Now I have been in the market for a mortgage for a few years now. I have been working hard to get my foot upon that elusive first rung of the housing ladder. My income has increased greater than the rate of inflation, which should be a good thing, but still the bottom rung, and that is all I want to get to at the moment, is just out of reach.
House prices, of course, have been rising without a care in the world for other factors such as average incomes or inflation. Average property values are now several times average incomes, and when I say several times I mean a couple of times more than lenders are usually willing to lend.
With all the talk of late about the crash of the US subprime mortgage sector due to bad credit losses I was buouyed temporarily at the though of a house price crash – Could house prices in the UK suddenly plummet so I could go to the bank and borrow 3 times my salary and buy a nice three bedroom house? Sadly it appears not. Any drop in house prices may well lead to interest rate hikes which would make repayments on even these lesser figures as prohibitive as at present. At the same time mortgage lenders are unlikely to take such flamboyant punts in lending potentially unaffordable amounts to prospective borrowers.
So, what is the best way forward for me? I have considered trying for a buy to let mortgage, like buying a small, very small flat and renting it out – at least I would be on rung one? But, financial matters are conspiring against me, and the millions in my situation, what if house prices drop really? Then what a wonder that would be to actually, after years of striving to climb aboard the property gravy train I ended up with negative equity on a property I could not even live in.