Monday, October 24, 2011

Another Home-Owner-Ist Milestone

Millions may still have a mortgage in their 70s as we buy first homes later

"Millions are at risk of becoming ‘OAP mortgagees’ as they buy their first homes later in life. Many are being forced to rent for much longer than intended because of job insecurity and a credit drought. Banks and building societies are also demanding large deposits before approving loans. As a result, more than a quarter of private tenants currently seeking to buy are now in their 40s. If they do manage to get on the property ladder, they will be faced with either paying off their mortgage faster than the 25-year norm, or being lumbered with repayments well into their 70s."

Posted by mark wadsworth @ 10:29 AM (3611 views)
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22 thoughts on “Another Home-Owner-Ist Milestone

  • sibley's b'stard child says:

    Well, it’s clear what the problem is. All the authorities have to do is raise the minimum retirement age to 80. That way, the average FTB age can easily raise to, say, 50-55.

    Honestly, if the FTBs only did what we did in the 60s & 70s and bought at a sensible age of 23 while the wife stayed at home with the kids they wouldn’t be in this mess.

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  • mark wadsworth says:

    This is what Home-Owner-Ism is really all about; get people to pay nigh unaffordable rent for half their lives and then struggle with an unaffordable mortgage for the rest.

    Ah well, at least we’ve got food security.

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  • I was out on Friday night with friends and recently did some work on behalf of the Daughter – during conversation up came the property market – “our XXXXXX is overpaying on the mortgage in order to have more equity so they can move in the future” I swiftly moved to another topic because I know that whilst the Daughter and her Husband are overpaying each month the property prices are adjusting downover (oop North) at a far faster rate than the overpayments.

    Seems to me that those who got on “the ladder” in say 2007-09 are just as stuffed as those who are currently priced out !

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  • Will articles like this make people think:
    1. Crikey, I need to get on the housing ladder as soon as I can then, or
    2. Ah stuff it, if that’s what’s in store for me then I’ll wait til prices are more sensible or maybe just stay renting.
    I’m sure 1 used to be the most common line of thinking, which in itself kept prices rising as demand stayed high, but as time goes by, more and more are converting to 2. The crash is inevitable.

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  • general congreve says:

    @3 – Throwing good money after bad. If I were them I’d be preparing for default by using the extra cash to buy untraceable physical gold, then when the point comes that they have to walk and declare bankruptcy, they’ll have a nice little nest egg the banks won’t be able to get their hands on so they’re ready to face the future.

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  • 1. sibley’s b’stard child

    You can thank the Rockefellers for that, they funded women’s lib and most of what you see today.

    The humble scams of Standard Oil have certainly come a long way since.

    Anyone for a game of Monopoly?

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  • general congreve – even if they followed your plan they would still need BOMAD to rescue them as they’d have no where to live. The most likely outcome is that BOMAD will provide bridging finance when they elect to move. A further indicator that the UK residentail property market is way overpriced and distorted.

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  • 1. sibley’s b’stard child,

    Now that’s what I call a good work ethic. Who’s up for it, Queen ‘n’ Country and all that? LOL

    Those were the days.

    R.I.P.

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  • sibley's b'stard child says:

    By the way Jack, our application has been referred to HSBC’s central underwriting unit due to the high LTV. The in-branch advisor reckons we’ve got a fifty-fifty chance.

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  • The problem is so easily solved by making houses cheaper (by building more)

    A couple get a long term fix of 6% say, and pay off at £1000 per month..

    A £150k loan will take 23 years, 2 months to pay down..

    ..but if the same house cost £50k less, the £100k loan would only take 11 years, 7 months to pay down..

    – So a third off the price can halve the mortgage repayment period..

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  • Sib’s – it could be that if they have hit this months “target” they’ll make it a decline, if however they are a bit short of this months “target” they”ll stick it through as an acceptance – it’s as daft as that at the moment.

    Best of luck whichever way it goes.

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  • Skeptical First Time Buyer says:

    Personally I’m going to wait for the boomers to retire before I buy. As they are forced to sell houses all at the same time to pay for health care that the government can no longer aford, prices should be coming down nicely.

    In the meantime, defy gravity extend and pretend, kick the can down the road, (bothers me not I have gold and patience). My girlfriend has a house that can be paid off with inflation, and I will wait to buy something larger and more suitable later.

    I don’t think they can drag this out longer than 10 years, and that suits me fine

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  • That’s what you end up with when you listen to Bullshxt like “affordability” as measured by monthly cash flow.

    Devils disguised as mortgage brokers, EAs, bankers and politicians keep whispering the satanic sweet verse of “if you extend your 25 years mortgage to 40 years, you can half your monthly payment.” without pointing out the blxxdy obvious 15 extra years burden and the more MONEY they can make out of you.

    Why these Satan worshipers are not burnt at stake is beyond my comprehension.

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  • stillthinking says:

    Interesting to see this in the Mail because this has been mentioned on this site a few times.

    I don’t see the image of ancient OAPs still paying the mortgage though, what I see is yet another cause of monetary deflation. All the people who take out mortgages nobly provide the “float” for the money needed to swirl around the economy. And until recently we had a debt based saving system, people would borrow money to save, the money swirls around and they end up with a house.

    Really nobody is going to take out a mortgage that ends in their 70s and every year now we move another years worth out of the potential mortgage market. So who is going to replace the borrowed funds, certainly not the government because every time they do so they implicitly raise the tax rates in the future…so this seems very deflationary to me. If you strip out new mortgage debtors all you have is the existing boomers paying down their mortgages, literally destroying money. At some point (if that were to continue) there wouldn’t be enough swishing around to support the existing wage level…. and the ensuing house price collapse will be the least of our worries.

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  • Banks won’t currently (and shouldn’t) lend past your working age. In fact they won’t lend past 65 years old, so fear not. They will however lend 17 times declared joint income, the government owned ones anyway. I couldn’t actually believe it myself but it’s true.

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  • tenyearstogetmymoneyback says:

    Having taken out a mortgage this year I doubt if people will get mortgages past 65.

    As part of the application, the Natwest advisor had to write a two page essay (typing with two fingers) explaining exactly
    why he was recommending that type of mortgage. I get the impression this was to cover his and the banks ar*e.

    He was insistant on making the mortgage term 16 years so it would finish when I was 64. His explanation was that if the
    term, went beyond my retirement age there would be numerous more hoops to jump through and a six page essay for him
    to write.

    This was all for a 60% LTV mortgage. The application took about 2 hours for him to complete. Better than YBS. I was
    there for 2.5 hours before they asked me if I would like to pay the £1000 fee to submit a mortgage application.

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  • At the risk of stating the obvious, the official retirement age is scheduled to rise to 68. The details keep shifting, but basically anyone born post-1970 won’t qualify for the state pension until at least age 68. Personally I take that to mean I’ll be working until 70, assuming my employer is willing to keep me on.

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  • Interesting they won’t lend past retirement age, but what provision has been made for those forced to rent who will have to continue to do so past retirement.

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  • Tenyears
    LOL presumably the mortgage was shorter based on the fact you’d be that much closer to retirement age by the time he’d finished his ‘six’ page report with ‘two’ finger typing!

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  • mark wadsworth says:

    SBC, best of luck with being turned down.

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  • sibley's b'stard child says:

    Heh, thanks MW.

    If I get accepted i’ll bite the bullet and get on with it.

    If not, I know i’ll have at least a year’s grace period before it would even be worthwhile applying again.

    Win-win.

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  • @UT
    If the problem is a credit bubble, which it is, it is incoherent to suggest that the solution is to build more. We don’t have mass homelessness, which suggests people are already housed.
    N

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