To obtain a mortgage, the standard income to total shelter expenditure - mortgage, property tax, maintenance, phone/internet, insurance - is 30 percent. It has been 30 percent for at least the past four decades.
Why? Why that threshold and why has it never been changed?
Times are not what they were forty, or even ten, years ago. People don't all have the same priorities or want the same lifestyles. A growing number of home owners do, and are getting by, on paying 50 percent or more of their income on shelter expenses. Renters pay upwards of 70 percent of their household income on shelter now.
So what is the rationale behind mortgage lenders' carved-in-stone 30 percent income to shelter expense threshold? Why are people refused a mortgage if they would, without hesitation, pay more of their household income, say the 50 or 70 percent they are already paying, toward preserving a roof over their heads, but one that they actually own?
To me there's something extremely elitist, not to mention unrealistic given today's market, about that threshold.
First, consider its originators and perpetuators: certain haves who cannot conceive of a lifestyle other than their own, people who cannot conceive of anyone who pays the majority of her household income on shelter as other than a person who is destitute or hard-done-by.
Well, here's a message to such haves: Not everyone considers travel, new clothes every season, dining out, or cottage or vehicle ownership as essential. Some of us are quite content - or would be, if we had a chance! - to own a tiny house on a bit of land in a beautiful spot and leave the rest of the world and its trappings and its lavish, monied values behind.
Second, the 30 percent threshold imposed from on high serves not only to broaden the gap between the rich and the poor, or the propertied and the non-propertied, it entrenches and deepens class divisions.
Which leaves me wondering... Perhaps that's why the threshold has never been changed. It does more than maintain the status quo, it increases the social stature of those already better off. In other words, the threshold serves those with the power to preserve it.
Recommend this post
