Is it Time to buy and secure a long-term fixed rate mortgage?

scousethife

Dithering_Dad wrote: »

If you believe that, no matter what people's financial circumstances are, that they should NOT buy a house, then please engage in the discussion and back your argument with facts and figures.

facts and figures were ALL I posted in my last 3 posts!

Please thank me :rotfl: :rotfl: :rotfl:

Oh check out my awesome new signature

please thank that too:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

Dithering_Dad

scousethife wrote: »

facts and figures were ALL I posted in my last 3 posts!

Please thank me :rotfl: :rotfl: :rotfl:

Oh check out my awesome new signature

please thank that too:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

I give in, no sensible, mature discussion to be had here. Well, at least I tried.
Good luck with the future. I hope that it works out for you.

p.s. I really laughed a while back when one of the regulars in here pointed out that the use of multiple :rotfl: :rotfl: :rotfl: was the forum equivalent of of laughing uproariously at one's own joke, while those around look at their shoes in embarrasment.

chucknorris

Dithering_Dad wrote: »

I give in, no sensible, mature discussion to be had here. Well, at least I tried.
Good luck with the future. I hope that it works out for you.

p.s. I really laughed a while back when one of the regulars in here pointed out that the use of multiple :rotfl: :rotfl: :rotfl: was the forum equivalent of of laughing uproariously at one's own joke, while those around look at their shoes in embarrasment.

I don't think anything is as important as the price you pay and I think prices still have around 15% to fall.

Yes interest rates could go up in a couple of years, but they could also stay low for a few years too, all this will be factored into the fixed rate deals on offer at the moment.

That doesn't necessarily mean that I wouldn't buy, but it would have to be at a very good discounted price that I considered to be 15% below current values.

Pobby

I suppose that I am not really adding to the debate but as someone who has " enjoyed " hpi I would like to make a few comments. Sorry DD if this is off topic.

So as someone who has witnessed the madness of the last decades here are my feelings. I purchased 10 years ago. Not a distressed sale but a house that had been on the market for a long while. A silly offer clenched the deal.

So from trough to peak the price increased by nearly 400%. So how has that affected me? Did I feel richer? Nope, why should I. The price increased, not the value of the property. Did I mew? Don`t be daft, I spent my time trying to explain to people that by mewing all they were doing was using there house as security for the debt. Did it make me any happier? Quite the opposite. How could I be happy to watch something, hpi, that really had no relationship to anything other than high ltv loans, teaser deals and down right dodgy goings on.

Mrstittlemouse tells us of 2 young families being thrown out of their properties. That makes me so very sad. Scousethelife gives us repo data that makes a depressing read. I honestly don`t remember anyone losing their homes before the late 80`s. Until then we had tight ltv regulations. The lenders made darn sure that they were going to get back their cash.

As more and more bad news is reported I hasten to say that the size of this calamity is down right scary. More than a few saw this coming years ago. Not just Vince Cable but quite a few regular Joes. The process could have been reversed but in our glorious, over bloated, free economy it was allowed to be played now causing untold misery to 10s of thousands of people. I feel ashamed.

MrDT

The base rate is 0.5% at the moment. A 10 year fixed repayment mortgage will be about 5% (with a half decent deposit down), equivalent to BR+4.5%

Let's say that the BoE base rate hits 5% in a couple of years time. Do you expect the fixed rate mortgages on offer to be BR+4.5%? 9.5%?

I'd expect that as the base rate rises, the spread between the base rate and the rates offered on long term fixes would reduce. Maybe we'd see BR+1%? So the scenario could be - buy now with a 5% mortgage, or in a couple of years at a lower price and a mortgage at 6%.

The time scales and percentages have all been pulled out of the air, but I think you can see what I'm getting at. Good thread btw DD

Dithering_Dad

chucknorris wrote: »

I don't think anything is as important as the price you pay and I think prices still have around 15% to fall.

Yes interest rates could go up in a couple of years, but they could also stay low for a few years too, all this will be factored into the fixed rate deals on offer at the moment.

That doesn't necessarily mean that I wouldn't buy, but it would have to be at a very good discounted price that I considered to be 15% below current values.

I agree, interest rates could stay low and house prices could drop a further 50%. People should make their decisions based on their own calculations and their own circumstances, which is what I have said on these boards for a long time.

I understand that as an individual, you have decided that the price you pay for a house is the most important thing. Other people will be looking at the price, but also may have children and will also be considering their schooling and the need to provide a stable home for them. We're all different and so discussions like this one will not be of any use to you as you have decided to wait until the market completely bottoms out. Others will be looking to buy soon (like lostinrates, for example) and so this discussion is pertinent to them.

After watching my parents struggle through the 80's due to high interest rates (remember, if the BoE has interest rates of 10%, the bank SVRs will be higher, say 12% or more) I am determined that my family wont be affected this time around.

Many people on here will not have experienced a recession in their working lives and will definitely not have experienced high interest rates. We've been lulled into the belief that 5% interest rates are the norm, but historically these are really low rates. People were also lulled into the belief that house prices only went up and that it's 'normal' to have a huge amount of personal debt, look how that turned out.

All I can say is what I said over 2 years ago when I talked about a housing crash and over 1 year ago when I talked about a stockmarket crash:

"This is what I intend doing to protect myself and my family, here are my reasons and my thoughts, if you agree with them, then I'd advise you to do the same".

Who knows if I am right about double digit interest rates? but surely it's better to hope for the best and prepare for the worst? If I can get a 7 year fix at 4.8%, then this is a good mortgage rate regardless of what rates do. If we continue with low rates of 2 or 3% for the next 7 years then I've paid slightly over the odds for my mortgage, but it's an affordable and regular monthly amount. If I am right, then I'll be quids in.

At least "I talk the talk and walk the walk"...

chucky

MrDT wrote: »

The base rate is 0.5% at the moment. A 10 year fixed repayment mortgage will be about 5% (with a half decent deposit down), equivalent to BR+4.5%

Let's say that the BoE base rate hits 5% in a couple of years time. Do you expect the fixed rate mortgages on offer to be BR+4.5%? 9.5%?

I'd expect that as the base rate rises, the spread between the base rate and the rates offered on long term fixes would reduce. Maybe we'd see BR+1%? So the scenario could be - buy now with a 5% mortgage, or in a couple of years at a lower price and a mortgage at 6%.

to add your comment about rates, the libor rates (that banks use to determine their fixed rates) have recently started to move upwards instead of downwards over the last couple of weeks. the 1-year is still coming down - this would be used for SVR and tracker rates.

last week the 5 year went up 0.05% and the week before was something similar.
http://www.swap-rates.com/UKSwap.html

Pobby

Sorry. Mis post.

Dithering_Dad

Pobby wrote: »

I suppose that I am not really adding to the debate but as someone who has " enjoyed " hpi I would like to make a few comments. Sorry DD if this is off topic.

I don't really believe many people "enjoyed" the HPI, except those who managed to bail out before the crash. The only property I own is my home and we're all very happy here, so STRing was not an option.

I always smile when i read posts like scousethife, where they rant on about how I am somehow trying to revive the boom and go back to HPI, just because I suggesting that the time might be right (for some people) to buy their own home.

When I bought my first house (a 2 bed bungalow) for £40k, three bedroom houses were for sale at about £60k and 4 bed houses up for about £80k. I lived alone and could only afford my little 2 bed bungalow, so this what I bought. When I met and married my wife and had children, we needed a larger place. Without HPI, I could have bought my current home for £80k and I would have had a £78k mortgage. With HPI I have ended up with a £116k mortgage (which I paid down and then added to with a £50k extension).

Basically HPI has doubled my mortgage debt - hence my laughter at scousethife and others who somehow think that anyone who bought before the boom is 'rolling in it' and wishes the boom would continue.

Pobby

Not sure DD. I know one or two that seemed to think that they were rolling in it because they were sitting in houses that were suddenly worth 300% more than 8 years before. I can remember chatting to a finance guy some years back, him telling me he was flat out doing remortgages. I suspect a bit of mewing going on.

Interesting that you say your 2 bedder bungalow was cheaper than a 3 bedder house. Wish it were the same down my way. Would love a bungalow.

Refering to scouse, I do know that he is not one that wishes for further hpi. Just read a post on a different thread that states clearly that he is hoping for further price drops.