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Realistbear

" Good News" From Lenders As Salaries Fall Behind H P I

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http://observer.guardian.co.uk/cash/story/0,,1853907,00.html

First-time loans up to five times your salary
Rising prices have forced lenders to offer more
creative deals
, writes Laura Brady
Sunday August 20, 2006
The Observer
No first-time buyer would make any apologies for borrowing as much as they can these days. And why should they? Even in this cooler housing market, Nationwide Building Society is still forecasting price rises of 5 per cent this year. But as the average wage has increased by 3.6 per cent in the past year, according to the Office for National Statistics, first-timers still find themselves playing a very lengthy game of catch-up.
The latest data from the Council of Mortgage Lenders shows the average first-time buyer now borrows 3.21 times their income. This is the highest figure on record but it may still be optimistic. In this case, the definition of a first-time buyer is someone who is buying a property but not selling one. The figures therefore account for people who may have equity behind them from an earlier visit to the property ladder. They could use this money as a large deposit, enabling them to borrow less.
The good news for true first-time buyers is that banks and building societies are generally lending more
, says Ray Boulger, senior technical director at broker John Charcol. 'The amount first-time buyers can borrow has edged upward over the last 12 months as a result of sustained low interest rates and growing competition between lenders.'
Traditionally lenders would assess borrowing levels using income multiples, which meant lending a typical 3.5 times a single salary and 2.75 times joint. Today, four times single and three times joint would be closer to typical, says Boulger

How can even more indebtedness be "good news." :lol:

Good news for the bankruptcy trade and for the EAs who specialise in auctions. <_<

Gordon will have to keep the money supply flowing as he can't rely on inflationary IR for much longer.

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http://observer.guardian.co.uk/cash/story/0,,1853907,00.html

First-time loans up to five times your salary
The latest data from the Council of Mortgage Lenders shows the average first-time buyer now borrows 3.21 times their income. This is the highest figure on record but it may still be optimistic. In this case, the definition of a first-time buyer is someone who is buying a property but not selling one. The figures therefore account for people who may have equity behind them from an earlier visit to the property ladder. They could use this money as a large deposit, enabling them to borrow less.
Gordon will have to keep the money supply flowing as he can't rely on inflationary IR for much longer.
I'm always wary of these statistics and this is a classic example. This proves that a lot of FTBs are not really FTBs at all. I wonder how many real FTBs there really are?

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"Just Gimme the truth" JL. I find this a bit like the Orchestra still playing while the Titanic was going down !!futile.

Spin like this will not stop the crash.

Edited by faloos

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"Just Gimme the truth" JL. I find this a bit like the Orchestra still playing while the Titanic was going down !!futile.

Spin like this will not stop the crash.

What crash, the last time I looked out of the Window we'd missed the iceberg :D

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Five times salary is a perfectly sensible lending decision for a young graduate with good earnings prospects. So before passing judgement on the banks I'd need to know who it was they were lending five times salary to.

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Five times salary is a perfectly sensible lending decision for a young graduate with good earnings prospects.

Of course 5x a typical 'young graduate' salary won't even buy them a one-bed flat over a crack den in most of the country. That's why the average FTB is in their mid-30s these days, when a 5x income mortgage is insane unless you expect massive wage inflation.

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Guest pioneer31

What crash, the last time I looked out of the Window we'd missed the iceberg :D

only the one iceberg around eh?

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  • 337 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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