Comments on: A competitor shows interest in Northern Rock’s mortgages http://www.johnredwoodsdiary.com/2007/12/19/a-competitor-shows-interest-in-northern-rocks-mortgages/ Conservative Party Member of Parliament for Wokingham Sat, 19 Jul 2008 23:27:47 +0000 http://wordpress.org/?v=2.5.1 By: Neil Craig http://www.johnredwoodsdiary.com/2007/12/19/a-competitor-shows-interest-in-northern-rocks-mortgages/#comment-15739 Neil Craig Wed, 19 Dec 2007 14:39:34 +0000 http://www.johnredwoodsdiary.com/2007/12/19/a-competitor-shows-interest-in-northern-rocks-mortgages/#comment-15739 "I want to live in a country where young people have a chance of raising a mortgage on their incomes to be able to buy a house" The ONLY way to do that is by allowing the building of more houses. Everything else is moving around the rules by which we decide who gets them. This only matters if they exist. There is no technical reason why houses need cost remotely what they do. It is all "planning" regulations which prevent builders building &/or require them to use Victorian building practices. “I want to live in a country where young people have a chance of raising a mortgage on their incomes to be able to buy a house”

The ONLY way to do that is by allowing the building of more houses. Everything else is moving around the rules by which we decide who gets them. This only matters if they exist. There is no technical reason why houses need cost remotely what they do. It is all “planning” regulations which prevent builders building &/or require them to use Victorian building practices.

]]> By: Francis Irving http://www.johnredwoodsdiary.com/2007/12/19/a-competitor-shows-interest-in-northern-rocks-mortgages/#comment-15732 Francis Irving Wed, 19 Dec 2007 13:10:06 +0000 http://www.johnredwoodsdiary.com/2007/12/19/a-competitor-shows-interest-in-northern-rocks-mortgages/#comment-15732 The problem is that anyone wanting to buy their first house this century has been forced to borrow irresponsibly, because other people are. In Q3 2007, median mortgage advance as multiple of salary was 3.39 times. For all of the 1970s, 1980s and 1990s it was between 1.9 and 2.4 times (Council of Mortgage Lenders statistics). This looser credit is good while the economy is doing well, and interest rates are low. People can afford the repayments, they're no higher than the rents they'd be paying anyway. It is a good thing, even though it meant an upwards readjustment in house prices. But what happens if something goes wrong? What happens in an economic slump, whatever the cause? There's no margin for error any more. The problem is that anyone wanting to buy their first house this century has been forced to borrow irresponsibly, because other people are.

In Q3 2007, median mortgage advance as multiple of salary was 3.39 times. For all of the 1970s, 1980s and 1990s it was between 1.9 and 2.4 times (Council of Mortgage Lenders statistics).

This looser credit is good while the economy is doing well, and interest rates are low. People can afford the repayments, they’re no higher than the rents they’d be paying anyway. It is a good thing, even though it meant an upwards readjustment in house prices.

But what happens if something goes wrong? What happens in an economic slump, whatever the cause? There’s no margin for error any more.

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