Housing market is realy bucking up!

[Richard Faulkner]

In message , John Cartmell writes

And what were they 20 years before you got on the silly ladder? - IIRC, in my fathers early house buying days, it was almost impossible to get a mortgage over about 75%, so help from parents/relatives was essential.

In a roundabout way, not much has changed - except the help from relatives has been replaced with "help" from lenders. Obviously the "help" is more readily available but, unless you are prepared to class housebuyers as stupid, I'm not sure there should be much sympathy for those who take out loans they cant afford.

I would temper that with sympathy for those who may lose their jobs, or become unable to work but, unless we know/suspect something at the time, we cant live our lives based on worst case scenarios, (although some do, of course).

[Richard Faulkner]

Smart move if that suits your circumstances. At least you are able to borrow what you know you can afford, rather than having your decisions restricted by the lender.

[John Cartmell]

But because others haven't made that decision you have to pay over the odds (ie get that 5x mortgage) or content yourself with a house that you wouldn't touch with a bargepole if you could afford better. Andy & co call it 'nanny state' but I'd refer to it as reigning in the leeches.

[manatbandq]

I agree.

That's what insurance is for.

MBQ

[manatbandq]

3x, 5x salary, etc is a very poor measure.

E.g. someone on 20k may be offered 60k at 3x salary. another person on

25K may only be offered 75k mortgage. The thing is that the extra 5k salary alone is enough to service a 100k mortgage and so a 5x salary offer is easily affordable. On the other hand, someone earning 30k with an extravagant lifestyle may be able to service bugger all debt.

What you need to look at is your disposable income and what size loan that will service and make allowances for future interest rates, loss of second income, children, etc., etc.

If your mortgage adviser has done a proper job then 5x may well not be silly.

MBQ

[Tim S]

Unforunately, as John C suggests in another reply to this thread, so many other people are happy to skate on the thin ice that is low rates that I find myself shafted and unable to buy anything remotely suitable.

At least I have a nice landlord for now. Plenty of minor DIY opportunities to fix the bits falling off our shoddily built 1980's house ;-O

Funny, as building regs have got more prevelent over the last couple of decades, that new builds aren't a patch on early 1900's housing with respect to general solidity. Then that would be worth a thread of its own.

"Death to plasterboard, for it is a crap substrate to hang things off"

Cheers

Tim

[Tim S]

That's quite correct.

Only they didn't. They basically said that there would be no problem in finding lenders to go that high based on nothing more than my payslip and declaration of other major debts (none). In my case, 5x is utter insanity. My rent plus commuting costs already mean that I'm at break even (just).

5x means in my case that I'd be paying more than my rent now which would be patently unsustainable, even at today's rates. Problem is that some bank is still happy to give me that sort of money.

Which leads me to my earlier supposition that lenders are acting irresponsibly and screwing over the whole market as a result.

With respect to Andy's comments, I think there is a distinction between nannying and being a responsible lender. You are of course right in that there are circumstances where 5x is completely appropriate, but I do think the banks care to ask enough questions to make that judgement correctly.

Regards,

Tim

[Matt]

Suggesting a 1 or 2% rise will have cataclysmic effects is foolish in the extreme. 2% on a 200k mortgage is roughly 15 quid a "work day" - or put it in perspective - parking a car for 8 hours in a major city (or fuel for a 50 mile each way commute at 30mpg if you get free parking)

The majority of people were still managing to keep a roof over their heads 15 years ago when the rates went up 7 percent in around a year - a doubling.

[Tim S]

^^^do not

correctly.

[Dave Plowman (News)]

Or couples did that thing unheard of these days - save up the deposit. My parents - both born about the start of last century - lived in a modest rented flat and saved for 10 years or so to buy their first house, and waited until then before starting a family. Their parents were too poor to help.

[Dave Plowman (News)]

If the mortgage protection insurance people get a sniff you're likely to made redundant, prepare for your policy to be cancelled...

[Dave Plowman (News)]

No worse than lath and plaster...;-)

[John Cartmell]

The problem is that the over-borrowing by the stupid pushes up prices for everybody.

[John Cartmell]

Indeed. My daughter had a conservatory built recently and fixing skirting boards will be a nightmare as the crap 'plasterer' turned a perfectly straight internal wall into a wiggly mess by wasteful (mis) use of plasterboard. ;-(

[MM]

Okay, Cilla, it's really bucking up on a slightly rising trend, having been in the doldrums teetering before a crash for eighteen months.

PS: Another property sold today on my RightMove shortlist!

MM

[MM]

My previous house went from £29,500 in 1984 to £185,000 in 2004.

MM

[Ed Sirett]

The latter makes no allowance for a) The repayment aspect of the mortgage payments (and with lowish interest rates the repayment part is a more significant part than it was). b) A reasonable prudent allowance for a medium term increase in interest rates. Over the longer term inflation will reduce a mortgage anyway so the risk is mainly over the first 10 years.

The above means that AFAICT the market has peaked and quietened but is stable at the current high level. But I'm only in touch with the London scene. In general a rise in prices spreads out from the SE like a wave to the provinces. So when London has peaked other parts of the country may still be on the rise for a year or two.

[Richard Faulkner]

In message , John Cartmell writes

That's one vote for stupid.

My problem with the doom mongers and complainers is that this type of talk happens at the peak of every boom, yet even those people, (most of), who bought at the peaks of previous booms are now sitting on nice little piles of equity and, barring the worldwide collapse, there is no reason to believe that it wont continue. It only takes 5% per annum compounded to double prices in around 12 years +/-, and it is the fact that we borrow most of the money in our early house buying careers that creates the really large gains in relation to the investment.

Did the gold price rise around the peak of the last boom, and what about all the other things which are being suggested as forecasting doomsday. Do some people, (those who can afford to), dive for cover at the start of every bust, or does it only happen at this point of the Kondratieff wave?

[Richard Faulkner]

Might be nice to see a chart showing repayments of capital + interest on a typical 25 year mortgage compared with average income.

Agreed - a 2% rate increase would increase repayments by almost 50%.

That has been my experience in Manchester. Our last boom didnt get going until 1988 approx., and didnt end until 1993 approx. I think we lagged London by around 18 months or so.

[Andy Hall]

Employment is always unpredictable. Believing otherwise is living in cloud cuckoo land.