Silly typo - in the region of 50K / year given the 100 is a bit of an -ish figure. I suspect that figure was pre-tax.
Having said that, as he was a civil servant on an engineering/scientific scale, it ought to be possible to correlate it to the current scale assuming that there's one department left that hasn't become an agency and completely changed the scale structure.
I'm thinking his salary today would actually be more likely to be in the
30K region, maybe more, but I don't remember exactly when he once told me the 100/week figure, may have been as late as '75. I'll ask him when I see him - he's the sort of person who keeps his old payslips, bank statements etc. Might reveal something.
Hence the appearance of various other financial products to address the issue. In Germany, for example, 50 year mortgages are not unusual and are inherited. Then there are part equity schemes and so on.
Ultimately the whole circle does correct itself. Lenders need to do business and their products have to be affordable by their intended customer base.
Price correction is but one option for that.
Glad you saw the light and went straight :-)
You should have sent back your tax return by now if you wanted the HMRC to do the calculations and get them wrong.
This only matters if you want to change properties and can't fund the difference or are not moving and can't make the payments. Otherwise it can be viewed as a long term investment having a period where there is a loss relative to the original commitment.
People need to make their own decisions. Life is about taking certain risks. The lenders are selling a financial product -simple as that. It is the buyer's decision as to whether they want it or not.
There can never be an absolute guarantee that interest rates won't go up to high figures that would affect even the most prudent, so really the issue is what is the acceptable level of risk.
The market was probably kept boyant or treading water by the "good news" of the upcoming SIPP arrangments. Wine had increase by 30% in the last 3 months in antisipation apparently. Now we have Browns U turn maybe that will be the pin to burst the bubble, lets hope so!
Global inflation is on the up. The increases in oil and commodity prices generally is pushing up inflation globally. The European Central Bank, the US Fed and many other countries have all began putting up their interest rates. The US is set, on the current timescale of interest rate increases that the Futures Markets have ALREADY factored in for next year, ending up with IRs higher than the UK... something that last happened in the 1974 UK economic collapse.
UK interest rates are being kept artifically low in order to stop the UK housing market crashing in order to get Brown into No. 10 - simple as that. The longer they do this, and it is probably already too late, the greater the crash in UK housing prices will be and the subsequent knock-on affect on the UK wider economy. Quite simply, the UK cannot stand alone in the World keeping IRs low while every other major coutnry is pushing them up and up. It only needs a 1 or 2 percent IR rise in the UK to destroy the UK housing bubble and the lives of possibly hundreds of thousands of people. An awful lot of people are going to lose their homes, an awful lot of people are going to lose their jobs, an awful lot of people are going to have debt that they will never pay off.
Only this Monday Portman Building Society stopped giving out mortgages on new properties less than a year old due to "the over supply" of new properties on the market. The DIY chains are reporting big loses - anyone remember 'Do It All'? This is a classic repeat of the late 1980s/early 1990s housing crash when tens of thousand of homes were repossessed and their 'owners' made bankrupt - only this time it is going to be much, much, much worse.
House prices do go down as well as up. There is not a shortage of properties in the UK. The biggest pyramid selling scheme in history, 'bigger than the dot.con bubble' according to The Economist which describes the housing market as 'the biggest bubble in history', is about to collapse and the casualties in lost homes, in bankruptcies, in lost jobs and an economy that will be in recession for years are going to be enormous. Many leading economists are now looking at 1929 and commenting that this could be as bad. Again, why on earth do you think that gold, silver and other precious 'currencies' are soaring in price at the moment - the wise money is getting its hands on something that always has a value!
Global inflation is on the up. The increases in oil and commodity prices generally is pushing up inflation globally. The European Central Bank, the US Fed and many other countries have all began putting up their interest rates. The US is set, on the current timescale of interest rate increases that the Futures Markets have ALREADY factored in for next year, ending up with IRs higher than the UK... something that last happened in the 1974 UK economic collapse.
UK interest rates are being kept artifically low in order to stop the UK housing market crashing in order to get Brown into No. 10 - simple as that. The longer they do this, and it is probably already too late, the greater the crash in UK housing prices will be and the subsequent knock-on affect on the UK wider economy. Quite simply, the UK cannot stand alone in the World keeping IRs low while every other major coutnry is pushing them up and up. It only needs a 1 or 2 percent IR rise in the UK to destroy the UK housing bubble and the lives of possibly hundreds of thousands of people. An awful lot of people are going to lose their homes, an awful lot of people are going to lose their jobs, an awful lot of people are going to have debt that they will never pay off.
Only this Monday Portman Building Society stopped giving out mortgages on new properties less than a year old due to "the over supply" of new properties on the market. The DIY chains are reporting big loses - anyone remember 'Do It All'? This is a classic repeat of the late 1980s/early 1990s housing crash when tens of thousand of homes were repossessed and their 'owners' made bankrupt - only this time it is going to be much, much, much worse.
House prices do go down as well as up. There is not a shortage of properties in the UK. The biggest pyramid selling scheme in history, 'bigger than the dot.con bubble' according to The Economist which describes the housing market as 'the biggest bubble in history', is about to collapse and the casualties in lost homes, in bankruptcies, in lost jobs and an economy that will be in recession for years are going to be enormous. Many leading economists are now looking at 1929 and commenting that this could be as bad. Again, why on earth do you think that gold, silver and other precious 'currencies' are soaring in price at the moment - the wise money is getting its hands on something that always has a value!
Quite right - I did notice just after I hit send, honest - see my other message.
Ow. However the inheritance bit seems like an interesting idea.
It was, ironically, the most "fun" place to work, especially for a lad in his 20's. The job was inherently doomed, but the other staff knew how to have fun and were some of the funniest and nicest people I've known. The lunchtime pub visits, the after-hours parties...
That's declined the further into academia I've gone.
Heh - that would involve having something worth writing on it.
Upto a point I agree...
I'm all for that sentiment. The only problem I see here is that because people *can* pay more, it allows the prices to rise without reasonable limit, it seems. If the lenders has stuck to there yardstick of
3 x salary, 25 years, economics would have capped the price rise long before now. The current product is partly a function of greed, lenders and sellers.
Remember that debacle in Wales a couple of decades ago when the English were buying weekend cottages and thought they were getting a bargain, even when the sellers were charging considerably more than the local market was used to.
Prices went up beyond the reach of the local market, leading to general pissed-off-ness amongst the locals and subsequent arson.
That's true enough. I remember the 70's when the entire economy unwound. But our rates are quite low now - leaving *no* headroom is bad planning unless you believe that you are at the top of the rates curve.
The numbers of people who have signed contracts on the back of SIPPs for properties is now begining to come out. It is staggering. Many of these people were hoping to get 40% of the property paid for by, well, us via Brown's tax breaks. This is not going to happen now. Not only are these people, as several papers comment today, in deep financial problems but it means a large number of properties will flood an already flooded market. These people will be trying to ditch ASAP and that will mean cheaper prices.
As Moneyweek pointed out this week there is now a glut of unsold properties on the UK market, UK IRs are going up and the lenders are reigning in who they lend to, how much they lend and on what they lend it - in other words, UK house prices have only one way to go and that is down.
The pyramid selling scheme on UK houses is about to collapse. Stand back and enjoy.
True, but employment is less predictable these days so the liklihood is more people will have to sell at some point, and be faced with periods of unemployment when the DSS might pay the mortgage interest but the capital remains unpaid-off.
At one time - ie when I started on the silly ladder - mortgages were typically up to a maximum of 3 times one salary + one-third the spouse's salary. And when I say 'typically' you simply couldn't get more (there were some that offered you less)! What are they now?
In 1973-74 my salary was being increased monthly to keep up with inflation. It didn't. In 1971 I couldn't afford to buy a house at 2,750. One way out of my financial reach (then and now) - cost 4500. I paid under 2,000 for my first house. In 1975 the value of houses went up and I sold and bought a new house for that 4,500 in 1973 for no more mortgage. By 1976 I could afford to move again and spend 11,700 with a slight increase of mortage and that house is now 'worth' over 200,000. But in the 80s & 90s mortgage rate increases hit hard - and nastily.
That's always the case in the free market. The alternative is a regulated one, and we have seen over countless centuries that that doesn't work.
Indeed. That is part of the risk for the buyer.
Well yes. Then it becomes an issue of making a value judgment, the same as any other investment. You can go for a high risk/high potential return, or put the money in the post office and know the outcome, albeit a disappointing one.
They've either changed to match the requirements of the market or have gone out of business.
The days when one had to go along cap in hand and grovelling to the building society or bank manager for anything are all but gone, thank goodness.
Banks have realised that they are there to sell and provide a service. Like any other seller of goods and services, they should make sure of the customer's ability to pay for that service and agree with them accordingly.
The more successful managers have worked out that providing a good service on a consistent and a long term basis is the best way to bring in new business and to retain customers.
For example, I meet with my bank manager typically twice a year unless there is anything otherwise significant happening and we do a review of the financial products I have from his bank (subset of the total). Sometimes I'll buy something from him and sometimes I won't. Within the limitations of the regulatory environment that he has to work in, he may sometimes ask whether I am sure I want to do something if he thinks that it may not be a good idea considering my overall requirements, even if it means losing a sale.
He'd like to sell me a mortgage, but knows that I don't have or need one.
Neither of us are under any illusion that he is on some exalted pedestal that he might have been on a generation ago, or that he isn't there to sell products and services; but it works very effectively.
I don't need a nanny in a bank, a building society or anywhere else to decide what is within my ability to do and what is not. They get the scenario and make their offer, then I decide.
I've been offered 5 x in principle, when I met a mortgage adviser this year. I decided that was silly and there was no way I was going to stretch myself that thin.
They've risen a lot more than that round here. In 1974 my first job as a surveyor on leaving uni paid about £2K. Cheapest houses round here about £8K. Similar job today ? £18K. Cheapest house £225K - i.e. from 4 x income to 12.5 x. Mortgage rates are lower, but not that much lower.
Somehow I doubt this, given that when buying through a SIPP you can only borrow a relatively small proportion of the value as compared with a normal BTL mortgage.
I disagree Andy. In part the willingness to offer silly mortgages has allowed the market to get in the state it's in.
I think 3-3.5 x salary was a sensible yardstick. If they'd stuck to it consistently, prices could not have risen out of control because after the first few houses had been sold over-value to a few rich people, no one else would be able to afford extreme prices, so the market would have corrected, assuming the majority of buyers need the major part of their funding from a mortgage of course. Well, that's my theory.
Banks do tend to be a bit short termist in my opinion. My experience is if you can show you can budget for their mortgage today at today's rates, they lend you the max. I've not seen them question my ability to pay in 5 years time when the kids are costing me more, rates have gone up or whatever. The banks don't care if you can't pay, they can always repossess. OK, it is a very free market way of thinking, but it lacks responsibility.
Some of this is for the good - I agree there. I just think they've gone a bit far the other way.
You have a bank manager? Wow. All I get is the call centre in India or wherever.
Brings back memories of when I opened my first account as a teenager. I had to go with my Mum and meet Mr Bedford, the old traditional branch manager at Banstead Lloyds.
Well I cannot justifiably argue with you there Andy, as I'm the first to rant about being nannied by Blair and Fatman John about what DIY I can or can't do without permission.
I preference is more a middle ground, between virtually unregulated and "nannied".
The last time I met my bank manager was in 1993. Now I am probably classified as the worst sort of customer: runs a credit balance, no borrowings and pays off credit card each month. IOW not worth talking to
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