David Cameron asserted in Parliament this week that people needed only a £10,000 deposit to buy a new home now, so homes were affordable for people to buy on the “living wage”, “whereas he had needed £30,000 when he bought his first home – bet that wasn’t a starter home nor was he on a “living wage”!
However, today’s Telegraph has fact-checked this and found his maths somewhat disingenuous to say the least. No wonder the government can always seem to make 2 and 2 make anything but 4!:
” … The question put to Mr Cameron was if those on the national living wage would be able to afford a home.
Based on the current UK living wage of £8.25 an hour, an individual working 40 hours a week, 50 weeks of the year would earn £16,500 before tax.
A couple together would have a household income of £33,000, which based on a four-times salary multiple (a simplified measure) would enable them to borrow a maximum of £132,000 in a best case scenario, assuming they had a clean credit history, no other debts and minimal outgoing costs.
According to the Halifax House Price Index, the average house price across the UK is £208,000.
Taking a more conservative £180,000, with a 5pc deposit using a standard 95pc mortgage you would need to borrow £171,000 (the other £1,000 from the £10,000 would be needed for stamp duty).
To be lent that much, assuming all other elements are in order, would typically require an income of £42,750. Using regional average prices, that figure is £80,000 for London and £53,000 for the South East.
David Hollingworth, associate director of communications at London and Country Mortgages, said: “The scoring requirement is likely to be higher for those with a small deposit so applicants will need to be sure they can meet the affordability requirements and have a clean credit record.”
The other point to make is if £10,000 is all that you have been able to save, it is unlikely your salary will be high enough for a 95pc mortgage. The equity loan can of course help here, if there are new builds available in your price bracket. …”
East Devon Watch 