what will the interest rate cut do to house prices?

Cat695

The way I see it now people who are saving to buy a house have just been kicked in the teeth......why save when you don't get anything for it?

It will take people even longer now to gain enough for a mortgage (reading on the bbc news website lending is going to become even more restricted).

So yes a few will rush out now to buy but again it will just be a knee jerk reaction......I don't expect to see house buying on mass for a long time yet.

Realy

Cat695 wrote: »

The way I see it now people who are saving to buy a house have just been kicked in the teeth......why save when you don't get anything for it?

It will take people even longer now to gain enough for a mortgage (reading on the bbc news website lending is going to become even more restricted).

So yes a few will rush out now to buy but again it will just be a knee jerk reaction......I don't expect to see house buying on mass for a long time yet.

House prices are falling.
Falling house prices and economic downturn is always going to = interest rate cuts.

You are not being punished and mortgage holders are not being rewarded it is the economic climate that is causing the rate drops.

Kez100

Cat695 wrote: »

The way I see it now people who are saving to buy a house have just been kicked in the teeth......why save when you don't get anything for it?

It will take people even longer now to gain enough for a mortgage (reading on the bbc news website lending is going to become even more restricted).

So yes a few will rush out now to buy but again it will just be a knee jerk reaction......I don't expect to see house buying on mass for a long time yet.

You/buyers are saving a bleedin' fortune! Thousands every month. Probably more than you earn! Who cares if you get 3p interest.

The savers I feel for are the thrifty whose savings they need to live on or to provide a living very soon.

Restrictions will exist. Whatever the rate, it would be stupid to lend 100% when prices may be 25% lower around the corner and/or the buyer out of a job. Once HP's have fallen properly then they will be less worried about lending as there will be less liklihood of mega negative equity. So long as people have jobs that is. That's why I'd like it to happen quickly.

Cat695

Kez100 wrote: »

You are saving a bleedin' fortune! Thousands every month. Probably more than you earn! Who cares if you get 3p interest.

The savers I feel for are the thrifty whose savings they need to live on or to provide a living very soon.

you've lost me with that post? how am i saving 1000's? and how more than I earn??

skap7309

Kez100 wrote: »

You are saving a bleedin' fortune! Thousands every month. Probably more than you earn! Who cares if you get 3p interest.

Thanks - you have just given me a 'cyber slap'. :T

There was me thoroughly p#ssed off today as i am now earning about £50 less per month on my savings from today alone but providing the cut does nothing to slow the HPC then i am effectively saving thousands of pounds a month. :beer:

Kez100

Those saving to buy a property are finding that every month that property is falling in value......by thousands ££££. So, even if you only get 3p on your savings you have saved (in October 2008) 2.2% (I think) of the property price. That will be a saving more than most people earn in the month.

Kez100

skap7309 wrote: »

Thanks - you have just given me a 'cyber slap'. :T

There was me thoroughly p#ssed off today as i am now earning about £50 less per month on my savings from today alone but providing the cut does nothing to slow the HPC then i am effectively saving thousands of pounds a month. :beer:

That is true. Will it slow the HPC? A million opinions on that. I just happen to be in the 'not very likely to slow' camp.It'll be interesting to see what deals the banks come up with but I think, generally, people are too scared to make big house buying decisions at the moment. So, bank reluctance on LTV% (if it continues) and daily volatility in the news makes me think the freefall will carry on for a while yet.

What we really, really need is for this cut to ensure small business is supported with traditional lending practices rather than volatile/brick wall ones which will heamorage (sp?) them over the winter. We need to try and save every possible job we can and small businesses employ millions.

Cat695

Kez100 wrote: »

Those saving to buy a property are finding that every month that property is falling in value......by thousands ££££. So, even if you only get 3p on your savings you have saved (in October 2008) 2.2% (I think) of the property price. That will be a saving more than most people earn in the month.

Thank you Kez yep I see what you mean.....and you are very right on that.;)

Kez100

And if you want to feel even better........

Chances are your first home will also be bigger than you would have originally been able to afford and so, you have saved yourself the future hassle of a move from a flat to small house, or small house to family home. So, you will also save one set of virtual estate agents fees, legal fees and HIP pack!

Right, that's all the virtual savings I can conjour up tonight! Pity I couldn't do the same for pensioners I'm off to bed.

Kenny4315

god I hate being right.

This was a post a couple of years ago when everyone was arguing with me on MSE saying it was impossible for house prices to down.

Kenny4315
Regular MoneySaver


Join Date: May 2005
Post Count: 240
Thanked 36 Times in 28 Posts



Quote:
Originally Posted by nmiah786
I dont see that situation happening just yet......or anytime soon....I'm sure I'm not the only one with that view!

Well I am pretty certain that it will occur (house price correction). I have concluded that average Joe Public in terms of financial astuteness are like sheep and will follow the latest trend, whether buying or selling, or the latest panic buying or selling. This is true for most investments, shares and houses, bonds, etc. Check out the following FTSE crash, current rising house prices, late 80s boom and then fall, these are cases of sentiment/speculation outweighing financial sense.

Your not skint so why have you been waiting to buy ?? It's because you know as well as I that house prices are substantially over-inflated. Eventually the sheep will be led to the slaughter ! But unfortunately it will take some normal guys, unlucky to buy at the wrong time with them but who have had to buy out of need.

My last prediction on FTSE year end position was pretty accurate when market was just under 5300 back in early July I stated that it would be 5600ish at year end, it broke through this in the last couple of days trading of the year, finishing at 5618. The stagnation I predicted for the housing market is now being seen, my prediction is that some people will soon be waking up to some rather alarming news regarding house values which are going to seriously put the wind up them and then the inevitable downturn will start, slowly at first (as it is now) but speeding up as panic sets in. My house isn't worth £200k anymore its worth £190k, no its worth £185k, oooooohhh shiiiiiiiiiiiii !!!

Do not hold your breath on interest rate stability being able to bail these people out, there are too many uncontrollable factors, energy costs, growth in other economies (US, China, etc), Oil issues, UK tax issues. Even small increases in interest rates could ruin many people who have had a remortgage and spend spend spend mentality, or those who are over extending themselves.

Quote:
Originally Posted by Kenny4315
In short once the situation occurs, whenever the fall hits, the outlay previous should be totally disregarded from a pure investment perspective. All prior costs are sunk (in finance terms), only future costs and revenues should be considered, against any other alternatives (shares, deposits, bonds, opening a strip club for polar bears, etc).

I have done multi-million pound investment appraisals, and am a qualified straight A grade chartered management accountant, I know what should and should not be included/excluded from investment appraisal decisions. Whether sentimental BTL's want to hope for the best is up to them, but I would not and have not !

Last edited by Kenny4315 : 01-01-2006 at 9:35 PM.