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Differences Could Be Attributed To Our Assumptions Of Marital Status, Initial ...

Differences could be attributed to our assumptions of marital status, initial flat being 70% of average value, wages of the couple, length of the mortgage amortisation period, and the initial mortgage being 95% of the purchase.
The problem of the 1990 Scenario
The first scenario, where the initial burden is the greatest illustrates rather poignantly the vagaries of the housing market. Volatility is a major factor. For consumers who live forever, volatility is a minor inconvenience. Unfortunately for house buyers life unfolds: people get married, they have children creating the need for larger houses and they move because of a new job. Timing is key.
The following graph shows the burden of the first year mortgage for each of the years 1990 through to 2005. The burden ranges from 41% to 18% and back up to 28% depending on the year of entry into the market. Clearly as housing prices, mortgage rates and household salary move the efficacy of obtaining a mortgage also changes.

The couple in the 1990 scenario had the misfortune of purchasing each one of their houses in years where the bank lending rate had reached a local maximum. For their first house the 1990 bank rates were the highest rate between 1980 and 2006. Their initial purchase was also made in a year where housing prices peaked. Even though the initial house was 70% of market value and the third house 150% of market value the percent burden for the first house was higher. In 1995 the fortune smiled on the couple with housing prices the lowest between 1990 and 2006 and mortgage rates much lower than their first one resulting in a drop in the percent burden even though they were upgrading. Alas, their timing is off even here. The 1995 rate was bracketed by two lower rates on either side. If they had made their second purchase a year earlier or a year later their burden would have been 23% or 22% respectively as opposed to the 1995 burden of 24%. The rate for their final purchase in 1998 was the last high since 1992. The good news is that they purchased their final house just before several years of rapid price increases. Clearly, the need for timing when entering and making changes in the housing market is evident by this.
A further problem with the first scenario is the substantial gap between the scenario's 41% payment burden and the historic 26%. There are several possible reasons for this. During unfavourable economic times first time buyers may either stay out of the market or confine their purchases to a smaller percent of the average. They may also find themselves relying on relatives for help .
It should also be noted that, for all of their ill timing, the couple in scenario 1 never bore the high burden that the couples in scenario 3, 4 and 5 did on their third purchase.
Future Scenario
A sixth scenario was performed to investigate what happens after 2005 using the assumed economics.

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