Guest blog: Shelter's Chief Exec on the rise of unaffordable housing

[JessMumsnet]

This week, to highlight the fact that housing is increasingly unaffordable for many, Shelter published research which showed what our weekly shop would cost if food prices had risen to the degree that housing costs have done over the last decade.

In this guest blog, Shelter's Chief Exec Campbell Robb warns that unless something changes, the next generation will find it even tougher to get a stable and affordable home.

What do you think? Are you struggling to get on the property ladder, with rising rents making it increasingly difficult to save for a deposit - or are you worried for your children's prospects? How do you think the situation could be improved? Post your URLs here if you blog on the subject, or tell us what you think here on the thread.

i think the 2% is utter bollocks tbh. there aren't btl mortgages at 2% interest on 35year terms with zero repayment required. i think and tbf you have repeatedly shown it OB that you don't have a clue about the real details and as you've admitted it's your partner who handles it all.

seriously 2% interest only mortgages on 35year terms with only a 15% deposit? i don't buy it.

the best btl rate i can find is BBR+3.29% - currently running at 3.79%. if mortgages rates went up even to 5% that would be 8.29%.

as far as i can see no one offers better than tracking at 3.29% above base rate for a btl. i also seem to recall that btl rates used to be higher than this back in the time you're talking about buying - i thought more like 4.5% above base rate and that's without even taking into account the fact it was interest only (which means they need a wider margin of profit to cover that risk) and was an extended term of 35 years.

and yes OB when you pay it back does make a difference - it means a hell of a lot more interest and a longer term investment and gamble for the lender. their capital is out of the hands far longer and they usually add in costs to account for that.

extra costs would include building insurance, corgi certification annually, decoration, repairs, replacing white goods (student accomm so presume you furnish and provide appliances), etc.

start up costs - surveyor, estate agents, stamp duty etc exit costs HIP (if they still do that), minimum of 2.5% of sale price to estate agents, capital gains tax etc.

so sale price would need to get you back your deposit, pay the estate agents and cover all other exit costs. you're looking to need a decent increase in prices.

if it was me i'd be paying in all profit and excess left from my own salary to the capital of the loan bringing down the debt before interest rates go up by minimum of 5% (as they have to to get back to anything like normal). i certainly wouldn't have savings in a bank account earning 0.5% whilst i had a huge debt like that sat there. that makes about as much financial sense as sitting with thousands in your bank whilst you have credit card debt

oh and if my salary had doubled i'd be paying 50% of it monthly off the capital of that mortgage.

I'm out and about at the moment but just to counter the claims around our approx 2% rate, we were on a fixed rate of about 5% for an initial period but then rolled onto a SVR. We have not changed products since but may look to fix in the near future.

There's no point in paying too larger a chunk off the mortgage as this would only increase our tax bill though we will pay down some if it when we move products.

Yes there were initial set up costs in the early years but these weren't too onerous and can be offset against tax.

I'll have a proper read of the thread when I'm back at home tomorrow.

Southwest, put the numbers in the link I posted up thread, probably more accurate than your calculations

Also southwest, I didn't say it was me who would be without a home (if you recall we live in a relatively modest house and haven't over stretched ourselves financially) but many of my generation.

Well not reading the thread worked out well

The numbers are the numbers, the properties may go through on my husband's tax return but I still know the approx and did indeed check them out with him last night (we pay £240 a month per mortgage if you're interested).

When we first bought the houses we were on a higher rate of 5% and the rental was less. There was still a good level of profit. I know interests rates may well go up much further than this but as long as we remain cost neutral I'm happy.

Really must go to sleep now...

Ob I'm fine with your situation if the students have a lounge and a large kitchen. 35 years' is a long time. our mortgage is for 25. Good luck with it.

Pretty sick isn't it, people like this pile into property without a moments thought and then get saved from their recklessness by these artificial low rates we now have crippling the economy. Meanwhile the prudent savers see less return on their savings they worked for and were responsible in acquiring as it goes into these folks pockets instead.

A 3 bed house I think is more suited to a family home, but how can they compete with these kinds of 'investors', how awful. Ripping off kids before they've even started out. Pity the neighbours as well, a family with 2 kids to feed and jobs to go to are not going to be overjoyed to see another 4 temporary 19 year olds moving in next door and thumping out bass every night till 2am.

What a service to society. What a tragic lack of morals.

Terrible times. Rates need to go up and go up NOW. No more rewarding recklessness and punishing responsibility.

I hope you lose money. I fully expect you to, and when you do, I hope you get no sympathy.

I think rates need to go up too but I don't blame Obface using this to fund retirement. didn't Gordon Brown not help by taxing pension trusts etc.

It's still wrong, moral people are above it. Unfortunately moral people are in short supply these days

But Mondaytuesday our initial rate at purchase was 5%, it's only since rolling off a fixed rate that we've been on such a low rate. I think you'll find there are many people in this position though I don't expect rates to stay this low for much longer.

Our houses are in a student area, there wouldn't be many families wanting to move in and the neighbours are students also. Before you say it, the area has evolved like this due to its proximity to a university and isn't really down to the likes of me

What I don't understand though is why you are really quite so nasty to me. Yes we disagree about the future of property prices but the economic situation of the country isn't really down to me and my very small property portfolio. To wish me to lose money is mean, why can't you be civil? I find it odd that you can't.

Every single thing you say is illogical. Im starting to be impressed by it I have to admit.

our initial rate at purchase was 5%, it's only since rolling off a fixed rate that we've been on such a low rate

I know, its this rate that is bailing you out of your poor decisions, paid for by more responsible people.

I think you'll find there are many people in this position

I know, its a terrible situation for the prudent to have to hand over their hard earned money to so many spendthrift speculators.

there wouldn't be many families wanting to move in

Because of the students living there. Um. Yes....this helps your argument how?

the area has evolved like this due to its proximity to a university and isn't really down to the likes of me

This one is brilliant. And it 'evolved' that way how? By people renting out property to students perchance? I think thats pretty close to what you're doing.

Ive covered it before but here it is again, your actions harm others, what you are doing is immoral and unjust.

Its usually the last resort in an argument isn't it, why are you so mean! Time to fold your arms and pout I think.

Thank you Alemci. I know BTLs are for everyone so I appreciate you nice words.

Just to note, the mortgage term is somewhat irrelevant as we only pay off the interest each month. Though as i mentioned we'll pay down some of the loan when we switch products next time.

Sorry for the dreadful typing, been tapping out replies on a train so apologies if my responses have been a little disjointed.

I keep saying Im not going to post anymore on this, I mean it this time. Its oddly addictive to try and teach people who cannot learn, but it really is insane for me to bang my head so much against this wall.

I will try to refrain from continuing to respond to whatever utterly illogical baffled and confused response I get. I will try my best.

Thank you Alemci. I know BTLs are for everyone so I appreciate you nice words.

Just to note, the mortgage term is somewhat irrelevant as we only pay off the interest each month. Though as i mentioned we'll pay down some of the loan when we switch products next time.

Sorry for the dreadful typing, been tapping out replies on a train so apologies if my responses have been a little disjointed.

On my phone - not sure how I double posted!

Mondaytuesday - there is a chance you might not know it all you know...

I used to post on a tech forum back in 2004/5 a particular topic was about the economy and what I posted was that there would be a financial crisis within two years. The venom when I also posted that 1 million public sector workers would made redundant was unbelievable. Anyway some can see what is going down and others cannot. It?s all the small pieces of information that can give the observant a bit of insight. We are at a crossroads IMO and the whole house of cards may well collapse soon. We are going back to a economic lifestyle roughly in line with the early 1950s . Some will adapt , others will not see the lights have turned red .

Just to clarify , when I say we are IMO going back to the early fifties economically I mean the lower end.
Very few had a car and most were drably dressed and very few owned property.
In other words they had little

I'm not saying that hard times aren't ahead just that I believe, given type of let we have (student) that we'll be able to ride out any rough period. I fully expect interest rates to rise to a much higher level in the next few years. Please understand these properties are not the be all and end all for us. We have been prudent with our choice of residential home and both earn well. I know these factors aren't related in any way to our BTLs but give a picture of our overall financial health. People have lost a lot in recent years in devaluing of pension pots/stocks and shares. I still believe in the long term prices will rise (no one can say with certainty what will happen in 35/40 years, not even you Mondaytuesday) but even if they don't we'll still be relatively well off. I'm not too worried.

This was a great thread until it became OBFace and Her Lets.

With students only able to get mac burger jobs on leaving university they may soon be thin on the ground.

possibly a better housing market and economy before it became about OB's ilk and their lets too expat

i'll say it again - length of term DOES matter. it may not matter you 'we're only paying the interest' but it matters to the lender who is taking a higher risk and losing their capital for longer (and therefore having less money to lend out to other people seeing as they've tied up so much of their capital with these kind of idiotic mortgage arrangements).