Petrified...should I be?

maf20

With all that's going on at the moment, I'm a bit worried about when my fixed rate mortgage ends in August. To boot, I've just been listening to some guy on 5live saying that without doubt house prices will fall by at least 20% next year, minimum. He said that whatever happens in the US, happens here about 6-12 months later.

If this happens, this'll mean that we end up with negative equity, and to be honest I'm really worried about the consequences. In August 08 we bought a house at £192k and the mortgage on this was £160k. Local indications would say that are house at the moment is somewhere around £180k-£185k.

We're pretty stable financially with no credit cards, and nothing 'on the weekly' at all, no car payments or anything like that. We also have quite secure jobs so lucky on that front.

Is there anything we can do to head this off? Is this really likely to happen?

Kez100

If you are absolutely convinced he is right you should sell - assuming ERC not prohibitive, rent and buy at the bottom of the market (whenever that is - bit like crystal ball gazing)

If you don't want to do that or do not think he is right then overpay as much as you can on your mortgage to stave off as much potential negative equity as you can, just in case you ever have to sell .

It's also good overpaying as you may find your new rate next August is much higher and at least if you have overpaid you will have slack to help you afford the new rate.

Rabiddog_2

Is there anything we can do to head this off?

just pump in an extra £500Bn of liquidity into the mortgage market
The UK housing market doesn't necessarily follow the US, we are a small landstarved nation with many planning laws, more akin say to Holland or Japan than the US. But there is likely to be further blood shed before the "Crunch" blows itself out, as all these fads do, remember clicka-clickas?

leyla-aurelia

Remortgage if you can, rates are dropping, and enjoy your house and each other. As long as you can afford the payments and don't plan to move in the next year or three, what does it matter.

Prices will catch up in time, and life's too short to worry about money unnecessarily. If you do plan to move within the next few years or can't remortgage or can't afford the repayments, then sell and rent.

maf20

Thanks for the feedback guys, much appreciated. The truth is that we an afford for the mortgage to go up by a few hundred quid to be honest, and we don't plan to move for a long while, if at all.

I think you've probably made me realise that we may be better off than most!

Maybe not a good idea to remortage at the minute as we are tied in until July 09. We're currently on a 2 year fixed rate mortgage at 5% (we did well I think, even at the time). I haven't looked around too much so I don't know what's out there at the minute.

Hopefully won't be too bad!

Thanks again