If you were forming a political party what manifesto commitments would you make?

[sal]

BBC NEWS | In Depth

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Historically we are at a high point of owner occupied. Private renting has nosedived Housing is changing.

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supply & pricing is the issue.

Nice data/graphs, sadly 14 years out of date. And doesn't reflect that owner/occupiers are much lower % in the expensive areas, like London and SE, precisely where the BTL/investment buys are popular.

BTL is not the source of the problem, it's just a symptom, that exasperates it.

[BlasterBates]

BBC NEWS | In Depth






Historically we are at a high point of owner occupied. Private renting has nosedived Housing is changing.



supply & pricing is the issue.

What were the interest rates in the past ?

If you buy a house with an interest rate of 17% as they were in 1979 and a house with an interest rate of 4% what is the difference in the price you pay in total for the house.

The answer is a house with a price of ₤200,000 and 17% interest rate you pay ₤1 million to pay off the mortgage
and a house with a price of ₤200,000 and 4% interest rate you pay ₤340,000 for the house

This is why comparing house prices at different mortgage rates is a bad comparison, because the mortgage rate makes a huge difference to the affordability of a house.

[BlasterBates]

Nice data/graphs, sadly 14 years out of date. And doesn't reflect that owner/occupiers are much lower % in the expensive areas, like London and SE, precisely where the BTL/investment buys are popular.

BTL is not the source of the problem, it's just a symptom, that exasperates it.

If you halve the interest rate you double the price of a house that is affordable.

not a good comparison

[vetran]

Nice data/graphs, sadly 14 years out of date. And doesn't reflect that owner/occupiers are much lower % in the expensive areas, like London and SE, precisely where the BTL/investment buys are popular.

BTL is not the source of the problem, it's just a symptom, that exasperates it.

later graphs that show similar current figures but they don't show the ownership change over a century which is why I went with the older figures.

Home ownership in the UK - Resolution Foundation

Key point in these figures are that far fewer council houses are about. Housing associations aren't replacing them fast enough. The number of owner occupiers is far higher than any time in history and completely unlike the figures across Europe.

The private rent sector is still smaller than the 60s.

52% are owner occupiers compared with 30% in the 60s. And in the 1900s.

BTL is creating a private rented sector that is recovering.

When I bought my first house 25 years ago it was £65K and I earnt £19k + company car which was just below higher rate tax , so 3.5 my earnings bought you a four bed terrace in a village in the south east. If I hadn't wanted to live in Berks/Bucks a 2-3 bed house was about the same in the better parts of Surrey.

The same house is sold at ~ £440K now. The higher rate tax threshold is £37.5k so 13 times higher rate earnings. House prices have gone up well beyond affordability.

[vetran]

If you halve the interest rate you double the price of a house that is affordable.

not a good comparison

do please explain your assertion.

feck me glad you don't go anywhere near figures. Its like having Assgoo back.

[BlasterBates]

do please explain your assertion.

feck me glad you don't go anywhere near figures. Its like having Assgoo back.

Most of what you pay for a house when you buy is interest.

Mortgage calculator

Double the interest rate and see what happens to your mortgage.

[vetran]

Most of what you pay for a house when you buy is interest.

Mortgage calculator

Double the interest rate and see what happens to your mortgage.

so you don't repay the capital at all? The amount of interest you pay has no relation to the capital?

From your calculator
you borrow £200,000 at 1.6% (the default) you pay back £242,000

Your monthly payment
£809.30

you borrow £100,000 at 3.2% you pay back £145,000

Your monthly payment
£484.68

so doubling the price means you pay nearly 100k more even though the interest stays the same. Yes you pay 100% more interest if you double the interest rate but that is obvious.

However as to your point about affordability the doubled capital nearly doubles the repayments. Both mortgage examples have about 45k iinterest

[BlasterBates]

so you don't repay the capital at all? The amount of interest you pay has no relation to the capital?

From your calculator
you borrow £200,000 at 1.6% (the default) you pay back £242,000


you borrow £100,000 at 3.2% you pay back £145,000



so doubling the price means you pay nearly 100k more even though the interest stays the same. Yes you pay 100% more interest if you double the interest rate but that is obvious.

However as to your point about affordability the doubled capital nearly doubles the repayments. Both mortgage examples have about 45k iinterest

We're getting there. Here are the interest rates in the 1970's and 1980's.

[vetran]

I think I am being condescending but really I didn't explain my point very well.

FTFY

If you are trying to say that because interest rates are low people are risking more debt than is sensible then unfortunately you are right. Its a balloon of debt and will end in trouble however the fact there is a shortage of stock may cushion it.

[BlasterBates]

FTFY

If you are trying to say that because interest rates are low people are risking more debt than is sensible then unfortunately you are right. Its a balloon of debt and will end in trouble however the fact there is a shortage of stock may cushion it.

House prices are lower than they were 15 years ago



House prices will drop when the interest rates go up, always have and they always will. You bought at a time that was very unusual just after a housing crash and the interest rates had just dropped. House prices shot up over a 10 year period, and over the following 15 years dropped in real terms.