I am worried.
Having sat on the sidelines for the first near-decade of my working life, spending large sums of the money I’ve managed to continue earning paying someone else’s mortgage, I am about to get on the housing ladder.
Or at least, that is the plan. The way things are going, I cannot be sure I won’t in fact be buffeted back into my box by the uncompromising headwinds of what is undoubtedly a rampant sellers’ market.
Silly first-time buyer, run along home now while the big boys play.
We’ve got our deposit together - and living in London we’re talking about the minimum 5 per cent of the eye-watering sum needed to buy anything auspicious enough to have both walls and a roof - and are going in a few weeks to talk mortgages with the bank.
Then we’ll start the apparently arduous process of finding a place to spend these borrowings on. Elbows at the ready.
According to an article in the Sunday Times, there are now on average six buyers for every home - and 10 if you are looking in the capital. Small wonder then that the article also cited a rise in the average house price to an “all-time high” of £265,000.
Watching Location, Location, Location last week, I was startled by the stat that in some parts of London house prices have risen by more than 30 per cent in the past year. That’s around £2,000 a week, and devastating to the prospects of living inside Zone 4 for most.
Real world horror stories I’ve heard add some colour. For example, friends of ours had the vendor pull out months after a sale had been agreed (and large sums had been spent on surveys) because the property has already increased in value substantially.
A Sunday Telegraph article over the weekend highlights another consequence of all this: a rapid rise in the number of people being forced to borrow over longer periods.
According to data from the Council of Mortgage Lenders, 28 per cent of the 171,000 new loans taken out between April and June were for terms of more than 30 years, a new record. Ten years ago just 4.5 per cent of loans were three decades or longer.
I find it staggering that we are back to frothy, out of control housing hubris, just seven years after the world fell into economic purgatoryGiven that the average first-time buyer is now over 30, more and more are facing the prospect of barely managing to get rid of mortgage debt before they retire - if they can at all.
Oh, and while we’re on it, both the Independent and the Times carried a story on Saturday based on a Halifax press release that claims those buying are better off to the tune of £1,300 a year, even taking all buying costs and loss of interest on savings into account.
Based on the rates I’ve calculated I’ll have to pay back, this is only true at higher deposit rates (the study assumed 10 per cent). For the many first-timers, especially in the pricey south-east, with less in the bank and without rich parents, we’re going to be out of pocket. Significantly.
I find it staggering that we are back to frothy, out of control housing hubris, just seven years after the world fell into economic purgatory on the back of a global housing market crash. This is why I support any attempt to contain the housing market by regulators. It is self-evidently not capable of keeping itself in check.
Like most, I am grateful for the support the government has offered to boost lending to first-time buyers with smaller deposits. Even if I don’t take advantage of Help to Buy - and some of the rates aren’t all that great - this has catalysed the number of loans available to me.
But the efforts by the Bank of England to curb lending at higher loan-to-earnings ratios is very prudent.
Figures show this has been the highest growth area in lending over the past couple of years: understandable given the runaway price inflation we’ve seen; unsustainable and surely undesirable given the aforementioned and catastrophic recent history.
The Mortgage Market Review is welcome, too. While some of the odd side effects for older borrowers are regrettable, the general push for prudence and focus on affordability is surely in all of our interest.
Selfishly, as a solvent, otherwise debt-free buyer with a good credit history, looking to borrow less than three times my joint earnings - borrowing more makes the repayments unaffordable - and still struggling to get more than two bedrooms; I hope this all finally starts to push things back my way.
The next step is, of course, to increase building at the required rate again, but I suspect British ‘Nimby-ism’ and red tape will keep that a pipe dream for some time to come. Much like the dreams of many young people to own their own home.
