From The Telegraph: "... housing costs continue to absorb about one in eight pounds earned by first time buyers, compared to less than a tenth of the income of second or third time buyers.
CML figures for last month show that first-time buyers continued to see a decline in the proportion of their income accounted for by mortgage interest payments – it fell to just over 12pc in November compared to 13pc a year ago. Mortgage interest payments for home movers, however, remained unchanged at 9.2pc for the second month, still the lowest proportion in nine years."
From Estate Agent Today: "Typical mortgage payments for a new borrower – both first-time buyers and home movers – stood at 27% of disposable earnings in the fourth quarter of 2011.
This is well below the average of 37% recorded over the past 27 years, said the Halifax. Mortgage payments have nearly halved as a proportion of income, from a peak of 48% in 2007."
Righty-ho. Then either first time buys are devoting 25% of their disposable income to principal repayments; first time buyers' disposable incomes are only a third of their 'income'; some combination of the two; or one of those two statements is a complete lie.
H/t for the EAT article goes to SBC at HPC.
Cycling Proficiency Test
1 hour ago
11 comments:
But you missed the article in Estate Agent Today which explained that the CML and indeed, ahem, EAT itself, must have their wires severely crossed, because there aren't any properties for sale, anywhere, at the moment !!!!!
http://www.estateagenttoday.co.uk/news_features/New-listings-dry-up-to-lowest-level-ever-seen
Anon, that was the other big lie in The Tele:
First-time buyers are alive and well as house prices become more affordable, according to the Council of Mortgage Lenders (CML). Despite higher deposits being required, reports of the disappearance of first-time buyers are greatly exaggerated because falling house prices are making property more affordable, banks and building societies claim.
Paul Smee, director general of the CML, said: “... the proportion of loans advanced to first-time buyers has remained remarkably steady, fluctuating between 34pc and 40pc of the total since 2005. In November, first-time buyers took up 37pc of the house purchase market, the same as in October.”
Tut, Tut. How could you possibly think bodies like the CML and those representing Estate Agents and Housebuilders would be anything but scrupously honest in their propaganda bulletins, sorry, "factual statistical information on property based investments alerts" ...
What a parlous state of affairs it conjures up - no wonder that Nick that everyone agrees with was told by the Mighty Ding to take his Mansion Tax idea and shove it where the sun don't shine ...
Hmmm, I wonder what new and very clever bright ideas emanating from the CML et al Grant has been sent to "lobby for in government" re some "much neeeded boost to the housing market in the budget in the way of more government assistance" and that Grant is currently considering - not of course, being such a bright thing, that Grant will need to consider them for long before passing them over to the Oik with "Great Idea ! We should definitely do this" scrawled on every one, eh ?
What about maintenance costs and insurance? And amortised stamp duty, legal fees and other transaction costs?
...and gas and ele and council tax and water and TV licence. Oops then there's the broadband, the TV itself, washing machine, fridge freezer, oven, carpets, bed ... the list goes on.
Life's a lot simpler not paying for all the above - and my 'portfolio' of geared spread bets is up 30% already this year!
But the best bit is there's a few good jobs being advertised at the moment - and while I'm not the only person in my department that whinges about the crap pay...
...I'm the only one that can move to Nottingham, Aberdeen or South Wales at a months notice! Guess what's stopping everyone else even contemplating moving?
Selling "in this market"!
Aaah But - here is another piece of, well, doublespeak, from an Housebuilder, who does have the good grace to tip the hat to Grant "thankee kindly Sir", even though the end of the business they are concentrating on and will continue to concentrate on is definitely not the area of the "market" that magnificent "First Stage Rip Off" or whatever it called, supposedly targets ... but they do like it that some mortgages now have government backed indemnities - makes lenders happier to lend doncha know when 'some' of the risk in lending is carefully factored out by being passed straight on to the taxpayer !
http://www.guardian.co.uk/business/2012/jan/16/bovis-homes-profits-southern-focus
First-time buyers, who are typically younger than second/third timers, tend to earn less than the latter.
Who'd have thunk it?
re my comment at 16:07 yesterday - I hadn't expected the estimable Grant to be so quick out of the blocks !
http://www.telegraph.co.uk/news/politics/9019124/State-to-help-elderly-downsize-as-Government-tackles-housing-crisis.html
M, SL, you can add those other costs onto the 12 per cent or the 27 percent of your income which goes on mortgage repayments.
VFTS, and have bigger mortgages.
Anon (assuming all three comments to be coming from the same person), yes of course. Shappsy is very much from the school of thought which says "If they own land, then give them money". Although the idea re downsizing is the least bad of all his bad ideas.
Sounds like the first is an interest only payment and the second a (more common) repayment mortgage. Given that base rates are at record lows and in general measured house prices remain optimistically high, the difference between interest only and repayment must be about the largest it has ever been.
QP, is that enough?
Assume mortgage four times gross income and interest of five percent, then interest payments are twenty per cent of gross income and probably thirty per cent of 'disposable' net income.
Principal payments are probably very small, so the "27% of disposable income" seems about right.
The "12% of income" must mean gross earnings before tax and suggests that an average mortgage is only three times income and only 4% interest.
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