To be jealous of older generations who were able to buy houses because their bosses exaggerated their salaries?

[HonestTealPoster]

Yesterday I was at the spa and got talking to a man who was older than me (I’m 33 and I’d put him in his early 50s at most).

He told me that when he was in his 20s, he and his friend were able to buy properties in the area of South London where I grew up.

Despite not earning particularly much at the time, his boss wrote a letter stating that he earned £90,000 a year! He openly admitted that he wasn’t earning anywhere near that amount but the letter helped him secure a mortgage. He also received £5,000 from his grandmother towards the purchase.

I’d heard stories about people being able to do things like this years ago but I’d never actually met someone who’d benefited from it!

I was genuinely gobsmacked. Imagine being able to get on the property ladder like that.

AIBU to feel rather envious of how much easier some people had it when it came to buying their first home?

I have never heard of an employer doing anything like this, besides, the lending companies did check! Possibly, if it was a very small firm…
(Lenders asked to see bank statements, salary slips etc. I don’t know if they still do but I'd be surprised if they didn’t.)
In addition in the 70s and 80s interest rates were sky high, up to 15 pct and monthly repayments were huge, relative to salaries.

They were called Liar Loans, banks probably knew the info was dodgy but their mandate at the time was to get as much secured lending into the economy as possible, they next started pushing BTL loans so that one person could have a main mortgage and two or three other mortgages on flats to let out! Win Win for banker"s bonus time.All works great as long as there are new mugs to keep borrowing and pushing prices up (classic Ponzi scheme) then it all went wrong in 2007 but they bailed the Ponzi out with more debt and zero rates! This brings us to the mess today where a lot of people who bought in recent years are going to lose money on their property and still have high debt at higher interest rates to pay back. It was a ladder back then when people were lying about their income, now it is just a debt ladder and very dangerous to your financial health.

I remember Prince Philip, a man who never paid for a house in his life, condemning mortgage tax relief.
Probably didn’t like common people becoming owners.

My brother self certified for his mortgage years and years ago and just inflated his earnings massively. I think good for him and everyone who was able to do it. Rent is often more than mortgage payments and we have a ridiculous system!

I bought a little studio flat in 1997, my employment did not exaggerate my wages. I sold it in 2000 and bought a house. Then sold that in 2006 and bought the house I still own now 20 years later. I had no help. Ive always been on a low wage. I've always paid it solo, no one ele's contribution. In 10 months time thankfully the mortgage will finally be paid after 30 years and I will be 55. It has been a slog.

I think your opening line gives away a few clues "Yesterday I was at the Spa...." OP I've never had the money to go to a Spa.

We bought our first flat in 1982. Got 100% mortgage as we hadn't got around to saving a deposit! There were lots of stories of people simply self-certifying their income. Feeling was that mortgage lenders didn't really care because if you didn't manage to pay they got your house.

Yes but with rent you aren’t responsible for maintenance/repairs/insurance etc. Lots of people lost their homes from doing this. They bought homes that were unaffordable and then couldn’t cope when interest rates went up.

This is actually true! The main difference is that we had less options to fritter our hard earned money on other than housing. No game boys, no computers, only crap on TV, few decent eating out places, fewer still coffee places. Beer was cheap, but pubs were not the family friendly places they are now. Kids were a lot more 'neglected', in that they had to find their own entertainment. No fancy holidays for us; we went camping in Scotland. No mobile phones, no internet, no social media, no high expectations about home cooking. Keeping up with our peers meant scrimping for a nice home.

Our first house was an unmodernised mid terrace in a very grotty area, with no heating, no hot water, no inside bathroom and riddled with rot. We refurbished it ourselves over 2 years. We couldn't even afford a tv, never mind a holiday or eating out. Our furniture was all second hand from the local junk shop. I doubt that you or many of your generation would find this acceptable. So take your so-called 'critical thinking' and get some actual facts.

I'm not brainwashed - I lived through it.

And there's plenty of young people these days living exactly as you describe in your first paragraph and they still cannot afford to get on the property ladder.

I just really object to the idea that young people aren't managing to pay a mortgage because they are spending their income on crap and luxuries.

We got on the property ladder in the early nineties and we were lucky enough to make money on our first house that enabled us to continue upwards.

And the key word is lucky... We were lucky to live in a time that afforded us those possibilities.

Young people these days are worse off than our generation. Not because they go on holiday, not because they have phones, but because we've fucked it up for the generation behind us.

The current housing bubble took off in the early 2000"s, the seeds were sown when Labour came to power in the late 90"s. Many like to blame Thatcher because of the council house sell off where if you were refused a mortgage by a couple of banks the council were obliged to lend you the money at very good rates. It was much harder to get a mortgage in the 80"s and first half of the 90"s than it was in the early 2000"s. Thatcher was there for "big bang" and the start of bank deregulation and there was dodgy "offshore" stuff going through the City of London finance sector in the 1960"s, but that was more banks lending to each other and relatively wealthy people, many U.S citizens, dodging tax, the mass availability of cheap mortgage debt to the masses is purely a 2000"s thing and has led to the financial mess we are in now as global events restrict the ability to cut interest rates and create upward pressure on rates from bond markets.

This is true. I'm late 40's and I got a self cert mortgage for my first flat, you just declared how much you earned and no proof was needed if you went through a mortgage broker. The mortgage broker recommended it. You had to sign a form to say you weren't lying but everyone was lying. It wasn't fair especially compared to now but it was the start of the property prices going up and up so it was get on that ladder or get priced out.

Whilst I can understand your point it’s just a waste of time and energy to be jealous. The generation you’re jealous of were jealous of something about the previous generation. Just like the generation after yours is jealous of something from your generation.

So house prices going up wasn't the fault of my generation then (born mid 50s) which it's always made out to be. It's the fault of those in their late 40s 🤔

So 4x your combined income with 10% deposit. I presume a 20-25 year term. And all the estate agent had to do was ask? Perhaps not spectacularly easy but not particularly hard either.

Can’t remotely work out why yoire envious of this, if indeed it happened, and I also don’t think you are a home owner, because you’d know there is already a hefty multiplier in place as standard and affordability checks, as such, lying would mean borrowing more than you could genuinly afford,

DH & I bought in 1996 & had to provide wage slips which I expect was the norm. They did credit checks & we provided bank statements too. Never heard of this practice before.
We were offered a 100% mortgage but paid 5% deposit which was pretty standard at that time.

It was very common as prices started to increase (the bankers planned this of course, what better than big debt for something everyone needs i.e basic shelter) There were media articles all over the place on Liar Loans after the first bubble burst in 2007.

https://www.investopedia.com/terms/l/liar_loan.asp

I think all previous generations and the banking systems all played their part in creating unrealistic house prices that outstripped incomes. Self certs were around for a very long time. Causing families to work hard and never see a return. Obviously now it's a heritocracy, that is pushing it up. Those who can afford houses can only do so with help from their parents and others who do not have access to generational wealth can maybe buy if they inherit when parents die, and a lot of people aren't able to buy at all. I wonder if self certs would help people buy again as typically a mortgage taken out when young will reduce outgoings for people as mortgage payments can be less than rent.

Reality check. 30 years ago many people did not get paid directly into the bank and did not get electronic pay slips and so the banks either asked fo copies of your payslips or a letter from your employer to confirm your income.

Very few employers would have lied like that, it wasn't normal.

And also as a single person, you generally only got 3 x your annual salary as a mortgage offer or 2.5 x your joint annual salary if a couple. So if I earnt £20,000, the max mortgage I could get was £60,000, As a couple earning £20K each, the max mortgage was £90K, that is a far cry multiplier wise now. Also they took into account your existing debt so if you had a loan for say £5k for a car, they would reduce the mortgage offer by the £5K so the max loan I could get as a single person was £55K

Today, in the UK 4 to 4.5× income is the normal range for many borrowers.
Many lenders now offer 4.75× to 5× income for applicants who meet certain criteria and some products allow 5.5× income, particularly for first-time buyers, professionals, or higher earners. A few specialist lenders go even higher in specific circumstances.

To put that in perspective, if you were earning £20,000 today:
Multiplier Mortgage - 3× (what you got) so £60,000
4.5× (typical now) £90,000
5.5× (higher-end products) £110,000

However, a typical house that might have cost around 3× to 4× average earnings in many parts of the UK in the 1980s is now often 7× to 9× earnings in many areas, which is why younger buyers often feel that borrowing multiples haven't kept pace with property prices.

And some families have always helped with deposits and I don't think that has changed over the years, sadly I was never that lucky.

"lying would mean borrowing more than you could genuinely afford"

Yes, how else do you think people managed to afford property at many multiples of their actual income! It all ticked along as long as the monthly mortgage debt payments were cheap, but fast forward to now and people can"t afford houses again!

I got a mortgage mid 90’s and had to jump through hoops.
My salary was 19k and the house was 36k I put down 6 of that. So my mortgage was far less than twice my salary, I worked in the public sector and it took ages.
Around 2000/2001 it was like the Wild West. People were being offered mad amounts, they couldn’t give you a mortgage you could never afford quick enough. Pay it back over 100 years? No problem. And we wonder why 2008 happened….
If a younger person now is envious of ‘back then’ I don’t blame. And I was a teen in the early 80’s during a grinding recession.
However, things did improve. I got to buy a house, a decent car, go on holiday, had a lovely life. I got extra jobs easily on top of my main job for funds when it was for something extra.
I know Blair/Gordon get slagged to high heaven but between them and John Major before them, they actually did some good stuff. Outside of illegal wars leading to years of misery, which I’m not omitting.
I miss not having a mobile. Having a little portable telly I carried around my house with me. A house phone which you could just unplug. It wasn’t all a bed of roses but most people I know who got a mortgage are mortgage free now.
Oh and culturally the 90’s was fantastic as well.
Was I at Knebworth? I’ve got the poster up on the back of my spare room door battered it is.

I agree it's an annoying post - but I do also think that the lifestyle expectations of 'ordinary' middle class people have changed quite dramatically.

Obviously lattes and netflix won't change much - but I didn't know a single person with a new-ish car in the 90s/2000s, no-one had more than one holiday per year and it was pretty basic, eating out in the UK was special occasions only, Marks and Spencer was 'posh treat', coat and boots would last at least 3 years, etc etc

I had a few years as a SAHM in the 2000s - we spent so little on food, no holidays at all, car worth £1500 if that and the kids' clothes were supermarket or eBay.

So I reckon everyone does now spend at least ten grand a year on luxuries that they didn't then. And then maybe another £1K on things that we really can't get by without like phones, wifi, and another £1K on things we could get by without but it would feel pretty grim - TV subscriptions etc.

Like I said, completely acknowledge that won't bridge the housing gap - but it's not true that things haven't changed in terms of our lifestyle expectations (not addressed to you @Lemons1571 but to the thread more generally.)

Edited to change 'brand new car' to 'new-ish car'

Whereas my parents worked their arses off (in fact never stopped) to afford a house and to bring up a family in the 60s to 80s.

I never heard of that happening in the 80's/90's (or any time). I bought my first property in 1985 and I'm pretty sure it was normal to prove your income (with payslips).

I was absolutely skint when I bought my first property in 1985, earning £14K p.a. and property bought for £52K. Fed myself of £5 per week buying vegetables from Croydon market, never ever went out to socialise, walked miles rather than spend 80p on a tube ticket. Perpetually hungry, cold and joyless. Obviously it changed as I was promoted a few times and then bought with a boyfriend. No car, no children - would just have been out of the question. I really don't think anyone puts themselves through that now.