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Marek

More Sensible Mortgages Now Please

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When do banks finally wake-up and strat lending only 3 to 3.5 times our annual income? That should really push the prices down shouldn't it?

My wife and I earn together 60k per year, we live in London. If we want to buy a decent 2 bed house in Finsbury park we can only dream on. Hopefully in 2 years time things will change in our favour.

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when they cant make money out lending at higher multiples, don't worry inflation will be running at 15% per year and interest rates will touch 12%.

Edited by moosetea

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Guest barebear
When do banks finally wake-up and strat lending only 3 to 3.5 times our annual income? That should really push the prices down shouldn't it?

My wife and I earn together 60k per year, we live in London. If we want to buy a decent 2 bed house in Finsbury park we can only dream on. Hopefully in 2 years time things will change in our favour.

Surely then by being able to get 5x your income suits you then doesn't it or there would have to be a crash of biblical proportions and low unemployment for you ever to get your wish.

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Surely then by being able to get 5x your income suits you then doesn't it or there would have to be a crash of biblical proportions and low unemployment for you ever to get your wish.

5x our income? that's exacly why prices are so unrealistic now. realistic level is 3 or 3.5 times no more than that

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when they cant make money out lending at higher multiples, don't worry inflation will be running at 15% per year and interest rates will touch 12%.

Is that wage inflation or food and fuel inflation? Interest rates will get higher, and house prices lower. ;)

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My wife and I earn together 60k per year, we live in London. If we want to buy a decent 2 bed house in Finsbury park we can only dream on. Hopefully in 2 years time things will change in our favour.

The average property in London costs about 11x the average wage (about 360k/33k, maybe slightly more).

So you should be living in a house that costs about 660k, if you did the average thing (or slightly less considering 2 incomes)

In the last boom prices peaked at about 8 times wages, and dropped to 4 times wages in the bust.

That makes this bubble much bigger than the last.

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5x our income? that's exacly why prices are so unrealistic now. realistic level is 3 or 3.5 times no more than that

Realistic in what sense? The reason people were offered and took high multiple mortgages was because the payments were low due to the low interest rates. At 5% a 25-year 5x salary mortgage takes 45% of your take-home (using 30K per year as a salary). At a 7.5% rate, a 4x mortgage takes 46%. At 9%, a 3.5x mortgage takes about the same. So which is the number you need to be realistic? The multiplier, the interest rate, or the percentage of your income?

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When do banks finally wake-up and strat lending only 3 to 3.5 times our annual income? That should really push the prices down shouldn't it?

My wife and I earn together 60k per year, we live in London. If we want to buy a decent 2 bed house in Finsbury park we can only dream on. Hopefully in 2 years time things will change in our favour.

They most certainly will.

I bought my first place in Finny Park back in 1997. The last 'trough' in house prices. It was a one bed flat for 54K...barely twice my income at the time, but I still had to get a financial guarantor for my mortgage as I was self-employed with only 2 years of 'books'. This was when mortgages were regulated; 5 years later they were giving them away with every packet of cornflakes.

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Realistic in what sense? The reason people were offered and took high multiple mortgages was because the payments were low due to the low interest rates. At 5% a 25-year 5x salary mortgage takes 45% of your take-home (using 30K per year as a salary). At a 7.5% rate, a 4x mortgage takes 46%. At 9%, a 3.5x mortgage takes about the same. So which is the number you need to be realistic? The multiplier, the interest rate, or the percentage of your income?

I guess in this case percentage of your income. IMHO any payments over 30% of your monthly income is only asking for a trouble. Rates go up and down

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I guess in this case percentage of your income. IMHO any payments over 30% of your monthly income is only asking for a trouble. Rates go up and down

Then, unless my calculations are screwy, you and your wife need interest rates to drop below 4.5% to make a 3.5x mortgage meet your 30% of take-home income criterion. Now who is being unrealistic?

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When do banks finally wake-up and strat lending only 3 to 3.5 times our annual income? That should really push the prices down shouldn't it?

My wife and I earn together 60k per year, we live in London. If we want to buy a decent 2 bed house in Finsbury park we can only dream on. Hopefully in 2 years time things will change in our favour.

**Sobs in sympathy**

There are families in this country on half that.....and manage.

Your problem is you want a

decent 2 bed house in Finsbury park

Lower your sights, get real...... ....or dream on <_<

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Then, unless my calculations are screwy, you and your wife need interest rates to drop below 4.5% to make a 3.5x mortgage meet your 30% of take-home income criterion. Now who is being unrealistic?

I recall ir's of around 17% on my first house. As a single person I found a way. 30% of take home pay would have been bliss, I had a sandwich maker for a cooker and a sink for a fridge. Of course I didn't suffer because I worked 84 odd hours a week to survive and never realised I never had a cooker because I never had anything to put on it and even if I had I wouldn't have had the time to turn it on. <_<

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I recall ir's of around 17% on my first house. As a single person I found a way. 30% of take home pay would have been bliss, I had a sandwich maker for a cooker and a sink for a fridge. Of course I didn't suffer because I worked 84 odd hours a week to survive and never realised I never had a cooker because I never had anything to put on it and even if I had I wouldn't have had the time to turn it on. <_<

Just out of interest, when was this, who was the mortgage with, and why weren't you renting?

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**Sobs in sympathy**

There are families in this country on half that.....and manage.

Your problem is you want a

Lower your sights, get real...... ....or dream on <_<

it's finsbury park for ****** sake, not f*ing chelsea!

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Same boat myself Marek - me & wife on 65k gross (10k higher than twice the average salary (2x25k) - take home of around £3,100 a month. For that I would want to comfortably afford a modest 2-3 bedroom home.

Finsbury Park (hardly Hampstead dahling..):

http://www.rightmove.co.uk/viewdetails-195...=1&tr_t=buy

Taking a 10% deposit, would mean around £1,600 a month repayment. So 50% of combined take home pay on the mortgage... To me, 30-40% fall (so 1k a month seems reasonable)

But at the moment? No thanks :ph34r: - too risky at the start of a potential recession, I'll wait on the crash.

EDIT: typos

Edited by garybug

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5x our income? that's exacly why prices are so unrealistic now. realistic level is 3 or 3.5 times no more than that

This is the KEY to the WHOLE business of House Prices. The Vested Interests DELIBERATELY changed the age-old rule of thumb - and started lending well over 3.5 x salary -- AND THIS IS WHY WE'RE IN THE MESS WE ARE IN NOW. IT IS THAT SIMPLE. DEAD SIMPLE. They got really greedy - and changed this - so now it takes 12 x salary in many places to "buy" a property. This is UTTER MADNESS. It is SLAVERY and BLACKMAIL. No more to discuss.

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Same boat myself Marek - me & wife on 65k gross (10k higher than twice the average salary (2x25k) - take home of around £3,100 a month.

Your take home would be much higher than that with a single earner of 65K. How are you figuring £3100 with two earners?

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Never mind 12x.

65k, at 5x salary & a small deposit gives a 320k mortgage - thats £2,200 a month.

I personally would not be able to sleep at night with that over my head.. :( . Hell knows how / why people do it.

WTE: I'm on 42k, take home 2k ish after travelcard deduction. Mrs on 23ish, so 1,100 ish after travel

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This is the KEY to the WHOLE business of House Prices. The Vested Interests DELIBERATELY changed the age-old rule of thumb - and started lending well over 3.5 x salary -- AND THIS IS WHY WE'RE IN THE MESS WE ARE IN NOW. IT IS THAT SIMPLE. DEAD SIMPLE. They got really greedy - and changed this - so now it takes 12 x salary in many places to "buy" a property. This is UTTER MADNESS. It is SLAVERY and BLACKMAIL. No more to discuss.

Eric, the multiples went up in the last boom they'll go down in this bust. It's not vested interests its loose fiat money.

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Okay. Interesting concept of take home. Most people just mean it as "post-tax and NI".

Er, straightforward is it not? 65k gross = circa 3,100 'take home' in our pockets after tax, NI, Travelcard & gym.

Given that, would you consider £1,600 mortage a month for the modest 3 bedder in Finsbury Park unreasonable? I'm interested to know what you consider an above averge earner should 'expect' in Zone 3?

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Er, straightforward is it not? 65k gross = circa 3,100 'take home' in our pockets after tax, NI, Travelcard & gym.

Given that, would you consider £1,600 mortage a month for the modest 3 bedder in Finsbury Park unreasonable? I'm interested to know what you consider an above averge earner should 'expect' in Zone 3?

What do you mean by straightforward? I'm not finding it too complicated, it's just not how the phrase is normally used. Most people use take-home to mean the amount they get in their pay-packet or on their wage-slip post-tax, not the amount they get minus any arbitrary costs they want to include. Gym? Why not the cost of your lunch or a few beers to wind down after work too?

As for the housing question. I have no opinion. I've never had any desire whatsoever to live anywhere in London. I'm only interested in the general issues of how people view affordability and their understanding of the numbers. Your numbers didn't fit, so I was curious why.

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Realistic in what sense? The reason people were offered and took high multiple mortgages was because the payments were low due to the low interest rates. At 5% a 25-year 5x salary mortgage takes 45% of your take-home (using 30K per year as a salary). At a 7.5% rate, a 4x mortgage takes 46%. At 9%, a 3.5x mortgage takes about the same. So which is the number you need to be realistic? The multiplier, the interest rate, or the percentage of your income?

hmmmmmmmm..... bit of a simplistic view there. Lets say your salary goes up and you have extra cash to spare. Would you prefer that cash to get 9% interest and pay off a larger piece of your mortgage, or 5% interest and pay off a smaller part?

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hmmmmmmmm..... bit of a simplistic view there. Lets say your salary goes up and you have extra cash to spare. Would you prefer that cash to get 9% interest and pay off a larger piece of your mortgage, or 5% interest and pay off a smaller part?

I think you misinterpreted the purpose of the comparison. I wasn't making any statement about which was preferable, I was asking Marek what his measure was and demonstrating that multiples aren't the only variable.

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I think you misinterpreted the purpose of the comparison. I wasn't making any statement about which was preferable, I was asking Marek what his measure was and demonstrating that multiples aren't the only variable.

No I didn't misinterpret anything.

Affordability is based on forward projection as well as how much you can afford right now. In a scenario where houses are 3.5x and 9% your forward projection for reducing your debt and mortgage payment quicker is much better than 5x at 5%. This allows people to do things like....... have children.

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  • 295 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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