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sobriqueOn the radio this morning was a news article about how Abbey National are relaxing their limit on how much money you can borrow on a mortgage.
BBC Link.
Summary? Abbey have said 'ok, you can borrow 5x your salary, rather than the traditional 3.5x'.
There was a little bit of froth from someone who was saying that this was bad, because now people would be looking at 200-250 thousand pound houses. Now, I'm not sure about anyone else, but I always thought that 40-50 grand a year was a quite well above average salary.
Now, I've just had a look at house prices around coventry: http://www.upmystreet.com/property/prices/l/Coventry.html
What that one says is that Average price of a house in coventry in the first half of 2006 was 147 thousand. With a detached averaging at 304 thousand, and a flat at 117 thousand.
A 3.5x mortage means you need to be earning 33,000 a year to afford an 'average flat'. Even a 5x requires 23 thousand pounds a year. I seem to recall that's quite a way above an 'average salary', although I'll admit I've not actually checked recently. Is it only me who thinks that 'average salary' should be able to afford an 'average house'?
There's actually a nice graph at the bottom of that BBC article, that's saying currently 'average house price' is actually 6.1x 'average salary'.
Of course, lets not even start on how much pain is involved in a 5x mortgage over a 25 year term. Rough guessing at rates suggests that it'll be about half of take home pay. 5% rate, 147k, 25 years is about £850 out of a £29,400 salary, of which you'd actually see about £1600-1700, so around half.
Personally I think upping the cap isn't all that bad an idea. Quite a few people were using the 'self assessment' deals to lie anyway. Of course, it also means that there will be a swathe more people able to buy into the property market too, which will probably serve to spike prices even further.
BBC Link.
Summary? Abbey have said 'ok, you can borrow 5x your salary, rather than the traditional 3.5x'.
There was a little bit of froth from someone who was saying that this was bad, because now people would be looking at 200-250 thousand pound houses. Now, I'm not sure about anyone else, but I always thought that 40-50 grand a year was a quite well above average salary.
Now, I've just had a look at house prices around coventry: http://www.upmystreet.com/property/prices/l/Coventry.html
What that one says is that Average price of a house in coventry in the first half of 2006 was 147 thousand. With a detached averaging at 304 thousand, and a flat at 117 thousand.
A 3.5x mortage means you need to be earning 33,000 a year to afford an 'average flat'. Even a 5x requires 23 thousand pounds a year. I seem to recall that's quite a way above an 'average salary', although I'll admit I've not actually checked recently. Is it only me who thinks that 'average salary' should be able to afford an 'average house'?
There's actually a nice graph at the bottom of that BBC article, that's saying currently 'average house price' is actually 6.1x 'average salary'.
Of course, lets not even start on how much pain is involved in a 5x mortgage over a 25 year term. Rough guessing at rates suggests that it'll be about half of take home pay. 5% rate, 147k, 25 years is about £850 out of a £29,400 salary, of which you'd actually see about £1600-1700, so around half.
Personally I think upping the cap isn't all that bad an idea. Quite a few people were using the 'self assessment' deals to lie anyway. Of course, it also means that there will be a swathe more people able to buy into the property market too, which will probably serve to spike prices even further.
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Date: 2006-11-01 12:18 pm (UTC)no subject
Date: 2006-11-01 01:26 pm (UTC)no subject
Date: 2006-11-01 02:48 pm (UTC)This is most likely a mentality issue, Britain has the highest per head debt in Europe whereas in Germany it's among the lowest (in reverse, Brits are the worst energy conservers while Germans are the best). As someone else above mentioned, Brits tend to love spending money they don't have while Germans (in general) don't. Incidentally, these are the two personality traits (going into debt without thinking and wasting energy) that irritate me the most in Brits.
While housing on the whole is cheaper (a modern, standard - which in Brit standards would be a luxury - two-bed apartment in Nuremberg, which is a bit bigger than Coventry, would cost around €150K which is about £100K. I'd reckon that you'd pay at least 200K for a similar place in Cov.
Rents are definitely cheaper (monthly rent for the above would easily be less than £500 a month). I couldn't believe it when I moved to Cambridge 10 years ago and paid the same amount of money for a room in a shared house than I did for my own flat in Nuremberg (which was three times the size). Now the discrepancy is even worse.
Sharing a house as a "professional" (i.e. someone with a steady job and income) is almost the norm here whereas Germans value their "own four walls", even if it's just rented in an apartment block.
This is also reflected in interest rates. With a German mentality (saving), living in the UK is great (I get 4.x% on a standard savings account here, in Germany I'd get maybe 1.5). If only the prices (of everything, not just housing) were similar, I'd be laughing.
If the employment situation in Germany (especially in my line of work) were better, I'd go back in an instant. After tax and other deductions (which are far higher in Germany, just under 50% for unmarried), I'd earn roughly the same amount of money in a similar job but that money would go almost twice as far. Go to any shop in Germany and you'll see roughly the same prices (only in Euros instead of pounds).
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Date: 2006-11-02 01:19 pm (UTC)And yes, from the occasional comments i catch it seems that German house prices are stagnating, and maybe even falling. (careful, this may be seriously out of date info). So if I had the money i might buy a nice place in Germany, rent it out to pay for my rent over here... hehe. Makes no sense... just a stupid thought.
I have more seriously considered buying my parents house though, but thats probably for other reasons than renting or living in it.
And yes, i can't believe i'm paying 525 a month for the shithole i live in, but thats just it.