[Finance] 'Possible' BofE Base Interest Rate Rise this Thursday .....

[Bold Seagull]

I may have that Sideboard in my TV room

To just continue to divert this thread into home design...on certain websites it's listed around £700-800. No one in the family wanted it, almost like I did everyone a favour taking it.

 

[beorhthelm]

1. The cost of the initial property does matter if family aren’t in a position to help. £25,000 is no small amount to save, especially while paying market rents. Ok if you’re able to live with family while saving, but not everyone has that luxury. Plus an outstanding mortgage of £225,000 becomes much harder to manage much quicker when interest rates do rise than a mortgage of £72,000 (to use your example)

luxury? this was another common practice a generation or two ago. its another factor on affordablity that the previous generation stayed at parental home to save, often until married or beyond.

 

[Peteinblack]

luxury? this was another common practice a generation or two ago. its another factor on affordablity that the previous generation stayed at parental home to save, often until married or beyond.

But a generation or two ago, much lower property prices and thus smaller deposits meant that many young people might be able to save-up by living at home for a couple of years. Today, they'd probably need to live at home for 10-15 years to save a deposit, given how much property prices have soared, while salaries have stalled or stagnated. It's really not a fair comparison.

 

[Bold Seagull]

But a generation or two ago, much lower property prices and thus smaller deposits meant that many young people might be able to save-up by living at home for a couple of years. Today, they'd probably need to live at home for 10-15 years to save a deposit, given how much property prices have soared, while salaries have stalled or stagnated. It's really not a fair comparison.

'deposits' - around 2000 lenders were offering 100% mortgages with cashback in some cases!

 

[dazzer6666]

'deposits' - around 2000 lenders were offering 100% mortgages with cashback in some cases!

…and negative equity mortgages

 

[usernamed]

luxury? this was another common practice a generation or two ago. its another factor on affordablity that the previous generation stayed at parental home to save, often until married or beyond.

Not everyone has healthy relationships with their family. It isn’t an option for many. And it is equally likely to be the older generation making life together untenable as it is the younger generation.

 

[Peteinblack]

Every generation has that legitimate fear and each one has different causes that create that fear. It doesn’t actually matter that houses cost 250 k compared to 80 k (the latter being the cost of our first house) if the mortgage interest rates are so much lower. There will be a problem in the future if interest rates rise to counter inflation and house prices crash. Our generation faced this negative equity disaster. The current one hasn’t. So far they buy a house, it goes up in price.
We have never pulled up a drawbridge. We have spent a lifetime sacrificing, as did our parents. I agree with you about buy to let. It should be banned, as should foreign money in our housing market. But no political party has ever backed these ideas. High rents are simply a function of high house prices. It is an economic relationship. Keeping interest rates artificially low and allowing foreign money and multiple house ownership is to blame and it is a little wide of the mark to look for ordinary older people to blame.

Oh, but it really does. When house prices were £80,000, someone earning £25,000 could get a mortgage (3-4 x salary).

Today, if the same property is £250,000, but a person's salary is still £25,000, they would need a mortgage @ 10 x their salary; how many building societies would lend so much?

Also, rents today have soared, which means that many young people are paying more than 50% of their monthly take-home pay to their landlord - they do not have enough left to live-on and save £25,000 to put down a 10% deposit. And even if they did manage it, they'd still be needing a £225,000 mortgage on their £25,000 salary.

 

[zefarelly]

I have no quarrel with the basic tenet of Thatcher’s policy of “right to buy your council house” but the cruelty inherent in the policy was that local authorities were forbidden from using the proceeds to replenish their social housing stock and create new developments. It was always a policy where the sting was in the tail, and wouldn’t be fully felt until a decade or two had passed from implementation.

When my parents split up in '77 ( I was 6, brother 3) we bounced about staying with friends in a few places, B&B for a while, no one would give a single mum with 2 kids a rental property, regardless of the fact she had the cash. . . eventually we ended up in a 2 bed council flat at the Arse end of Shoreham . . . . we all hated every second of it . . . . .but it was a roof . . until she bought a houseboat . . . I periodically drive by to remind myself why a nice roof is so important to me. . . we were lucky . . . . a flat in that block is on the market now for £260k.

a single mum in the same situation now . . . where will she end up? I assume all the council estate is now private. Probably owned by the Tory councillor who wants to build a new 9 storey block of flats in Shoreham, and is also a 'letting agent' All so wrong on a social and welfare level

Nevilles breakfast & I share very different political views, but I think we agree foreign property ownership and buy to let should be strictly regulated/managed, if not banned, Its not in the national or public best interest to skew everything to so few at the expense of so many.

 

[Peteinblack]

'deposits' - around 2000 lenders were offering 100% mortgages with cashback in some cases!

When I bought my first flat in the late 1990s, I was offered a 125% mortgage! Totally irresponsible, and I turned it down.

 

[zefarelly]

Oh, but it really does. When house prices were £80,000, someone earning £25,000 could get a mortgage (3-4 x salary).

Today, if the same property is £250,000, but a person's salary is still £25,000, they would need a mortgage @ 10 x their salary; how many building societies' would lend so much?

Also, rents today have soared, which means that many young people are paying more than 50% of their monthly take-home pay to their landlord - they do not have enough left to live-on and save £25,000 to put down a 10% deposit. And even if they did manage it, they'd still be needing a £225,000 mortgage on their £25,000 salary.

I've posted this before

flat 1992 4x salary
cottage 1999 3.5 times salary
house 2003 - 4 times joint salary
same house now 8 x joint salary ( house has tripled in value and some, my salary hasn't changed!!!, thankfully Mrs Zefs has! )

 

[Nobby Cybergoat]

No. Sorry, our generation grew up in a world where a house was genuinely affordable at 3.5x salary, which is what the mortgage lender would give you, and we had largely functioning infrastructure around us, including education and health.

We can’t sit there having had the opportunity to buy a house at £30k with a deposit of 3k and complain about “entitled” kids who work just as hard as we did, but see starter homes going in the 250k to 300k price bracket.

These guys have paid for prescriptions all their lives, these guys have paid for dentistry all their lives, they’ve paid for university and childcare and they’re both expected to hold down full time jobs, be brilliant parents, often while caring for their own parents. They’ve paid market rate rents, often for poorly maintained property, and the rents have kept going up diminishing their chances of getting the deposit together to get onto the housing ladder to start with.

And where does their money go? To our generation who decided property looked cheap and bought five.

I’ve no quarrel with anyone doing well, but I’ve got no respect for those among us who’ve made sure that they’re all right and then pulled up the drawbridge and walked away with no thought of those coming after.

I remember the time of 15% interest rates (another Conservative success story) and I’m not trying to diminish the sacrifices that you and your wife had to make, but those were different times when social housing was available so low earners didn’t have to pay market rates, the state paid for far more than the modern state, and there was, in short, a better safety net if the worst were to happen. Everything is stretched so tight atm, with so little slack anywhere in the system, that even a small worsening in people’s situations can potentially be disastrous for them. The moaning is legitimate fear.

It's a huge shame I can only give one thumb up for this post.

Very well said mate. And well done for being much more diplomatic than I would have been in calling out an astonishing lack of humility and self awareness by that Neville bloke and the other fella earlier in the thread saying the same sort of stuff.

 

[beorhthelm]

Not everyone has healthy relationships with their family. It isn’t an option for many. And it is equally likely to be the older generation making life together untenable as it is the younger generation.

sure but we're talking generalities here, and the majority of people have nice relationships with their family. (or we have bigger social problem than housing)
just highlighting another contrast, behaviors change over the decades impact on demand for housing. for generations the norm has been to save for years before moving out, young moving out in early twenties rather than later, to rent or buy, creates more demand without supply rising.

 

[Weststander]

'deposits' - around 2000 lenders were offering 100% mortgages with cashback in some cases!

Under Tory or Labour governments, it goes in predictable waves:

Phase 1 - a lending Wild West, self cert mortgages for non-employees, tiny deposits, huge lending multiples. A Stress Test is just watching a football match.
Phase 2 - a regulatory clampdown, lenders have to be seen to be lending responsibly.
Phase 3 - is phase 1 all over again.
et al

 

[schmunk]

And it is equally likely to be the older generation making life together untenable as it is the younger generation.

"What are you still hanging around here for, making the place look untidy, why aren't you out buying a house at age 25 like I did...?"

 

[Peteinblack]

The Bank of England only moves the headline rate. Mortgage lenders are not obliged to respond. It is a free market. However with inflation currently running at somewhere between 10 and 30 % it wouldn’t be that much of a surprise if interest rates were to rise from current absurdly low levels. Lots of people on here comment on the rich getting richer but much of that is from their ability to borrow (to invest) at ridiculously cheap levels.

Certainly a factor, but surely more important is simply the way that corporate and boardroom salaries have sky-rocketed in the last 10-20 years, while pay for ordinary people has stagnated.

In 1980, CEOs of Britain's largest companies were paid about 40 x as much as ordinary workers (and Thatcher complained that this meant "too much Socialist equality").
Today, top CEOs are paid - I refuse to say 'earn' - 160 x as much as ordinary workers. I refuse to believe that they work 160 x as hard as those workers, and as for the 'risks' they are supposedly being rewarded or compensated for - what risks? When these over-paid corporate bosses screw up and lose their company £ millions, it is invariably those front-line workers who lose their jobs as the company frantically recoups its losses.

I've seen it in universities (which are now badly-managed 'businesses') - arrogant, swaggering, Vice-Chancellors who call themselves 'Presidents' and are paid £400-500,000 plus bonuses, plunge their university into £ millions of debt. How do they return the university to financial solvency? They routinely make 100s of front-line staff redundant and/or slash 'unaffordable' staff pensions.

 

[usernamed]

"What are you still hanging around here for, making the place look untidy, why aren't you out buying a house at age 25 like I did...?"

I don’t think I can give “official NSC thumbs up” via Tapatalk, so [emoji106]

You’ve given me a chuckle.

 

[schmunk]

I've posted this before

flat 1992 4x salary
cottage 1999 3.5 times salary
house 2003 - 4 times joint salary
same house now 8 x joint salary ( house has tripled in value and some, my salary hasn't changed!!!, thankfully Mrs Zefs has! )

It's even true over the fairly recent past.

I'm coming up to 10 years in my house, which was bought for ~ 5.5x salary (including a 1.5x salary deposit and 4x salary mortgage).

This house is now 'worth' about 50% more, but the salary for that same role has only increased by about 10% - so to buy it now would be ~7x salary, needing a 5.5x salary mortgage, which nobody would lend me!

 

[Neville's Breakfast]

Certainly a factor, but surely more important is simply the way that corporate and boardroom salaries have sky-rocketed in the last 10-20 years, while pay for ordinary people has stagnated.

In 1980, CEOs of Britain's largest companies were paid about 40 x as much as ordinary workers (and Thatcher complained that this meant "too much Socialist equality").
Today, top CEOs are paid - I refuse to say 'earn' - 160 x as much as ordinary workers. I refuse to believe that they work 160 x as hard as those workers, and as for the 'risks' they are supposedly being rewarded or compensated for - what risks? When these over-paid corporate bosses screw up and lose their company £ millions, it is invariably those front-line workers who lose their jobs as the company frantically recoups its losses.

I've seen it in universities (which are now badly-managed 'businesses') - arrogant, swaggering, Vice-Chancellors who call themselves 'Presidents' and are paid £400-500,000 plus bonuses, plunge their university into £ millions of debt. How do they return the university to financial solvency? They routinely make 100s of front-line staff redundant and/or slash 'unaffordable' staff pensions.

I agree with every word of your post and it is difficult to weight the impact of the two factors. Everyone is a Vice President of something these days according to my Linked In. I am sure they are earning salaries to match. However I was talking about the wealthiest 2%, the ones who own the nation’s assets. They get richer simply by sitting on these assets. They then use their wealth to make risk free investments at very low interest rates.

 

[Neville's Breakfast]

It's a huge shame I can only give one thumb up for this post.

Very well said mate. And well done for being much more diplomatic than I would have been in calling out an astonishing lack of humility and self awareness by that Neville bloke and the other fella earlier in the thread saying the same sort of stuff.

Perhaps we were just disagreeing and justifying our respective points of view. It’s a thing you know.

 

[Bold Seagull]

sure but we're talking generalities here, and the majority of people have nice relationships with their family. (or we have bigger social problem than housing)
just highlighting another contrast, behaviors change over the decades impact on demand for housing. for generations the norm has been to save for years before moving out, young moving out in early twenties rather than later, to rent or buy, creates more demand without supply rising.

You may as well raise a flag with 'I'm out of touch' on it.