great news (sign of a booming housing market which will never end!). what's the difference between the two ? to my ar5e, nothing. (42% sounds a bit 1989 though!) Edited June 30, 2006 by sign_of_the_times Quote Link to comment Share on other sites More sharing options...
Bingley Bloke Posted June 30, 2006 Share Posted June 30, 2006 Sounds about right. £125K is the cheapest I've found a decent basic house to fulfil my requirements. I could probably put £10K down so would be looking at borrowing £110K (6.47 x my salary) The cheapest deals I can find at the momonet work out at 36% of my take home pay (interest only) or 56.5% of my take-home pay (repayment). Given my low income the repayment option is unaffordable due to living costs and the interest only option is grossly stupid. Quote Link to comment Share on other sites More sharing options...
Jason Posted June 30, 2006 Share Posted June 30, 2006 (edited) The Express is also running the 1trillion pounds of mortgage debt story on the front page - but being the Express they think all these people in debt is great news (sign of a booming housing market which will never end!). They just love the spin. Here's the Daily Mail link: http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 Edited June 30, 2006 by Jason Quote Link to comment Share on other sites More sharing options...
Rachel Posted June 30, 2006 Share Posted June 30, 2006 Liberal Democrat shadow chancellor Vince Cable said: 'Mortgage debts have rocketed under this Government leading to a growing minority in extreme financial difficulty. 'With two million households living on a financial knife-edge and a further 500,000 already with serious financial problems, any rise in interest rates could spell financial disaster.' Interest rates are currently 4.5 per cent and they have not been raised since August 2004 but this stability cannot last forever. this is a great quote as i explains exactly how i feel and why i won't buy a property in this climate..despite bulls constantly calling people like me lazy sods who don't want to work hard, etc (oh yeah, all us who think house prices are too expensive take lots of drugs according to another poster on another thread the other day!!) Quote Link to comment Share on other sites More sharing options...
Waiting Patiently Posted June 30, 2006 Share Posted June 30, 2006 Here's todays Mail. Look at the line above the headline : Repayments hit 15 year high as Bank chief warns of 'unsustainable' prices That should give 2 million Mail readers something to think about. Quote Link to comment Share on other sites More sharing options...
Panda Posted June 30, 2006 Share Posted June 30, 2006 Here's todays Mail. Look at the line above the headline : That should give 2 million Mail readers something to think about. A liitle more effective if the Sun carried this front page, i think then we may see a stampede of people cashing in their chips and running swiftly for the exit Quote Link to comment Share on other sites More sharing options...
Fancypants Posted June 30, 2006 Share Posted June 30, 2006 They just love the spin. Here's the Daily Mail link: http://www.dailymail.co.uk/pages/live/arti...in_page_id=1770 complete with a picture of evil Abu Hamza underneath... "buy a house now or this man will steal your children!" Quote Link to comment Share on other sites More sharing options...
Sledgehead Posted June 30, 2006 Share Posted June 30, 2006 (edited) So the Nationwide are saying 42% Of Salaries Go On Mortgage Payments I note the Nationwide are basing their calculations thus: The calculation is based on a person on average take-home pay of £20,500 buying a typical home worth £165,000 and borrowing a mortgage of £125,000. The repayment mortgage would have an interest rate of 5.09 per cent. - worrying indeed given then that the current Nationwide homebuyer mortgage is charging 5.89% SVR. Now consider that Tax Freedom day (see adam smith institute ) has only recently been passed - it was June 3rd. That means, on average, all our wages up to June 3rd go on taxes. As they put it, "How long do we have to spend working for the government, rather than ourselves? The answer is nearly half the year." So, allowing for Nationwide's rather kind interest rates, it looks like Britons have no more than about 10% of their salaries to spend on food, clothing, heating, lighting, insurance, holidays, entertainment, unsecured debt interest etc, etc ... If these figures are at all representative, what on earth would be the effect on a typical household of something like a car repair bill? - don't tell me: bigger monthly minimum repayments on their credit cards! Edited June 30, 2006 by Sledgehead Quote Link to comment Share on other sites More sharing options...
Jason Posted June 30, 2006 Share Posted June 30, 2006 I note the Nationwide are basing their calculations thus: The calculation is based on a person on average take-home pay of £20,500 buying a typical home worth £165,000 and borrowing a mortgage of £125,000. The repayment mortgage would have an interest rate of 5.09 per cent. - worrying indeed given then that the current Nationwide homebuyer mortgage is charging 5.89% SVR. According to Credit Action the average APR spent on all mortgages is 5.27%. For your reference: The avergae APR on all non secured debt is 15.5% Therefore the average APR on all UK private debt is 6.91% Quote Link to comment Share on other sites More sharing options...
enworb Posted June 30, 2006 Share Posted June 30, 2006 42% seems reasonable to me. Even taking into consideration council tax and utility bills, it still leaves a big percentage for food, other necessities and leisure. But yes a raise in IR's would make a big dent in the leisure funds. I'm sure back in the days of low priced property but double figure percentages, it would have been more than 42% going to a mortgage. I remember my brother worrying about the rate going up and he was a trainee bank manager come computer programmer with only a £54k mortgage back in the mid 90s. It's not quite as bad as you are suggesting. Quote Link to comment Share on other sites More sharing options...
simon99 Posted June 30, 2006 Share Posted June 30, 2006 (edited) House prices at record levels of unaffordability by every measure. Until average mortgage payments eat up arount 90% of salary there is no need to be concerned. Edited June 30, 2006 by simon99 Quote Link to comment Share on other sites More sharing options...
greengreen Posted June 30, 2006 Share Posted June 30, 2006 So the Nationwide are saying 42% Of Salaries Go On Mortgage Payments I note the Nationwide are basing their calculations thus: The calculation is based on a person on average take-home pay of £20,500 buying a typical home worth £165,000 and borrowing a mortgage of £125,000. The repayment mortgage would have an interest rate of 5.09 per cent. - worrying indeed given then that the current Nationwide homebuyer mortgage is charging 5.89% SVR. Now consider that Tax Freedom day (see adam smith institute ) has only recently been passed - it was June 3rd. That means, on average, all our wages up to June 3rd go on taxes. As they put it, "How long do we have to spend working for the government, rather than ourselves? The answer is nearly half the year." So, allowing for Nationwide's rather kind interest rates, it looks like Britons have no more than about 10% of their salaries to spend on food, clothing, heating, lighting, insurance, holidays, entertainment, unsecured debt interest etc, etc ... If these figures are at all representative, what on earth would be the effect on a typical household of something like a car repair bill? - don't tell me: bigger monthly minimum repayments on their credit cards! I think that there is a slight miscalculation in your figures: The news article states that 42% of net take home pay is paid on mortgage. The adam smith info gives the June 3rd date as the tax free day which equates to around 154 days in a year is tax: 42%. This then leaves the other 58% is the net take home pay. 42% of this net take home pay is then spent on the mortgage. This does not leave 10% but leaves 58% of their net take home pay for other costs or in other words 33.5% of their gross pay. Quote Link to comment Share on other sites More sharing options...
?...! Posted June 30, 2006 Share Posted June 30, 2006 (edited) According to Credit Action the average APR spent on all mortgages is 5.27%. For your reference: The avergae APR on all non secured debt is 15.5% Therefore the average APR on all UK private debt is 6.91% 6.91% * £1,199,000,000,000 = £82.85 Billion per year or £2863 per job (assuming total employment for 28.94 million) So £2863 is the cost per year of servicing the debt for each job in the UK. Median salary = £22,900 £22,900 * .78 = £17,862 £2,863 / £17,862 = 16% Edit: This is just servicing debt not repayment Edited June 30, 2006 by ?...! Quote Link to comment Share on other sites More sharing options...
simon99 Posted June 30, 2006 Share Posted June 30, 2006 (edited) The daily dose of house price boom is now relentless and has been for 5 years, the Express are now the new champions of this new era of unaffordable housing. The conditions are such that if your not on the housing ladder your f**ked under this government. Edited June 30, 2006 by simon99 Quote Link to comment Share on other sites More sharing options...
enworb Posted June 30, 2006 Share Posted June 30, 2006 I think that there is a slight miscalculation in your figures: The news article states that 42% of net take home pay is paid on mortgage. The adam smith info gives the June 3rd date as the tax free day which equates to around 154 days in a year is tax: 42%. This then leaves the other 58% is the net take home pay. 42% of this net take home pay is then spent on the mortgage. This does not leave 10% but leaves 58% of their net take home pay for other costs or in other words 33.5% of their gross pay. 66.5% seems nearer the mark. The percentage I pay is around the 40% mark but I bought cheaply in 2001. It's not possible any more. Quote Link to comment Share on other sites More sharing options...
?...! Posted June 30, 2006 Share Posted June 30, 2006 The conditions are such that if your not on the housing ladder your f**ked under this government. Why? Stigma? Quote Link to comment Share on other sites More sharing options...
simon99 Posted June 30, 2006 Share Posted June 30, 2006 (edited) Why? Stigma? Because you get forced to spend expensive rent forever more cos you cant afford to buy a house. The rich get much richer than ever before, the poor get poorer, and this government is supposed to be socialist. Edited June 30, 2006 by simon99 Quote Link to comment Share on other sites More sharing options...
?...! Posted June 30, 2006 Share Posted June 30, 2006 Because you get forced to spend expensive rent forever more cos you cant afford to buy a house. The rich get much richer than ever before, the poor get poorer, and this government is supposed to be socialist. If you believed that, you would already be a landlord. Quote Link to comment Share on other sites More sharing options...
simon99 Posted June 30, 2006 Share Posted June 30, 2006 Not if I couldnt afford to buy a house in the first place. Quote Link to comment Share on other sites More sharing options...
snowman Posted June 30, 2006 Share Posted June 30, 2006 So the Nationwide are saying 42% Of Salaries Go On Mortgage Payments I note the Nationwide are basing their calculations thus: The calculation is based on a person on average take-home pay of £20,500 buying a typical home worth £165,000 and borrowing a mortgage of £125,000. The repayment mortgage would have an interest rate of 5.09 per cent. - worrying indeed given then that the current Nationwide homebuyer mortgage is charging 5.89% SVR. So the calculation is based on the person with average take home pay having a £40,000 deposit. Good for them. I'm no-where near getting that sort of deposit and I haven't eaten for months. I also don't have an Ipod. How realistic is this for FTBs? What percentage of an FTB's take home pay goes on a mortgage? Quote Link to comment Share on other sites More sharing options...
Live_in_hope Posted June 30, 2006 Share Posted June 30, 2006 (edited) Probably about the same for renting eh for most folk though our rent is sub 30% I've a 60K deposit though no way am i buying a shed, trying to get a council house at the moment as I don't think property prices will ever come down, stagnation stagnation for the next few years, anyone who can give me advice on getting a council property please let me know, pms welcome Edited June 30, 2006 by Live_in_hope Quote Link to comment Share on other sites More sharing options...
Rachman Posted June 30, 2006 Share Posted June 30, 2006 Probably about the same for renting eh for most folk though our rent is sub 30% I've a 60K deposit though no way am i buying a shed, trying to get a council house at the moment as I don't think property prices will ever come down, stagnation stagnation for the next few years, anyone who can give me advice on getting a council property please let me know, pms welcome I know each person is different, but why should someone with £ in the bank as you do be entitled to properties that are subsidised by the rest of us ? Not trying to be rude, but the cost of renting a council house is NOT the cost of the house..... Quote Link to comment Share on other sites More sharing options...
Live_in_hope Posted June 30, 2006 Share Posted June 30, 2006 (edited) I know each person is different, but why should someone with £ in the bank as you do be entitled to properties that are subsidised by the rest of us ? Not trying to be rude, but the cost of renting a council house is NOT the cost of the house..... All the council housing associations I've come across in the SE allow you to have up to £75K in the bank, so why not, I know plenty of folk who've got a council house sold it for a small fortune & done very well for themselves, so why not ? Have you now realised that part of the reason for the HPI over the last few years was these said folk selling their council houses and moving into something better ???????????? Edited June 30, 2006 by Live_in_hope Quote Link to comment Share on other sites More sharing options...
pobby Posted June 30, 2006 Share Posted June 30, 2006 So what percentage of income if say rates go to 6.5%? Quote Link to comment Share on other sites More sharing options...
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