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Daily doom

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    Daily doom

    First-time mortgage repayments hit 16-year high

    Homeowners are spending more of their salary on mortgages for the first time since 1991 as the market continues to weaken

    Mortgage repayments reached their highest levels since 1991 in October, leaving first-time buyers paying out more of their salary to get on the property ladder.

    The Council for Mortgage Lenders (CML) said today that first-time buyers paid 20.6 per cent of their income on home loans during October, compared to 20.4 per cent in September.

    Payments also increased for homeowners who moved house, up from 17.5 per cent of average income in September to 17.6 per cent in October.

    The CML said that first-time buyers typically borrowed 3.36 times their income while the average home mover borrowed 3.02 per cent their income. (AtW's comment: surely this can't be that low? )

    This month, the Bank of England reduced the UK interest rate by a quarter point to 5.5 per cent, but in 1991 the borrowing cost reached 10.5 per cent.

    According to the CML, the average mortgage for first-time buyers in 1991 was £37,000 on income of £16,107. In 2007, a typical mortgage was £117,000 on a £35,400 salary.

    While lending volumes rose by 9 per cent to £33.5 billion during October compared to the previous month, the number of mortgage approvals fell by 16.5 per cent in the year to October, although it rose in October to 82,900, from 80,400 the month before.

    Michael Coogan, the director general of the CML said: "October is the last month we expect lending volumes to be higher than a year ago as lenders and borrowers will behave more cautiously in an uncertain and slowing market environment."

    Levels of new fixed rate loans fell from 72 per cent in September to 68 per cent in October. Fixed rate loans have have been popular throughout 2007 with levels of consistency at or above 70 per cent.

    The CML added that the move towards variable rate loans was likely in the coming months in anticipation of further interest rate cuts, adding: "The Bank of England’s rate reduction of 0.25 per cent will provide some relief to borrowers in coming months."

    #2
    Originally posted by AtW View Post
    First-time mortgage repayments hit 16-year high

    Homeowners are spending more of their salary on mortgages for the first time since 1991 as the market continues to weaken

    Mortgage repayments reached their highest levels since 1991 in October, leaving first-time buyers paying out more of their salary to get on the property ladder.

    The Council for Mortgage Lenders (CML) said today that first-time buyers paid 20.6 per cent of their income on home loans during October, compared to 20.4 per cent in September.

    Payments also increased for homeowners who moved house, up from 17.5 per cent of average income in September to 17.6 per cent in October.

    The CML said that first-time buyers typically borrowed 3.36 times their income while the average home mover borrowed 3.02 per cent their income. (AtW's comment: surely this can't be that low? )

    This month, the Bank of England reduced the UK interest rate by a quarter point to 5.5 per cent, but in 1991 the borrowing cost reached 10.5 per cent.

    According to the CML, the average mortgage for first-time buyers in 1991 was £37,000 on income of £16,107. In 2007, a typical mortgage was £117,000 on a £35,400 salary.

    While lending volumes rose by 9 per cent to £33.5 billion during October compared to the previous month, the number of mortgage approvals fell by 16.5 per cent in the year to October, although it rose in October to 82,900, from 80,400 the month before.

    Michael Coogan, the director general of the CML said: "October is the last month we expect lending volumes to be higher than a year ago as lenders and borrowers will behave more cautiously in an uncertain and slowing market environment."

    Levels of new fixed rate loans fell from 72 per cent in September to 68 per cent in October. Fixed rate loans have have been popular throughout 2007 with levels of consistency at or above 70 per cent.

    The CML added that the move towards variable rate loans was likely in the coming months in anticipation of further interest rate cuts, adding: "The Bank of England’s rate reduction of 0.25 per cent will provide some relief to borrowers in coming months."


    one third of BTL owned by companies with more than 100 houses. who cares about first time buyers?

    Comment


      #3
      Originally posted by BrilloPad View Post
      who cares about first time buyers?
      First time buyers are important because they bring in fresh supply of money into this pyramidal scheme (much like Dutch tulips in last century) - without first time buyers people who are already inside the scheme will be only using their existing houses as barter payment (plus maybe some extra money).

      Normally all pyramidal schemes collapsed as soon as flow of suckers (first time buyers in our case) stopped or slowed down.

      The only significant difference in this scheme is that you can actually live in houses in denial for a fairly long period of time before you either kicked out by repossessors or accept a loss on your investment.

      Comment


        #4
        It depends...

        ... on the property (and location). FTBs in London are after 1/2-bed flats, so there maybe a slight drop in demand - what's that got to do with properties worth say £ 500k - pretty much average for a house close to the City or the West End? No shortage of buyers that can afford these.
        People would still move for various reasons in and out of London (and other main cities), so the main market (family homes) will not be affected so much.
        Last edited by Dow Jones; 11 December 2007, 14:07. Reason: Spelling

        Comment


          #5
          Originally posted by Dow Jones View Post
          FTBs in London are after 1/2-bed flats


          dog houses

          Just wait until City boys start being fired - this will radically change the mood in London.

          Bubbles never go on forever - they pop, it happens always without any exceptions - the only problem is to predict exact timing.

          Comment


            #6
            A true pessimist - if there was ever one

            Despite all the predictions about a mass pre-Xmas cull in the City, I haven't seen anything yet.
            At the slightest sign of recession, the BoE will drop its rates faster than some girls drop their knicks (in our office anyway), so I am not convinced yet by the Cassandras (AtW etc)

            Comment


              #7
              The way you read information became obvious yesterday when you claimed UBS did not lose money on subprime junk.

              Especially for you: Dresdner set to axe more than 200 jobs

              Comment


                #8
                There have been a few sackings, IB I'm with now shut down one of the
                front office desks in october, I guess the main cull will start after bonus time
                in Jan/Feb, it's already known there will be zero bonuses here, so I'm seeing
                a lot of permies now who would work late leaving at 5.00pm.

                Comment


                  #9
                  Here we go again

                  You just don't get it, do you - copying and pasting headlines by some Russian bird doesn't reflect what happens in real life, ie investment banks always have and always will buy pre-risk-assessed fixed-income (bonds). The risk factor varies from bank to bank and depends on how much they can afford to lose without going bust - unlike the NR scenario.
                  You seem to be pre-occupied with headlines, none of the major players have gone under as a result.
                  There have always been losses of a few hundred staff before Xmas - banks like to do that before the NY starts.
                  It is not a matter to be gloating over though.

                  Comment


                    #10
                    Originally posted by Dow Jones View Post
                    none of the major players have gone under as a result.
                    And Northern Rock that had 20% morgage market share is not a major player?

                    Comment

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