If there were no mortgages

[[TW]Fox]

Such as where? Just asking mate .

Off the top of my head with no further research at all, France

A quick google tells me only 50% of people in Holland, for example, are home owners.

Some interesting research from Warwick Uni here:

http://www.warwick.ac.uk/news/pr/business/82/

Professor Oswald says:

These ideas may seem surprising at first sight, but they are just common sense. It is easy for renters to move around the country to find work. Home-owners and council-house tenants find it slower and more difficult. Western governments' actions have systematically killed off what used to be a large private rental housing market. This has probably been a mistake: it has made labour markets work less efficiently and led to more unemployment.

Britain fits the evidence, though it is currently passing through a cyclical boom. In the 1950s, most British people - around 60% - were private tenants. Now hardly anyone rents privately -- the figure is less than 10%. Over that period, unemployment has more than doubled from what used to be a regular two and half per cent.

The only countries to escape a major post-war rise in unemployment have been Japan, the US and Switzerland. Consistent with the theory, these have seen no increase in home ownership.

 

[RopAyy]

Id be happy to be able to get a mortgage Im stuck throwing a load of dead money to pay for someone else's mortgage because i cant fork up the initial deposit on one!

A joke i tell you!

 

[Third Opinion]

We do seem, as a culture, to be utterly obsessed with it often to the detriment of anything else that might get in the way.

Curiously in other countries around the world the attitude is completely different.

Totally agree with this. It has become a national obsession which I find people often look at the monstrous debt they are taking on with rose tinted glasses.

I wonder how many would end up in the poo if interests rates hit 7%?

 

[starfighter]

Totally agree with this. It has become a national obsession which I find people often look at the monstrous debt they are taking on with rose tinted glasses.

I wonder how many would end up in the poo if interests rates hit 7%?

It can be risky, but if you get to live 30 years rent free it might pay off?

 

[Bumhucker]

Our quality of life is getting pretty rubbish these days if we have to spend most of our salary on buying a house.

This sentence reminded me of an article I read today:

http://news.bbc.co.uk/1/hi/wales/mid_wales/10191162.stm

It also touches on the other themes of this thread such as differences between nationalities.

 

[Deleted member 66701]

I wonder how many would end up in the poo if interests rates hit 7%?

I've budgeted to be able to afford upto 15% as that's what my mum and day ended up paying in the mid 80's.

 

[Tombstone]

No not at all. If there were no mortgages you'd be able to buy a house outright for about £20k

Funnily enough my first house cost me £32k to buy outright, houses were cheaper then though, a lot cheaper.

Our current house cost us a hell of a lot more than our first house, though luckily we have no mortgage and bought our current house outright. Getting a house of my own was probably one of the best purchases I've ever made, had a massive impact on my life. Moving out from my parents at 22 and into my own house simply opened avenues that wouldnt have otherwise been possible. I must admit I do feel its a huge shame that its now so difficult for people to get onto the housing ladder and would very much like to see it made easier.

 

[dr_volki]

Germany was a famous rent only country with buying being the exception, this is changing with buying on the up and this seems to be a trend in Europe where renting was the main way.

yep that's the way it is in germany and switzerland (lived in both countries)
but the problems is more that you have to bring like 50% cash and 50% you can borrow from the bank or so which makes it quite expensive for yourself to afford a deposit.


p.s. not sure about the percentages exactly but it is quite high compared to a deposit in the uk

 

[Marky]

No not at all. If there were no mortgages you'd be able to buy a house outright for about £20k

lol! Can you build a house for £20,000?

 

[Lakeland]

Mortgages are a con though.

This. Who gains from increased house prices? Mainly banks. There are some people who gain but they are the people who either A) own their own house, and buy/sell a second, or those who are selling a house in an area where the price has risen, and are moving to an area where the prices have not yet risen.
If I bought my house for 70k, and it is now worth 120k, then surely I can buy a better house if I sell what I have and buy something for 120k? Well no cause that house for 120k probably cost 70k when you originally bought yours. So essentially the bankers get interest on the 50k and the vast majority of us gain nothing

 

[Dutch Guy]

yep that's the way it is in germany and switzerland (lived in both countries)
but the problems is more that you have to bring like 50% cash and 50% you can borrow from the bank or so which makes it quite expensive for yourself to afford a deposit.


p.s. not sure about the percentages exactly but it is quite high compared to a deposit in the uk

50% deposit is huge, here in The Netherlands a deposit isn't really needed at all, the first house I bought I had a mortgage of 110% with no deposit, only a 10% bank guarantee

Another advantage of increasing house prices is the fact you can get a better mrtgage rate if the house is worth more than the mortgage, we recently got a 0.3% interest rate discount as the mortgage was <75% of the value of our house, when we bought the house 5 years ago we had to finance 100%

 

[Dj_Jestar]

The OP is right, house prices are only as high as they are because of the amount people are willing to spend for one, ergo, because people are borrowing more money (mortgages) they are spending more money.

Supply of desirable housing is not meeting (and never will) the demand.

The "Property Ladder" is also a massive lie. There is no Ladder, there is only you indirectly saving money in the form of paying your mortgage (which you will later regain the equity if/when you sell).

If you saved the money directly instead, you'd be better off (no interest to pay).

My parents paid £24,000 for their house 33 years ago, which is now valued at £450,000.

Since then, Banks have been lending more and more. When my mum and dad applied for their mortgage, the limit was (1 * salary) + (0.5 * spouse's salary). This has been steadily increasing, and you can now get up to 6 * combined salaries.

Combine that with the obsession of owning properties (and then the obsession of owning multiple properties when you get spare cash) in this country, and you've got the debt riddled mess we (as a population) are in.

 

[cm1179]

a house can be valued at £500k but if no one is willing to pay more than £400k for it, then that is what it is worth

i'm interested to know what people do in countries where they rent their properties do when they retire or have no income?

 

[Dj_Jestar]

a house can be valued at £500k but if no one is willing to pay more than £400k for it, then that is what it is worth

i'm interested to know what people do in countries where they rent their properties do when they retire or have no income?

Pensions cover their rent. Rent is low in France, as everyone is doing it, property prices are low to begin with.

Btw, neighbour's house (Identical, as they are semis) went for £480k 4 weeks ago on auction.

 

[Shimmyhill]

The idea is that if you rent you also save and/or invest money for your retirement.

 

[cm1179]

my mortgage costs me about £100 a month less than what my property would to rent. can't see it happening in this country

 

[Dj_Jestar]

my mortgage costs me about £100 a month less than what my property would to rent. can't see it happening in this country

Ya think? Landlord is going to want to make a profit every month, not just pay the mortgage.


Rent is high because the mortgage payments for the landlord is high. Mortgage payments are high because the property value is high. Property value is high because people are willing to go into more debt to get property. Banks are rubbing their hands and lending out massive mortgages. Everyone is in a "Must own properties" frenzy, and takes out massive mortgages with the false security that they own the property.

 

[Glaucus]

I bet none of these "houses" is worth more than 20k, so yes you can build a house for less than 5k even if you wanted to. It's just not really a UK standard, is it?

Trouble is planning permission.
I would love to build my own house and could do it for a fraction of conventional houses. But planning permission is far to restrictive.

 

[Bear]

Pensions cover their rent. Rent is low in France, as everyone is doing it, property prices are low to begin with.

Btw, neighbour's house (Identical, as they are semis) went for £480k 4 weeks ago on auction.

Depends on where you are in France. In parts of France Brittany and Normandy for instance the French complain like mad that the British are pushing their house prices up by buying up property. Im sure its the same in the southern Spain.

 

[Shimmyhill]

Ya think? Landlord is going to want to make a profit every month, not just pay the mortgage.


Rent is high because the mortgage payments for the landlord is high. Mortgage payments are high because the property value is high. Property value is high because people are willing to go into more debt to get property. Banks are rubbing their hands and lending out massive mortgages. Everyone is in a "Must own properties" frenzy, and takes out massive mortgages with the false security that they own the property.

Property value is high because land value is high and there is and always will be more demand than supply.

People getting into debt is a symptom of the above not the cause of it, i dont think you grasp the basic economics of it - Banks do not make a lot of money from mortgages - they make far more from peoples savings and speculating with money they do not have.