Astronomical mortgage repayments for ordinary housing

[SweetieDarlings]

I have spoken to several friends recently (mid-30s) who have said they are looking at mortgages of £3-4,000 a month to buy a house.

This is to borrow £6-700,000 - buying a small terraced house with a large LTV ratio.

These are typically second homeowners - they have a little bit of equity but not a lot, and have not made money from the high price increases.

It was already expensive - but this sounds terrifying. These are not really fancy houses - three bed terraces mainly.

How is London going to survive in future? I cannot see how people will be able to afford to have families there within the next couple of years.

They do what people have done for generations... move further out

This is why people leave London.

@PuttingDownRoots but some people have to live in London.

It would be a shame for the city if it no longer had a families living in it.

These friends typically live in zones 4-6, so not central London.

Until a couple of years ago you could service these mortgages for a lot less - it’s a dramatic change in a short period.

You can buy a huge 5-6 bed house for £450-£500k round me. A starter home would be less than £250k, you could probably go down to £150k if you compromised on location

I guess you don't really mean second home owners, do you?

No-one has to live in London if they don't want to.

Already most ordinary people (nurses, teachers etc) can't afford to buy property & raise family in zones 1-4 (at least). So it's the rich (bankers, city law, family wealth etc) & people who have housing subsidised (council houses, student accommodation) generally speaking who live there.

The normies have to move further out! Then we wonder why there's a big shortage of nurses, teachers etc in London...jobs that pay enough people won't qualify for help, but not enough for people to actually live there.

By second home owners, I mean they’re not first time buyers! I realise that is confusing now.

Do you mean these people own 2 homes?? @SweetieDarlings

You can buy 3 bed semus for a lot less than that in zone 6.

My parents still live in the one I grew up in. They commuted onto London daily (no WFH then!)

Interest rates are high,

Everyone is paying more for their mortgage.

The costs will have similarly risen for those workers too.

A £600k mortgage in 2021 would cost you £2,000 a month - today it would be more than £3,000.

Indeed.

The problem in London is that the properties are already disproportionately expensive.

Which means the monthly repayments are really huge!

No I mean they have owned a first property! The house is the second purchase - having sold their first.

It's why I left London. I had a one and a half bed flat with a garden in zone 3 - rarer than hen's teeth - but for two proper bedrooms and a parking space, I moved 40 miles out.

London is for singles, the very wealthy and those in social housing. No one else can afford it.

I work in London (NHS) and lived there. We’ve had to move a 90 minute commute out to afford a two bedroom house. I agree with previous posters: average wage earners have been priced out of buying and renting. It’s commuter belt, or find work elsewhere. Those are your options.

@SweetieDarlings that's terrible. Many people I know - their mortgages went into the thousand figures after the disastrous Liz truss budget, literally changing their lifestyles dramatically. I can't believe she still tries to say she knows what she was doing. I also can't believe she's on the 90k annual pension for being a 30day PM. Anyways I've detracted.
It's awful families should be able to afford houses in London

@TheStateOfTheArt my question isn’t ’what should they do’, it’s more existential than that.

Who is going to be buying these houses for £3-4,000 a month in mortgage repayments?

So far we haven’t seen much impact of property prices as a result of increased interest rates - but this seems like it’s got to be totally unsustainable for people.

And this is just the mortgage - before any childcare costs!

It would be a shame for the city if it no longer had a families living in it.

London schools are facing closures because if huge falls in school rolls. People aren’t having dc and families are moving out.

https://epi.org.uk/publications-and-research/school-funding-model-effect-of-falling-rolls/

Who is going to be buying these houses for £3-4,000 a month in mortgage repayments?

People like your friends?

it isn’t sustainable, so much historically has been linked to equity gains but flats haven’t had much growth since Brexit and London in general hasn’t performed that well the last decade or so as it’s too expensive.

Even for those who can service a 3/4k mortgage not everyone wants to use so much of their income or pay so much interest

@Cuppapuppa that means to have a house and two children using nursery you need to be in top 1% of earners.

And that wouldn’t leave you with very much left over!

I don’t think the 600/700k market is unattainable; two good incomes & good savings/deposit. I don’t actually know anyone including myself who bought without help.

that means to have a house and two children using nursery you need to be in top 1% of earners.

I thought 1% of earners was a 160/180k income?

And there are many parts of London where you don’t need 700k for a terrace but people don’t tend to know them or think they are fashionable.

We moved out of London and commuted in when it was time to buy because we wanted a house not a flat somewhere a bit dodge. Now we could afford to move back and buy a nice place but we're happy here 🤷‍♀️ I think the answer is it's individual op - a surprising number of people have more money than you/your friends. People make different choices.

If people (generally) can't afford mortgages on £600k properties then nobody will buy them and prices will go down or stagnate til wages catch up. Not necessarily a bad thing imo.

If people can afford them but don't like the cost then they can do what everyone else does. Compromise the rest of your lifestyle or move somewhere else.

For the rest of us in the uk who have been told for generations we should "just move" if we want decently paid work, I think it's about time those in the SE try "just move" if you want cheaper housing.