How far will house prices fall [volume 4]

[eltawater]

walm said:

I don't think that a £285k mortgage is achievable for the majority of people (outside PH directors of course).
That's over 5x on a £50k income, which most people don't have, do they?

It's highly likely that they do if you think of it as £30k + £20k salary or different variations of.

Technical professional salaries can certainly be comfortably above the higher tax rate threshold, so if you add even a very small second salary it's more than possible to achieve this.

[walm]

eltawater said:

walm said:

I don't think that a £285k mortgage is achievable for the majority of people (outside PH directors of course).
That's over 5x on a £50k income, which most people don't have, do they?

It's highly likely that they do if you think of it as £30k + £20k salary or different variations of.

Technical professional salaries can certainly be comfortably above the higher tax rate threshold, so if you add even a very small second salary it's more than possible to achieve this.

I just did this test on £25k x2 (which is c.£21k net each).
Puts the household in the richest 30% of the country.
And even then we are assuming a combined 5.7x mortgage/salary with just 5% deposit is something a bank would lend against which I highly doubt, no?

http://www.cityam.com/235183/uk-income-inequality-...

[walm]

Moneysupermarket suggests £25k x2 lets you borrow £175k at the high end.

And one applicant on £50k can borrow £225k at the high end.

Again, I think £285k is just a simply massive mortgage for a huge majority of the country.

You need £63k single person on 4.5x to get £285k.

And running that though the CityAM test puts you in the top 10%!!!!

[eltawater]

I'm in the richest 30%?

The graph also highlights that 30% of households have an income after tax of between £25k and £35k. That's still a sizeable proportion of people who may have the advantage of equity and deposits to throw at the housing market. Not everyone needs to be a PH director although it helps if you want to be in the top 10%.

[eltawater]

walm said:

Moneysupermarket suggests £25k x2 lets you borrow £175k at the high end.

And one applicant on £50k can borrow £225k at the high end.

Again, I think £285k is just a simply massive mortgage for a huge majority of the country.

You need £63k single person on 4.5x to get £285k.

And running that though the CityAM test puts you in the top 10%!!!!

Nationwide calculator offers £285k lending on £30k x2 so it's not beyond the realms of possibility for non-director types. We could pull figures out of different calculators all day to support opposing viewpoints, but non-director types (like me!) have bought with mortgages in that sort of range without an issue.

[emicen]

walm said:

XJ40 said:

Well £15k seems a perfectly adequate deposit to get started with. You could put that down as 5% on a £300k property, that would buy you a nice family house in most parts of the country.

I don't think that a £285k mortgage is achievable for the majority of people (outside PH directors of course).
That's over 5x on a £50k income, which most people don't have, do they?

There's a hell of a lot of the country where £15k would give you a 10% deposit on a £150k home which is a nice enough family home [3-4 bedrooms, detached] and £135k mortgage is under 4 x joint income of £35k.

[Mr Whippy]

eltawater said:

walm said:

Moneysupermarket suggests £25k x2 lets you borrow £175k at the high end.

And one applicant on £50k can borrow £225k at the high end.

Again, I think £285k is just a simply massive mortgage for a huge majority of the country.

You need £63k single person on 4.5x to get £285k.

And running that though the CityAM test puts you in the top 10%!!!!

Nationwide calculator offers £285k lending on £30k x2 so it's not beyond the realms of possibility for non-director types. We could pull figures out of different calculators all day to support opposing viewpoints, but non-director types (like me!) have bought with mortgages in that sort of range without an issue.

Pretty sad though that you need two people in good full time jobs to justify just an average home.

There isn't much scope there for saving over time, having a family and having one parent look after the kids etc.

Those are things previous generations managed to do on moderate salaries.

Yes times change, it's just an observation. Society is imo all the worse for having both parents hammering away at full time jobs just to break even to get an 'average' house.

Dave

[walm]

eltawater said:

Nationwide calculator offers £285k lending on £30k x2 so it's not beyond the realms of possibility for non-director types.

Fair enough but given that £25k x2 puts a household in the top 30%, £30k x2 will be even fewer people!

All I am saying is that it is easy to forget that average households or even median households, aren't really in a position to buy average houses, IMHO.

[Sheepshanks]

walm said:

All I am saying is that it is easy to forget that average households or even median households, aren't really in a position to buy average houses, IMHO.

I think we've been through this before. It always strikes me as daft/bizarre that many people who have owned for a few years couldn't afford to buy their own house if they were starting now.

[XJ40]

emicen said:

walm said:

XJ40 said:

Well £15k seems a perfectly adequate deposit to get started with. You could put that down as 5% on a £300k property, that would buy you a nice family house in most parts of the country.

I don't think that a £285k mortgage is achievable for the majority of people (outside PH directors of course).
That's over 5x on a £50k income, which most people don't have, do they?

There's a hell of a lot of the country where £15k would give you a 10% deposit on a £150k home which is a nice enough family home [3-4 bedrooms, detached] and £135k mortgage is under 4 x joint income of £35k.

Yes exactly. A £285k mortgage is admittedly high by most peoples standards, but 4.5 x joint income of £64k is hardly beyond the realms of possibility for a couple with professional jobs. And in that senario the said couple could easily save more than £15k for a deposit anyway...

[XJ40]

walm said:

eltawater said:

Nationwide calculator offers £285k lending on £30k x2 so it's not beyond the realms of possibility for non-director types.

Fair enough but given that £25k x2 puts a household in the top 30%, £30k x2 will be even fewer people!

All I am saying is that it is easy to forget that average households or even median households, aren't really in a position to buy average houses, IMHO.

I don't disagree, I'd say the average house buyer (or FTB who takes out a mortgage anyhow) will almost certainly have an above average income, maybe significantly higher. Average income levels are obviously dragged down by all those on NMW and/or doing less than full time hours, those guys aren't going to be buying houses any time soon, rightly or wrongly.

Edited by XJ40 on Friday 29th April 12:33

[metrofour]

But it's not based just on a multiple of your salary IME.

My OH wanted to remortgage her flat (owns apx 60% equity) to a better deal,plus take some extra out,her gross is 25k,mortgage is 92k,broker at Barclays said she failed to even qualify for a remortgage on the existing,never mind taking any extra out-due to the new stress test basing the loan on a rate of circa 6/7% ...

M4

[Mr Whippy]

XJ40 said:

emicen said:

walm said:

XJ40 said:

Well £15k seems a perfectly adequate deposit to get started with. You could put that down as 5% on a £300k property, that would buy you a nice family house in most parts of the country.

I don't think that a £285k mortgage is achievable for the majority of people (outside PH directors of course).
That's over 5x on a £50k income, which most people don't have, do they?

There's a hell of a lot of the country where £15k would give you a 10% deposit on a £150k home which is a nice enough family home [3-4 bedrooms, detached] and £135k mortgage is under 4 x joint income of £35k.

Yes exactly. A £285k mortgage is admittedly high by most peoples standards, but 4.5 x joint income of £64k is hardly beyond the realms of possibility for a couple with professional jobs. And in that senario the said couple could easily save more than £15k for a deposit anyway...

£285k mortgage, plus council tax, is getting on for one full salary, IF interest rates get back to even mid 2000s levels.

That is quite a burden.

Not much scope for having a family, one person being out of work for a while etc.

Remember most people also have monthly bills like phones, cars, energy, food, savings even?

[XJ40]

Mr Whippy said:

£285k mortgage, plus council tax, is getting on for one full salary, IF interest rates get back to even mid 2000s levels.

That is quite a burden.

Not much scope for having a family, one person being out of work for a while etc.

Remember most people also have monthly bills like phones, cars, energy, food, savings even?

I agree that it wouldn't necessarily be a sensible option, but it is doable if you're determined to buy a house.

For the record I've put my money where my mouth is so to speak and have a large mortgage, my other out goings are low though...

[hornetrider]

XJ40 said:

Yes exactly. A £285k mortgage is admittedly high by most peoples standards, but 4.5 x joint income of £64k is hardly beyond the realms of possibility for a couple with professional jobs. And in that senario the said couple could easily save more than £15k for a deposit anyway...

Won't that fail on an affordability scale with the stricter lending criteria around now?

That level of mortgage, the repayment is around 1500pcm. Add on to that council tax of 200, gas & electric another 150, water another 50, phone line with broadband and a couple of mobiles on contract another 100 minimum probably 150... and you are over 2k outgoings to run the house... with no food.

Then it's car insurance, repayments, fuel, food, clothes, various insurances, pension payments... can't see anyone near being an average Joe and Jean affording that. I haven't even started on living your life - holidays, going out, doing nice things etc.

[JagLover]

eltawater said:

I'm in the richest 30%?

The graph also highlights that 30% of households have an income after tax of between £25k and £35k. That's still a sizeable proportion of people who may have the advantage of equity and deposits to throw at the housing market. Not everyone needs to be a PH director although it helps if you want to be in the top 10%.

Historically 3/4 of households could eventually buy their own home which is rather more than 30%.

Still I'm sure intergenerational mortgages or "innovative" deposit strategies, such as a Kidney, will sort this all out.

[JagLover]

anonymous said:

[redacted]

I can only say for locally

Round here houses that would have £300K asking prices if for sale are available for rent starting at £1,000 PCM.

[p1stonhead]

hornetrider said:

XJ40 said:

Yes exactly. A £285k mortgage is admittedly high by most peoples standards, but 4.5 x joint income of £64k is hardly beyond the realms of possibility for a couple with professional jobs. And in that senario the said couple could easily save more than £15k for a deposit anyway...

Won't that fail on an affordability scale with the stricter lending criteria around now?

That level of mortgage, the repayment is around 1500pcm. Add on to that council tax of 200, gas & electric another 150, water another 50, phone line with broadband and a couple of mobiles on contract another 100 minimum probably 150... and you are over 2k outgoings to run the house... with no food.

Then it's car insurance, repayments, fuel, food, clothes, various insurances, pension payments... can't see anyone near being an average Joe and Jean affording that. I haven't even started on living your life - holidays, going out, doing nice things etc.

You cant say how much a mortgage is based on a value alone unless you know the LTV and what deal they got.

A £500k house with a £350k mortgage over 30 years is £1223 from Nationwide.

Edited by p1stonhead on Friday 29th April 13:21

[okgo]

All the more reason not to saddle yourself with stupid car pcp's and all sorts of other st that brings affordability down

I'll need a 500k mortgage at least to buy the next place.

[XJ40]

hornetrider said:

XJ40 said:

Yes exactly. A £285k mortgage is admittedly high by most peoples standards, but 4.5 x joint income of £64k is hardly beyond the realms of possibility for a couple with professional jobs. And in that senario the said couple could easily save more than £15k for a deposit anyway...

Won't that fail on an affordability scale with the stricter lending criteria around now?

That level of mortgage, the repayment is around 1500pcm. Add on to that council tax of 200, gas & electric another 150, water another 50, phone line with broadband and a couple of mobiles on contract another 100 minimum probably 150... and you are over 2k outgoings to run the house... with no food.

Then it's car insurance, repayments, fuel, food, clothes, various insurances, pension payments... can't see anyone near being an average Joe and Jean affording that. I haven't even started on living your life - holidays, going out, doing nice things etc.

I wouldn't have thought so no. As an example I've actually moved recently and bought another house (due to getting divorced), it's just me there and I have a mortgage that's roughly 5 x my income. I've relatively low outgoings and it's affordable. I'm a big petrolhead but never get loans, finance, etc. to buy cars. Or phones, tellies, sofas... I'd rather spend the money on an appreciating asset...

Edited by XJ40 on Friday 29th April 16:03