MarkO

You sure it's worth locking in now? You might want to get a variable for a few months and lock in a little later in the year. There's no guarantee that this is going to be the last cut (far from it).

davyboy

Its just a gamble, and I think I will air on the side of caution.

How much difference would it make to a £400 a month mortgage?

carl

Well if it's interest only it's easy to work out.

Say it's £400 a month at 5%. That means each % costs £80, so each quarter of a percent costs £20. So the simple answer is £20 a month.

Tiggs

a 25pt drop! i'll have some of that!

T

MarkO

25 basis point drop, Tiggs. Jeez, and there was me thinking you worked in finance.

Floyd

iTrader: (9)

RichW

Enjoy yourself now, stuff the mortgage!

I lost most of my 20's buying bloody houses, I lived like a poor person who is very poor and didn't do anything much at all. I wish I'd waited for the crash in the late 80's/early 90's and bought then.

If you sell the car you may just have enough for a deposit on a shoebox.

My advice is to sponge of the oldies and wait for the next crash or bump of the parents.

F

PS if you start saving money now you will be outstripped by the house inflation.

xyzpaul

Difficult to predict, but... at some point in the next 5 years, house prices will be 10% less than they are now, and at some point in the next 5 years they will be 10% higher than they are now. My guess is that the will go up before down.

But when interest rates do rise, as they always do eventually, there will be a lot of people having to sell their properties because they can't afford the repayments, so house prices will drop. Just an increase from 5% to 7% would mean finding an extra £300 a month on a £700 mortgage.

Of course, in 15 years time prices will be higher than they are now.

carl

So let's say you're right and they go up 10%. Then to get 10% lower than they are now they need to go down by around 18%, which isn't far short of a fifth!

xyzpaul

carl - agree that it seems unlikely when you do the sums, but an 18% drop is nothing compared with what's been going on in the stock markets the last couple of years. Nasdaq down from 5000 to 1300. Nothing that severe will happen with house prices, but a 20% loss is possible. Hope I'm wrong

speedking

Don't forget that NI contributions are increasing in April (?) by 1%. If a third of your salary is spent on a mortgage, then this is like a 2-3% increase in mortgage rates. Gotta be some fallout from that.

PS 40% taxers will be hit even harder. IHT could change leaving expensive houses looking less attractive.

Downward pressure all the way.

carl

No, I think you have your wires crossed. This is like a 2-3% increase on the amount you pay each month (e.g. 15 quid on a £500 p/m mortgage). An increase in the mortgage rate of 3% would be the difference between £500 p/m and £800 p/m

speedking

Whoops! Quite right Carl, I stand corrected.

rich1231

Cost of morgages as a percentage of income is currently running at around 23%. Early 90's crash this was well over 40%and i believe peaked at 60% in some areas.

We are nowhere near that at the moment. There is still alot of room for upwards movent in both prices and interest rates.

MarkO

Looks like rates are going down tomorrow instead!

dogmaul

nice to see york is been made a hotspot for house prices due to the fact the ratio between wages and houses prices is like the third higest in the country at this rate i will never get a house in york

dsmith

Is that gross or net incomes ?

Deano

dogmaul

if your talking to me god knows will go dig out the bit in the paper

dogmaul

THE true plight of the first-time house buyer in York has finally reached the ears of the Government.

Booming property prices, the selling-off of council houses and low wages in the city have combined to put even the most modest of homes out of the reach of many families.

City of York Council has been well aware of the problem for years and has frantically cast around for a solution.

Now, in desperation, it has put the full facts before Westminster, to try to show the Government it is not just south of Watford where there is a housing problem.

York is a victim of its own success. The city is booming, it is a beautiful place to live, and those who can afford it are willing to pay the price to settle here. Well-paid workers in neighbouring Leeds are willing to commute and pay York prices rather than live in the sprawling West Yorkshire conurbation.

Government legislation dictates that councils must allow residents to buy their council houses. No new council housing is being built unless it is hand in hand with such as housing associations.

Combine that with market forces and it means rocketing prices for the limited number of properties still available in York.

The mathematics of the equation are simple: the average price for a terraced house in York is £95,000; the average family wage is a mere £20,864. The two figures together equal either renting or homelessness - and a council house waiting list of 4,500 households.

The problem is further aggravated by the instability of investment. Many people are looking to secure their retirement by buying up second and third properties to rent out and later sell at a healthy profit.

York Council leader Dave Merrett revealed in the recent Evening Press online debate that the council was to insist that 50 per cent of any new housing development will be affordable homes.

But in a city with gold nugget land prices, that will not be an attractive proposition for developers who would rather put up luxury flats or executive homes.

It may seem ludicrous for boomtime York to ask the Government for help with a social problem. But a solution to York's housing needs is beyond the powers of the local council. The city needs help - now

dogmaul

THE true scale of the affordable homes crisis facing desperate first-time buyers in York has been laid bare in a dossier of evidence submitted to MPs.

City of York Council has sent a memorandum to a House of Commons select committee to prove that problems caused by spiralling property prices and the "right to buy" scheme are not just limited to London and the south-east.

The document supports York MP Hugh Bayley's bid for York be treated as a special case when extra housing cash is allocated by the Government.

It reveals the gap between earnings and average house prices in York is now as large as in the hot-spots which have been singled out for urgent action by Deputy Prime Minister John Prescott.

According to council officials, the average sale price of a terraced house in York is now £95,000, while a flat or maisonette costs £96,000.

Yet the average household income in the city is only £20,864 - with 57 per cent of families earning less than £20,000.

This means the ratio of earnings to house prices is now 3.4, above the normal "three times your salary" level of lending offered by many mortgage companies and on a par with the average for the south-east.

So-called hotspots Reigate and Banstead, Hastings, Maidstone, South Buckinghamshire and Chiltern all have lower earnings to house prices ratios, the city council has discovered.

The council says the city needs 954 new affordable homes a year for the next five years, but less than 200 per year are currently being built, resulting in increasing levels of homelessness and a large waiting list for housing, around 4,500 households.

It is worried that authorities such as York will be severely disadvantaged if there is a view that affordability problems only exist in the south-east. "Unlike most of the north, there is a very high demand (in York) for housing."

Councillor Viv Kind, former executive member for housing, said today: "We have asked Mr Bayley to lobby the Government to recognise York as a special case in the North of England."

She said the spiralling cost of property was affecting not just people wanting to buy but also those wanting to rent.

Council leader Dave Merrett recently revealed in an Evening Press online debate that planners may help tackle York's problems by insisting that half of properties in future housing developments are affordable.

Mr Bayley, who has called for the city to be handed millions of extra pounds to build more new "affordable" homes, is urging Deputy Prime Minister John Prescott to make York a special case when he allocates a £1.1 billion increase in housing spending announced by Chancellor Gordon Brown in the Comprehensive Spending Review.

Mr Prescott has pledged to spend a large chunk of the money on affordable homes for the south-east.

The remainder will be spent on bringing "abandoned" houses in northern cities back into use.

Mr Bayley said: "York has got a serious problem and it is important we get the same favourable treatment as councils in the south-east."

The select committee is expected to publish its recommendations in the next few months.

dogmaul

well if i had 20k it would be fine but im only on 16.5K so its a rather large ducking problem

father_jack

Get a bird with another 16k then....

dogmaul

great idea now to find a woman