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kris_77

Re: 'professional Mortgages'

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Hi guys,

I am another one of those 20 something FTBs waiting to get on that elusive ladder, the rungs of which seem to get ever so higher and wider. I live in the South East, earning 50k pa, no significant savings till date(too many long haul holidays every year+high rent ) but am fairly confident I`ll be able to raise around 20k towards a deposit,if needed. I am hoping my wife, who leaves Uni in another 10 months, would be able to find a half decent job next year. I`ve had enough of renting and want to buy my own place now. However, most places I`ve had a look at are either way too small or too pricey.

I`m really confused now..the market shows no signs of cooling, despite the recent rate hike...prices seem to be moving only one way(up). I feel in these days of lax credit, prices are immaterial..as long as you get a rental return of around 5-6%...Things are compounded by the recent influx of East European immigrants, further stretching the housing stock in the South East. One of my relatives owns a 5 bed place in West London which he rented out to 4 Poles late last year..He went in to check the property the other day and found about 10 people living there. The immigrants are able to meet higher rental demands from the landlords as they share the accommodation,thus fuelling the BTL market. I really do not know if I should wait any longer as I cannot see the housing shortage in the South East easing, atleast in the short term.

My question is....

1)Should I wait any further before taking the plunge? Is there any chance prices may dip in the short to medium term?

2) I've been told there are the so called 'professional mortgages' where banks lend you upto 5X your pay..Has anyone heard of them?

3)I am seriously thinking of moving to Wales as prices are cheaper there...Does anyone know of the situation there?Any chances of prices falling in the Cardiff/ Swansea area?

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The interest rate rise will take few months to have a visible effect on prices, so if may be worth waiting a while.

As far as housing goes, I think London offers far better value than many other parts of the country.

If you have to buy you can probably find a property in a reasonable part of the city that yields around 5-6%.

Far better that than some horrible place in Wales that costs 10x local salary.

Why not rather rent, it's cheaper, and the housing slide is only just starting to get under way.

If you want my advice, wait a couple of years and keep saving.

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Hi!

My question is....

1)Should I wait any further before taking the plunge? Is there any chance prices may dip in the short to medium term?

Up to you and yes. Only a major chance of prices dipping, so we can't guarantee anything

2) I've been told there are the so called 'professional mortgages' where banks lend you upto 5X your pay..Has anyone heard of them?

Yes, there called mortgages with an incy wincy bit glossy jargon.

3)I am seriously thinking of moving to Wales as prices are cheaper there...Does anyone know of the situation there?Any chances of prices falling in the Cardiff/ Swansea area?

I dunno about that one and yes.

Edited by Jason

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Just ask yourself this one question.

What happens when the local labour force living 1,2,3,4 to a house (either rented or "owned"/mortgaged) has their economic legs cut from underneath them?

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I would be surprised if 10 years from now, houses were not at similar prices as they are now. The more they go up in the short term, the further they will have to fall to allow wages to catch up. So, if prices are likely to be at similar levels in 10 years, and renting is cheaper than the interest component of a mortgage, then you might be better to save the difference each month, and then try and buy at the "trough".

I think there is little question that we are now at a peak, and even though prices have been bouncing up and down a few percent for the last few months, the days of 20% a year rises are long gone. With interest rates now moving upward I would expect that to put even more negative pressure on prices.

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Just ask yourself this one question.

What happens when the local labour force living 1,2,3,4 to a house (either rented or "owned"/mortgaged) has their economic legs cut from underneath them?

Is there any reason to believe there would be a major policy change by the Govt on immigration from the EU (vague statements from Mr Reid notwithstanding) ? Or are you expecting a downturn in the economy which would render most of the new immigrants jobless?

Personally I think immigration is good for the economy in the short term...it helps keep blue collar wages down and has a deflationary effect on the economy.I cannot see the Govt changing its policy on new EU immigrants as they have contributed to growth figures and most of them would vote labour anyway( they are eligible to vote as EU nationals) However large scale, unregulated immigration has made things more difficult for FTBs like me as the immigrants have fuelled the rental and BTL market,atleast in parts of London and the South East.

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I'd go to Wales if I were you. You'll easily double your salary if you move there.

I don't know about making double but I'll definitely make atleast 15-20k more+its far cheaper to live there. For eg: I pay around 1450 pa in Council Tax where I live now...I would only be paying around 850 in Wales.

I dont mind Wales but...I have to admit,I do not find the prospect of living there very exciting. I suppose I might get used to it,sooner or later. I would like to start a family in a few years and dont want to be stuck in a shitty 2 bed flat with kids.

On the other hand, if prices around here crash( or atleast drop 10-15%) over the next year or two, I would scrap the idea of moving altogether. But its the waiting bit that is the hardest.

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Is there any reason to believe there would be a major policy change by the Govt on immigration from the EU (vague statements from Mr Reid notwithstanding) ? Or are you expecting a downturn in the economy which would render most of the new immigrants jobless?

Personally I think immigration is good for the economy in the short term...it helps keep blue collar wages down and has a deflationary effect on the economy.I cannot see the Govt changing its policy on new EU immigrants as they have contributed to growth figures and most of them would vote labour anyway( they are eligible to vote as EU nationals) However large scale, unregulated immigration has made things more difficult for FTBs like me as the immigrants have fuelled the rental and BTL market,atleast in parts of London and the South East.

Kris,

The jobs cover a variety of sectors - casual work, blue collar, white collar, labouring, trades and even (for the skilled with good langage skills) high level professional jobs. Lower paid jobs are a critical release valve in times of fincnial distress - lose a job with high outgoings and you need income immediately - lose that option and you are up the creek. Let me tell you how the jobs market was like in the early 90's with an example, round here you needed a fliiping "in" i.e. somebody already working in the company to get a job at Pizza Hut.

The whole teritary education system is now so tightly strung that a large propertion of students rely on temp/part time jobs to keep up their studies - to have any chance of completing their course such are the financial strains. Multiple sharers relying on the financial liquidity of other sharers - a domino effect can quickly take hold if no replacements can be found.

The same for multiple sharers in normal employment, and the same for even couples in the lower wage sector, working contract or self-employed - if their rates/wages are being cut (or they lose their job completely) because somebody else can do the job for half/two thirds the price what do you think will happen?

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I would be surprised if 10 years from now, houses were not at similar prices as they are now. The more they go up in the short term, the further they will have to fall to allow wages to catch up. So, if prices are likely to be at similar levels in 10 years, and renting is cheaper than the interest component of a mortgage, then you might be better to save the difference each month, and then try and buy at the "trough".

I think there is little question that we are now at a peak, and even though prices have been bouncing up and down a few percent for the last few months, the days of 20% a year rises are long gone. With interest rates now moving upward I would expect that to put even more negative pressure on prices.

But have you taken the bouyant rental market into account? I feel it would take a bit more than a couple of quarter point rises in interest rates to dissuade potential BTL landlords from their suicidal rush to grab more properties?

Would the rental prices rise in line with interest rate hikes as people who just cannot afford to buy would have to fork out whatever rent the landlords demand off them?

Apparently buyers outnumber sellers 4:1 in the current market..How can prices crash under these circumstances?

The same for multiple sharers in normal employment, and the same for even couples in the lower wage sector, working contract or self-employed - if their rates/wages are being cut (or they lose their job completely) because somebody else can do the job for half/two thirds the price what do you think will happen?

It might lead to social strife in areas with high concentration of new arrivals (as we are currently seeing in Slough) but would it necessarily translate into lower house prices? From what I can see, the new immigrants are displacing the resident labour force from their jobs in these areas but it has done nothing to help FTBs like me

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  • 341 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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