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.

That is a mind blowing amount on a mortgage. My DD and her DH pay £550 a month for a house worth £300,000. (Midlands, nice area.) They bought a £180,000 house in 2020, (£40,000 deposit, so £140,000 mortgage,) and sold it for £275,000 3 years later whilst retaining the £140,000 mortgage. Then they bought a £270,000 house 8 months ago that has recently been valued at £300,000.

On their joint salary (£135,000 joint,) they could have got a half a million pound house, but they bought a cheaper house and have a very modest mortgage now. They are minted, and regularly go on holiday abroad, have nice cars, nice clothes, and all the luxuries they want. (Because of being happy with a lower mortgage/lesser priced house.) They've got a 4 bed detached now, so will very likely never move.

Why do people borrow exorbitant amounts just because they can? Why max yourselves out?

@SweetieDarlings Clearly you need to leave London. It's not rocket science.

We have a high joint income and are paying a £5.8k mortgage for a 4 bed house in zone 2. We can afford it because most of our wealth has come from other investments - our first home didn't increase by much but we have stocks which did extremely well. We didn't rely purely on house price inflation to move up the ladder, and had no help from family or inheritance.

London school rolls are falling and primaries are closing or merging. But the popular schools are still hugely oversubscribed, the private and grammar schools are incredibly competitive to get into, and there's still a huge demand for family sized flats and nurseries. The toddler classes, family events and playgrounds we go to here are always busy. There are still plenty of families living here, even in zone 1/2. People manage to find ways to continue living here with their families - by living in flats, only having one dc, taking on second jobs and side hustles.

There has always been a demand for a more suburban lifestyle though and many families would never consider living in central London even if they could afford it, they just don't like the pace of life and diversity. It's easy enough to commute in from outside the city, especially if it's just a few days a week. So the house prices are not really an issue, because many of them wouldn't choose to live here anyway.