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But the rate at which house prices have risen has vastly outstripped the rise in wages. It was a lot cheaper in real terms for you to buy a house. So if you had to give things up to achieve it, think how impossible it is today without taking on a lot of mortgage debt.

 

We moved to our present house in April 1991. Britain had joined the ERM the previous year. In 1992 sterling came under pressure. Major (by now PM) was determined to keep the UK in the exchange rate mechanism. In the run up to 'Black Wednesday' (16 September 1992) he raised interest rates to 10%. On the day, selling of sterling continued, so rates were raised first to 12% and then, desperately to 15%. The mortgage rate associated with a 10% base rate would have caused us some difficulty, 12% extreme hardship. When the 15% gambit was announced I told Lady Kaht to worry no more - 15% couldn't possibly be sustained. Lamont then announced our departure from the ERM and reduced rates back to 12%, with a return to 10% the following day. The Tories' poll ratings tanked, and many see Black Wednesday as being a major (Major) factor in the loss of the 1997 General Election.

There is an obvious risk of the current inflationary pressures again putting pressure on the (now independent) Bank of England's Monetary Policy Committee to raise rates. But I tend to think that just as in 1992, there is a ceiling above which rates will not be allowed to rise. The political cost will be too great. And while the independence of the BoE presents an obstacle to correcting the position, Johnson has shown he is not concerned about tearing down previous 'inconvenient' legislation to achieve his ends. I tend to think that the 'ceiling' is likely to be much lower than in 1992, perhaps 4-5%, maybe lower. So while rate rises will cause some hardship when accompanied by other cost of living factors, I don't expect a total Armageddon.

 

I totally agree that house prices today are horrifically high and my missus and I are always commenting when they build yet another big house round here, rather than the ‘affordable’ houses they keep promising.
I genuinely feel sorry for youngsters starting out today, I really do.
But my original comments weren’t supposed to be smug or anything, just pointing out it was always going to happen and if folk were stretched at low interest rates/ inflation it was never going to end well, and they must accept that responsibility.

 

It's a different world. We get that. But that doesn't alter the fundamental point being made.

If you're careful with your money, you're more likely to cope with lifes ups and downs, including buying a house.

@red24/7 listed five things above. He was joking, obviously, but I'd only count one of them as essential. Some people might consider all of them to be essential - or at least, so desirable that they'll over-stretch their finances to pay for them.

 

Some truth in what you're saying, but I think it's a little more complicated than that. From when we bought our first house, up until 2008 it was more or less a fact of life that there would be steady inflation of both costs of living and wage rates. So if you wanted to climb the housing ladder and gradually acquire a better property many folk took the not unreasonable gamble to stretch themselves to trade up. They could reasonably confidently predict that inflation and wage rises would gently erode the value of their debt as they repaid it. So I guess it's also about aspiration and risk-averseness. Many would have taken the latter course. I know we did, and have never regretted it. Those doing so around 2008 will have been less fortunate.

 

It’s simple bloody maths.
I’ll bet your first house didn’t cost much more than twice what your annual salary was (wages were low?). Nowadays the average house price in somewhere ‘cheap’ like Donny and Barnsley is 5x the average local salary.

Doctrine? You’re blaming the poor for bringing it on themselves.

Knock yourself out with your anger; but it’s time to look in the mirror and realise you’ve been led to believe a false narrative.

 

And the point I'm making is that for many people buying a family home and being careful with money are now mutually exclusive.

 

Affordable housing is a modern myth - it’s a phrase used by the industry to help support growth; even lower priced housing is twice as much ££ as it was when we were young.

 

It was the Littlewoods payments before that.

 

I've only just stepped into this thread. Surely there are elements of all of these sentiments that are true and valid.

My perception from simple income multipliers is that houses have far outstripped wage growth for the best part of 20 years and likely longer. Even when factoring in house price slumps. My perception is that despite interest rates being miles lower, the capital cost of a mortgage has significantly increased and general affordability has increased the mortgage to salary multiplier by a distance, likely doubling. I wouldn't like to think I was trying to make a first step on the housing ladder in London now.

It also seems fair to say that society has significantly shifted in the last probably 40 or so years. Credit was seen as a bad thing by my parents and certainly more so by grandparents. Debt was almost a sign of weakness to them. The absolute last resort.

Credit is much looser now, and there will be plenty of cases of people who have wanted too much too soon and got themselves in trouble. Just as much as there will be people who just can't manage on basics and with little or no other lifeline have reached for it for a temporary fix to escape a more immediate problem. Just as much as people who use credit as often and typically as paying through their bank accounts.

I can also subscribe to societal changes in consumerism. We can surely all largely agree that there is much more change now? There will of course be exceptions, but my perception would be that we're largely not in a make do and mend state. Things don't last as long in fashion, furniture and technology as an example.

Times change, generations are faced with different challenges and opportunities.

 

It’s 350 pound a month now for a room in a communal house,sharing a bath and nail gunning your food down in fridge

 

Wish you would stick to the point and stop exaggerating or making stuff up.
Yes our first house was was just over BOTH our combined wages , both working full time, but my point was we worked out what we could afford and stuck to it.
Doctrine, what doctrine? Blaming the poor?, no I'm not, I'm simply saying people should accept responsibilty for taking on too much.
Angry? I 'm not angry I just don't agree with you.
False narrative? what folk should be careful what they take on and spend?

 

Ditto, but in my case, 2 direct debits have been taken since under the Avro banner but I am still awaiting a final bill from Avro via Octopus. Octopus are providing regular updates on their site as regards ex Avro customers. I thinks its taking longer than they expected.

 

I cancelled my DD, I know they said not to but I’d rather save the money myself and pay the debt later than worry my cash was going off into the ether somewhere! I’m hoping I can do something funky with the meter readings and get a few months free

 

I think what got people's backs up was your first post which was basically implying (with clearly anecdotal evidence) that there are too many younger people being reckless with their finances. You could say the same for people of any generation right now, it didn't really need to be said.

Millions of people will be shafted if their mortgages are hiked into double figure interest percentages, but you can't live your life assuming that that will happen or nobody would buy a house in the first place. It is hard enough for many to get on the ladder as it is.

 

Fair enough, but I wasn't trying to upset anybody and I suppose it is anecdotal to a point, but from past experience , (a long time ago I used to work in financial services I was one of the rare ones with a conscience , which is why I ultimately left) I would bet in a lot of cases its true, because looking at peoples outgoings against their incomings and expectations sometimes was truly scary and no matter how you advised against it they just went somewhere else and did it!
And btw that as it does now applied to all age groups.

 

I think we learn from experience don't we, so there is probably some truth to what you suspect might be happening.

I bought my first house about 6 months before the 2008 recession and have probably learnt from that in terms of how interest rates can fluctuate. We went for a .5% above base rate tracker at the time and did very well out of it given we knew rates would drop. I wouldn't make that call again in this climate, though.

 

Before I started my current job, I spent 18 months working for a large mortgage provider - the largest building society in the world - in Swindon. While I was there, it was announced that Honda (also in Swindon) was going to be closed. One of the senior managers I worked with commented that they should just close all the accounts of anyone that would be affected *then* - before they even had chance to get into any kind of financial difficulty...

 

Houses used to cost 2x wages on average. That was hard when starting out. We know it wasn’t easy for people then and sacrifices had to be made.

Houses are now 5x wages on average. That is hard when starting out. Arguably, 2 and a half times harder now than it was back then. Sacrifices are having to be made but those sacrifices are often still not enough to get a house in return.

We understand it was hard back then and we’re not downplaying it. Saying it was easier doesn’t mean it was easy. That just shows how hard it is now though.

 

That makes sense why you think the way you do now, based on your experiences. You must see that your view has been hugely skewed by your previous job, though. It’s like saying everyone is a criminal because you used to work in a prison and that’s who you saw all day, every day. That’s not representative of real life.