Not, really, going to work

One way of measuring the cost of housing is in the monthly payment that must be made to gain access to it.

Downing Street is exploring the idea of trying to tackle the housing crisis with ultra-long mortgages of up to 50 years that could pass between generations, allowing more people to build up equity rather than pay rent.

Spreading the cost over more years so that monthly payments are lower is likely to push up prices, isn’t it?

16 thoughts on “Not, really, going to work”

  1. Bloke in Cornwall

    It likely will, but not for the first lot that jump on the bandwagon… I’m looking at purchasing a place with land in the next few years to build up alternative income streams and, as it will be business as well as home, extra time for it to pay for itself would be a bonus for me…

    Just need to make sure I’m one of the first on the bandwagon!!

  2. Yeah but no but…

    Won’t the buyer end up paying absolutely squillions in interest ? The payments would have to come down an awful lot to make it worthwhile and not sure the banks would let that happen.

  3. Bloke in North Dorset

    My new online German teacher who lives in Leipzig told me he has a 30 year mortgage. There’s also a massive housing crises Germany, so perhaps this won’t be the solution.

  4. 30 years is standard in Hong Kong, and my commercial mortgage (shop with flat above) is 30 years.

  5. Bloke in The Wash

    Of course HMRC will want a slice of inheritance tax before allowing anything to “pass between generations”.

  6. More importantly, is not clear what problem this solves. Mortgages are cheap. Getting a deposit is the main barrier – and this policy is more likely to hinder than help.

    The only problem this could (but won’t) solve is affordability. This isn’t a problem outside London (where the greater % spent on housing isn’t factored into affordability checks).

    Quite apart from all this, when did Boris start working at a bank? I thought he was PM, what’s he doing designing mortgages?

  7. US mortgages are usually 30 years aren’t they? Our last mortgage started life as a 25 year loan and was finally paid off after 31 years.

    I wonder whether this intergenerational idea will create an opportunity for avoiding inheritance tax.

  8. Electorate: yes, I’ll have a Full English Brexit, tax cuts, immigration controls, sensible government spending and less wokeshit please.

    Fat Blair: Splendiferous! Thucydides. Socrates. Net Zero. Wiff-Waff. Best I can do is another massive housing bubble.

  9. My Austrian bank offers 10,15,20,25 and 30 year mortgages. The cost saving between a 25 and 30 year mortgage is marginal.

    Rather than taking one’s yearly salary and multiplying by x, the Teutonic banks work out how much a month one earns, deducts living costs and then calculates how much is a safe amount to lend. Theoretically they offer 100% mortgages. Ha ha but as we well know….

  10. Indigenous brit couples produce less that 1.8 children on average. Even after allowing for other people who are unwilling or unable to have kids that’s still below replacement.

    Allow controlled immigration of appropriately qualified individuals to do the necessary jobs. No one else.

    There is no housing crisis, just an uncontrolled immigration crisis.

  11. How does this help?

    Lets say you take out a 25 year mortgage aged 30. You have some kids around the same time. 25 years later, aged 55, your mortgage is paid off and the kids have left home and are starting families of their own. At this point 2 houses (at least) are needed – one for the 55 year old parents (who will probably live another 25-30 years) and at least one more for the kid(s). How does a 50 year mortgage help here? Unless the house is big enough for 2 or maybe 3 families to live in (and contribute to the mortgage payments) how does a multigenerational mortgage improve matters, when over an 80 year lifetime one couple could generate the need for between 3 and 7 houses (1 for themselves, 1 or 2 for however many kids they have and 1-4 for grand kids)?

  12. In De and Oe it is quite common ( I know quite a few who have done this ) for children to move into the late parents'( much bigger ) home after renting for years.

    Perhaps that is the plan. Instead of selling one’s folks’ million quid semi in Richmond, the heir and family moves in and frees up theur previous property for some of the brain surgeons and nuclear scientists who have just washed up on Dungeness beach.

    Wibble.

  13. Longer-term mortgages only work if rates are low.

    Assuming a £500k mortgage,
    • at 1.50%, 25 years : £2,000/mo
    • at 1.50%, 50 years : £1,185/mo

    Assuming a £250k mortgage,
    • at 6.36%, 25 years : £2,000/mo
    • at 6.36%, 50 years: £1,660/mo

    In the higher rate scenario (and that’s not even a particularly high rate), doubling the mortgage term reduces the monthly payment by just 17%.

  14. And if the homeowner’s children graduate with a gender studies degree, and still don’t even make enough to pay off that 50-year mortgage, we’re back to square one then, aren’t we?

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