Interest Rate up a measly .25%

[MatBin]

In terms of house buying this generation have it far worse. It was easy in the 70s and 80s to find a nice house for 2.5/3 times salary. You simply cant do that now.

Very simplistic Simon, as has been pointed out a number of times, house prices may have been cheaper (I havent really researched that so I'll take your comment as ok) BUT repayments were based on huge interest rates and were financially crippling for lots of people for many years, so yes it may have been easier to put a deposit on a place but most of your salary was then taken in repayments.
Hers's another nicety for you.
Purchaser buys a house in the 70's/80's based on repayments of £X which includes tax deductable interest at whatever you max rate is and can afford the repayments on a 25/30 year "contract". Govt doesnt like this maximum tax rate deduction and 3 or 4 years later decides you can only have tax releif at basic rate, then reduces basic rate tax for the first small part of income but you only get tax relief on the whole mortgage interest at the basic rate, effectively ramping up your repayments. Few years down the line Govt decides lets change the rules again, so the amount of mortgage that can have its interest deducted is reduced, so you had a £40K (laughable these days) mortgage but actually now only the interest on the first £25K is going to be tax deductable, effect, ramps up your payments again. Next up, Govt decides to do away with tax relief completely, ramps up payments yet again.
Where else could you enter a contract and have the terms changed by one party (not political party though) resulting in ever increasing costs that you cant get out of without a massive financial penalty.
End effect - house price crash, negative equity etc.
Then we come to today - house price inflation because REPAYMENTS have become a lesser percentage of take-home pay, so more people can afford the repayments on a bigger mortgage, more potential customers chasing fewer houses - result, more expensive housing.
However I will agree deposits have become difficult because of a) the financial crash resulting in few if any 100% or 95% mortgages and b) higher house prices in general, and why is that, because parents etc dip into their future savings pot and help their child up the ladder, or Granny dies and leaves a cash bundle, and what does that do, push up house prices because sufficient people can now afford the deposit to cause a housing shortage, but some get left behind and start to rent instead because they want toys etc and an expensive lifestyle generally unwilling to stay in night after night for maybe 3 or 4 years until they have saved enough whilst still living at home and paying out little.
So you cant have it all I'm afraid.
There may be worries about security these days, but again it's not a lot different to when I grew up in London during the IRA bombing campaign, or when my colleague got blown up on a bus after 9/11.
we can all bleat about how hard it is or was, my generation are the only generation to now have old age parents needing to be cared for by us, either physically or monetarily, childre of our own that need same and Grandchildren also in the mix, including trying to make provisions for old age so as not to be a burden on YOUR generation, life's hard but I'd sooner be a human worrying about if/when I can buy a house/retire etc than a herring worrying if that shark is going to eat me.

Matt

 

[MatBin]

Bank of england base rate never hit 15% it was 14.87 for 1 yr two days and then dropped to 13.87% it is somewhat a myth that interst rates were 15% some mortagages were for a very short period.

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

Were you there, I was and 14/15% was in effect on mortgages for quite a while, 10% was normal for a long time too. See my previous post linking to a base rate graph and do remember interest rates on mortgages were/are more than base rate by possibly 2 or 3% years ago, slightly more now

The Bank of England raised its ....... Interest Rate in the United Kingdom averaged 7.67 percent from 1971 until 2017, reaching an all time high of 17 percent in November of 1979 and a record low of 0.25 percent in August of 2016.

 

[andya700]

I wonder if some people think "I'll never be able to save up the £20K needed for a deposit for a house, so I'm just going to buy myself a nice car instead, may as well have something nice".

Not me mind, my current car cost a massive £2700.

The thing is Andy, a lot of youngsters want everything now, and everything new - phones, TV's, cars, going out, designer clothes. I am in the same car price bracket as you, I have no credit card debt, I have a five year old Nokia PAYG which cost £16, we rarely go out for a meal or buy takeaways, cook from scratch etc. When I was 21, I had a day job in an office, but worked in a car parts factory three nights a week to earn enough money to buy a motorcycle. I still had time to go running/cycle/play league badminton on the other four nights.
When I learned to drive and passed my test, my cars cost between £80 and £400 - buying new was a dream. There are many youngsters buying new cars nowadays, simply because of image - which comes at a price. Buying a new car or banking a big part of the mortgage deposit - no brainer for me.

 

[Mr Bump]

looking at it another way thou for what it is worth.
how many people out there carried on paying the same monthly repayment when mortgage interest rates tumbled over years.
or how many people just cut it to the bare minimum and bought a new car and or more holidays.

 

[nilagin]

I think thats a very good point actually. And it wouldn't surprise me in the least.


I agree it was a great idea in principle to get people on the property ladder, but as you say, it was badly managed. I thought the idea was to actually put the money into new council houses.
Instead we saw a massive rise of private companies jumping in there. And of course the rent prices were reflected in this.

My son and his girlfriend have their deposit saved. There problem is just finding a property they like within in easy commute for their jobs. They'll continue saving in the meantime so their deposit increases and hopefully increase their choice of property to buy too. My son also picks up a new car on Saturday. Neither of them are exactly earning a great amount but they are coping just fine.

When our local council sold off council homes in the right to buy scheme it certainly was intended that the proceeds were reinvested into more modern replacement housing, but it never happened. No idea what they managed to do with the money.
Our home is ex council. I believe we are the third owners since it was sold by the council. Our road is a mixture of flats, maisonettes and houses. All were once council, i'd say at least 75% are now privately owned. What is a waste of money is some of the now privately owned flats and maisonettes are rented out to people obviously on benefits and someone is paying twice as much in rent for them to live their than the people are paying in rent for their council home.

 

[Cobra]

There problem is just finding a property they like within in easy commute for their jobs. They'll continue saving in the meantime so their deposit increases and hopefully increase their choice of property to buy too.

Excellent

Our home is ex council.

And if they are anything like the ones around here, they are extremely well built !

No idea what they managed to do with the money.

The same as the state pension money I guess

 

[tijuana taxi]

Why was it ever a good idea to sell off council houses?
Apart from the Tory party buying votes of the council renters, what good did it do anyone apart from the tenants and the government

One reason was so that it made it harder for people to take industrial action, Thatcher thought it was a good idea for people to be property owners.
Councils were far more lenient with arrears especially left wing ones than mortgage companies.
Dependants of anyone on strike could also get benefit if renting, but not buying.

Evil old cow sold everything else off and where did the money go?
Same as the rest to pay unemployment benefit and to all those that made a fat profit from the privatised companies

 

[Cobra]

Why was it ever a good idea to sell off council houses?

Like so many things, it seemed like a good idea at the time, (And no, I never bought into it)
but no so much now the private housing associations are making all the money from rent...
Or if they can't afford it, the council pay's it, probably at an inflated rate too.

 

[tijuana taxi]

Used as a political tool by another old Tory stalwart, the one and only Lady Porter of Westminster and Tesco fame
Last seen legging it to Israel to escape paying the £43.3 million surcharge

 

[DG Phototraining]

Bank of england base rate never hit 15% it was 14.87 for 1 yr two days and then dropped to 13.87% it is somewhat a myth that interst rates were 15% some mortagages were for a very short period.

http://www.bankofengland.co.uk/boeapps/iadb/Repo.asp

Its not that much of a myth as our first mortgage was 15.4% - I know, as I was the mortgage broker at the time

Dave

 

[nilagin]

Why was it ever a good idea to sell off council houses?
Apart from the Tory party buying votes of the council renters, what good did it do anyone apart from the tenants and the government

In general it works in the favour of future buyers of the property because they are cheaper than what have always been private homes. I would have had to pay about £15k or more extra to have bought a similar sized property in my home town or moved further away from work and family.

 

[tijuana taxi]

In general it works in the favour of future buyers of the property because they are cheaper than what have always been private homes. I would have had to pay about £15k or more extra to have bought a similar sized property in my home town or moved further away from work and family.

I can see that, when we were looking to move those that mentioned ex local authority were cheaper

 

[Deleted sulking member 63079]

Right to buy was never intended to help the buyer, that was just a convenient side effect.

It was a mechanism for reducing the amount of social housing without everyone kicking up a stink about it.

 

[Cobra]

It was a mechanism for reducing the amount of social housing without everyone kicking up a stink about it.

You're not suggesting that the government of the day was devious? surely not!

 

[onomatopoeia]

Indeed and it's in my profile

Never thought to look at your profile - my brother just moved house there and the sort of numbers you were talking about and the schools made me think "I bet I know where that is."

Apparently houses might be built on the east side of the Luton road at the northern end of the town, which is in Beds not Herts, so not in the right catchment area and as a result the houses are expected to be way cheaper

 

[onomatopoeia]

looking at it another way thou for what it is worth.
how many people out there carried on paying the same monthly repayment when mortgage interest rates tumbled over years.
or how many people just cut it to the bare minimum and bought a new car and or more holidays.

I let the repayments fall and saved more, since the return on my cash ISAs was better than the mortgage interest.

Makes no sense to overpay the mortgage a 0.49% when I was getting more than double that in a cash ISA that had unlimited withdrawals (and more on my current accounts).

 

[MatBin]

Never thought to look at your profile - my brother just moved house there and the sort of numbers you were talking about and the schools made me think "I bet I know where that is."

Apparently houses might be built on the east side of the Luton road at the northern end of the town, which is in Beds not Herts, so not in the right catchment area and as a result the houses are expected to be way cheaper

No such thing as catchment area, that really is a myth, it all depends on how many children have siblings, special needs, children in care or parents/teachers that work at the school. And then finally how close your nearest school is.
There's a new school being built in Batford (hopefully, we think) so getting a place might be easier soon.
That field has been subject to speculation for years, Herts is asking Beds council to keep them informed as it's going to be a massive development, 500+ houses I hear and Harpenden infrastructure would collapse, cant get a parking spot in Town (or the Village as we like to call it ) now as it is.

 

[stickytape]

I do have sympathy to some extent, but was shocked when my daughter said one of her friends paid seventy quid a month on a mobile contract.
Being hard up seems to mean something different to when I was a kid, loads of people could save a fortune by giving Starbucks and co a miss

I agree with so much of this. Today’s culture totally is a “must have”. A girl in work pays £85 per month for her iPhone 7 something or other. £85. And she takes great pride in telling everyone it gives her unlimited everything. Can I just repeat that - £85.

People don’t dunerstabd the value of money and fritter it away in useless things. The other thing that gets me are these adverts (possibly local radio only?) about the car place; makes it into a song about having bad credit, no Job and even a county court judgement and you can still get a car.. forgive me, am I missing something here? How the heck did this pass through the ASA!!!

 

[OldCarlos]

Today’s culture totally is a “must have”.

I agree & must have the most expensive they can afford..................much of it on credit.

When I was house hunting for my first property, I looked at what I could comfortably afford, which was a little `first time buyers` property, then worked my way up over many years, not like today where because of low interest rates, first timers are looking at much larger more expensive houses.

Priorities seem very skewed these days.

 

[nilagin]

looking at it another way thou for what it is worth.
how many people out there carried on paying the same monthly repayment when mortgage interest rates tumbled over years.
or how many people just cut it to the bare minimum and bought a new car and or more holidays.

I've been paying over the top for a few years now, so the drop in interest rates meant I was paying even more back. Still bought a new car though.

 

[noneforit]

At the end of the day, I was born in Kent people shouldn't be pushed up North just to afford to buy a house.

Fortunately we got on the ladder a few years back with a 95% mortgage and our interest rate was 5.2% for the first 2 years, we struggled a little but managed it.
Fast forward 2 years and a remortage sees it come down to 1.39% so a £400pm saving on interest alone.

When we got our remortage, they did an affordability check on a 6.2% rate for some reason so I am not sure if they would have refused if that had failed?

To be honest, if I didn't work in Central London we would not have been able to afford to save the deposit and the first two years mortgage payments.

The average salary in 2016 in my area is £28k so 4-5x that is going to get you a one bedroom flat in a less desirable area. Assuming you were a couple both earning that, you could get a 2-3 bed semi assuming you could save for a deposit.

Edit - I do know some people don't help themselves though, we have some friends who are renting at £1700pm yet have lease cars totaling £700pm! Then they moan they can't afford to save for a deposit. Its true, they can't but if they bought cheaper cars and perhaps downsized a little, they might be able to.

 

[andya700]

Right to buy was never intended to help the buyer, that was just a convenient side effect.

It was a mechanism for reducing the amount of social housing without everyone kicking up a stink about it.

Yep, and provide many councils with a source of extra income, taking the pressure off the chancellor.

 

[cambsno]

I agree with so much of this. Today’s culture totally is a “must have”. A girl in work pays £85 per month for her iPhone 7 something or other. £85. And she takes great pride in telling everyone it gives her unlimited everything. Can I just repeat that - £85.

People don’t dunerstabd the value of money and fritter it away in useless things. The other thing that gets me are these adverts (possibly local radio only?) about the car place; makes it into a song about having bad credit, no Job and even a county court judgement and you can still get a car.. forgive me, am I missing something here? How the heck did this pass through the ASA!!!

Why is that frittering it away on useless things? Surely its all down to perspective and she quite possibly sacrifices other things to have that phone. Certainly for a young person, an iPhone is essential. It can eliminate the need for a computer for many, and a camera, gives you social interaction, email, music etc... the cheapest deal you will get for home broadband is probably £35-£30 inc, line rental so maybe she saves on that too. People are so quick to judge but one of the key things in life is to do what makes you happy, be it photography, cars or days out, otherwise whats the point? Many people would say I have frittered £900 on a used X100F - useless thing seeing as I have a DSLR already and an iPhone which takes decent photos, same for me frittering money on film and developing seeing as a digital camera is free once you have bought it.

 

[Deleted sulking member 63079]

I agree & must have the most expensive they can afford..................much of it on credit.

When I was house hunting for my first property, I looked at what I could comfortably afford, which was a little `first time buyers` property, then worked my way up over many years, not like today where because of low interest rates, first timers are looking at much larger more expensive houses.

Priorities seem very skewed these days.

A one bedroom flat in Norwich is £100K, a pokey 2 bedroom Terrace is £160K

Yes, first timers are looking at more expensive houses now, because houses are more expensive.

 

[Cobra]

No such thing as catchment area, that really is a myth,

In that case things have changed since my time as a school Governor. People could apply for an "out of area" place, some got in, ( on merit ) if there was space, others didn't.
And it was just a "Normal" school nothing special about it, at all.

makes it into a song about having bad credit, no Job and even a county court judgement and you can still get a car..

It makes a huge joke of the whole thing doesn't it? I saw an advert for a credit card the other day, basically if everyone else has turned you down we won't!
(Possibly with a massive interest rate, dragging the poor souls down even further when they default. )

 

[stupar]

Scotland still has catchment areas for schools and the amount of people that move home just to be in a particular catchment zone is crazy!

As for house prices, Scottish house prices arent that much behind yon english counterparts.

That said the current house the missus and i are in is 3 bed and we only paid £127000 back in 2012.

 

[stickytape]

Why is that frittering it away on useless things? Surely its all down to perspective and she quite possibly sacrifices other things to have that phone. Certainly for a young person, an iPhone is essential. It can eliminate the need for a computer for many, and a camera, gives you social interaction, email, music etc... the cheapest deal you will get for home broadband is probably £35-£30 inc, line rental so maybe she saves on that too. People are so quick to judge but one of the key things in life is to do what makes you happy, be it photography, cars or days out, otherwise whats the point? Many people would say I have frittered £900 on a used X100F - useless thing seeing as I have a DSLR already and an iPhone which takes decent photos, same for me frittering money on film and developing seeing as a digital camera is free once you have bought it.

Is it not an extravagance that yields little reward? The girl in question lives with her parents still and is lamenting the fact she can't get a property yet (not enough deposit). an iPhone certainly is essential - I would be lost without mine. However, paying £85 per month to be is unjustifiable. I use the more untraditional method; buy a sim only plan (I currently pay 13 per month for unlimited calls and messages plus 16gb of data (Vodafone). When I want a new iPhone, I simply purchase a new (or used, nearly new).

I suppose it is horses for courses - if you are on a fantastic salary, have a property and all the rest- and can justify that then great. But still living with your parents? And paying £86 per month?

But have you fritted that away? I take it you have a property and are a t comfortable stage in life where you can afford to pay for this.

Maybe its just me, but this is my way of looking at things - somewhere along the line, a line has to be drawn!

 

[stickytape]

In that case things have changed since my time as a school Governor. People could apply for an "out of area" place, some got in, ( on merit ) if there was space, others didn't.
And it was just a "Normal" school nothing special about it, at all.


It makes a huge joke of the whole thing doesn't it? I saw an advert for a credit card the other day, basically if everyone else has turned you down we won't!
(Possibly with a massive interest rate, dragging the poor souls down even further when they default. )

Absolutely, utterly ludicrous!

 

[tijuana taxi]

A one bedroom flat in Norwich is £100K, a pokey 2 bedroom Terrace is £160K

Yes, first timers are looking at more expensive houses now, because houses are more expensive.

Your description of the "pokey" two bedroom is what many of us are talking about, traditionally a first time buyer property, yet you denigrate it.
A couple on the national average wage could comfortably afford that with a sixteen grand deposit
Maybe even better if they have been in on one of the help to buy schemes where the government gives you up to three grand tax free

 

[Deleted sulking member 63079]

Your description of the "pokey" two bedroom is what many of us are talking about, traditionally a first time buyer property, yet you denigrate it.

I'm not denigrating it, but they are pokey, they're certainly a lot smaller than the house I grew up in up north (which still cost half of what a mid-terrace does in Norwich). I'd hardly describe them as spacious.

A lot here have the bathroom off the side of one of the bedrooms. So not practical either if you need both bedrooms, you don't want to walk through someones room to go the toilet ideally do you?

A lot have had a downstairs bathroom built and the original one changed into a "third bedroom", but you can't actually fit a bed in most of them. Those ones are generally priced a little higher too.

They have their plusses, in that they're victorian, so generally have some character.

But that's your choices here as starter homes, I don't think people who are already on the market, appreciate just how expensive the bottom of the market is these days.

 

[Cobra]

I don't think people who are already on the market, appreciate just how expensive the bottom of the market is these days.

I knew it was outrageous, so just out of curiosity I did a rightmove search, within 5 miles of me (MK)
2 bed properties under 200K are "shared ownership"
3 bed Properties ( free hold) start at £160 go figure!
( all the above are terraced)

edited to say, one "just down the road from me" same as ..
£290K that is just daylight robbery!

 

[MatBin]

In that case things have changed since my time as a school Governor. People could apply for an "out of area" place, some got in, ( on merit ) if there was space, others didn't.
And it was just a "Normal" school nothing special about it, at all.

Different areas may have different procedures. Some time ago the Head Teacher had an influence, these days (or at least until my wife left 3 years ago) County (Hertfordshire) decides who goes where.
On their website they used to show the criteria for placement.
What is happening in our area is a family move close to the school, get their child in, sometimes a first child, then either move away or rent out their near-school-home after the qualifying period, 2 years I believe. Second or subsequent child gets in via sibling rule. St George's I understand has an old-boys route too, if a parent went the child gets a place (Grant maintained faith school), or it would appear that a gifted child can also get in regardless of proximity etc

 

[MatBin]

I'm not denigrating it, but they are pokey, they're certainly a lot smaller than the house I grew up in up north (which still cost half of what a mid-terrace does in Norwich). I'd hardly describe them as spacious.

A lot here have the bathroom off the side of one of the bedrooms. So not practical either if you need both bedrooms, you don't want to walk through someones room to go the toilet ideally do you?

A lot have had a downstairs bathroom built and the original one changed into a "third bedroom", but you can't actually fit a bed in most of them. Those ones are generally priced a little higher too.

They have their plusses, in that they're victorian, so generally have some character.

But that's your choices here as starter homes, I don't think people who are already on the market, appreciate just how expensive the bottom of the market is these days.

New houses are a little like cars in the way "basic" is now defined.

My first property, a 2 bed flat, had a tiny 2nd bedroom, Lounge/diner, one bathroom and a fitted kitchen which comprised two small work surfaces, one of which had a sink built-in and both had cupboards built-under plus 2 wall cupboards. That's it - fully described.

Most modern property, even "starter" homes/flats that I was involved in selling over the last year had a fully fitted kitchen, oven, hob, extractor, fridge/freezer, washing machine and/or dishwasher, often a downstairs loo (although not in a flat obviously), en-suite and seperate bathroom upstairs, double glazing and central heating, wired for all sorts of electronic gizmos and possibly ceiling speakers in at least one room. Some of the properties were fitted with CCTV/alarm and flat screen TV in the living room. Flooring was usually provided in the form of carpet in all rooms except kitchen which was usually tiled. So yes a modern place is going to be more expensive on that score alone.

Having said that we loved our first place and had a terrific year in it before we bought our first house, a 3 bed semi - it too came virtually as a shell, cost twice the price of my flat. Once again I suppose we had it easy despite having to fully furnish both properties to make them habitable, but it was "cheaper" than today's property.

The grass often seems greener elsewhere.

 

[Deleted sulking member 63079]

New houses are a little like cars in the way "basic" is now defined.

My first property, a 2 bed flat, had a tiny 2nd bedroom, Lounge/diner, one bathroom and a fitted kitchen which comprised two small work surfaces, one of which had a sink built-in and both had cupboards built-under plus 2 wall cupboards. That's it - fully described.

Most modern property, even "starter" homes/flats that I was involved in selling over the last year had a fully fitted kitchen, oven, hob, extractor, fridge/freezer, washing machine and/or dishwasher, often a downstairs loo (although not in a flat obviously), en-suite and seperate bathroom upstairs, double glazing and central heating, wired for all sorts of electronic gizmos and possibly ceiling speakers in at least one room. Some of the properties were fitted with CCTV/alarm and flat screen TV in the living room. Flooring was usually provided in the form of carpet in all rooms except kitchen which was usually tiled. So yes a modern place is going to be more expensive on that score alone.

Having said that we loved our first place and had a terrific year in it before we bought our first house, a 3 bed semi - it too came virtually as a shell, cost twice the price of my flat. Once again I suppose we had it easy despite having to fully furnish both properties to make them habitable, but it was "cheaper" than today's property.

The grass often seems greener elsewhere.

The houses I'm talking about are 100 years old New builds here are a lot more.

That said, I wouldn't want a new build, love all the character of our current house

 

[cambsno]

The houses I'm talking about are 100 years old New builds here are a lot more.

That said, I wouldn't want a new build, love all the character of our current house

Yes, round our way new builds are probably 10-20% more than an older house although taht is dependant on age and condition (i.e. a 2 bed 16th centure property is more) - A new 2 bed is £289k with an older one from the 80s being £220k

 

[Deleted sulking member 63079]

Yes, round our way new builds are probably 10-20% more than an older house although taht is dependant on age and condition (i.e. a 2 bed 16th centure property is more) - A new 2 bed is £289k with an older one from the 80s being £220k

We got a bargain on ours 3 years ago. 1903, period property, victorian architecture but more edwardian finishing in the way of the coving etc inside. But the previous owners had installed 1950's and 1970's gas fires. Covered up the original pamment tile hallway and kitchen floor with carpet and for some reason, put laminate down over the original wooden floors.

We've since put the open fires back in, finished off the wooden floors and restored the pamment tiles, but it's been a slog.

And by "bargain" it was still £173K, but the same property 2 doors away sold for £200K 6 months later.

It's irrelevant though, I hate moving, I'd happily never move again.

 

[OldCarlos]

Second or subsequent child gets in via sibling rule.

As you say, different areas/LEA's might have different criteria, but living in the `catchment` is in our area & the old subsequent siblings aren't now given priority. Bonkers!