Buyers blocked by low valuations

penguine

ad9898 wrote: »

I wonder how many FTB'rs are going into the market now, with the enticement of 'the lowest interest rates in 400 years' ringing in their ears ? I wonder how many have considered that if they buy now, what is likely to happen to IR's over the typical time span of a 25 year mortgage ?, I wonder how many of them are factoring in the historical rate of 8% ?

I would suggest none or very few, hence when we get 'cost push' inflation over the next few years and IR's go up, the housing market will suffer more carnage.

I was clearing out some old papers over the weekend and came across the our original mortgage documents (from 10 years ago). Although I know that we're now at historically low interest levels, it was still a bit of a shock to see that we started out paying 7.49% interest on our mortgage.

ad9898_3

penguine wrote: »

I was clearing out some old papers over the weekend and came across the our original mortgage documents (from 10 years ago). Although I know that we're now at historically low interest levels, it was still a bit of a shock to see that we started out paying 7.49% interest on our mortgage.

Nice find penguine, I remember my first mortgage payment well, 7.7% in Jan'97, memories are short though.

Dan:_4

penguine wrote: »

I was clearing out some old papers over the weekend and came across the our original mortgage documents (from 10 years ago). Although I know that we're now at historically low interest levels, it was still a bit of a shock to see that we started out paying 7.49% interest on our mortgage.

Why is that a shock? I was paying 7.89% until rates came down

ad9898_3

Dan: wrote: »

Why is that a shock? I was paying 7.89% until rates came down

For us seasoned players Dan, it is no shock, but for the young 'uns, bank base rate at 7% was something that happened in the stone age.

penguine

Dan: wrote: »

Why is that a shock? I was paying 7.89% until rates came down

It was a shock because I realised how quickly I've become used to interest rates being low, that it's hard to imagine they'll ever go back up to 7-8% again (even though I'm sure they will).

ad9898_3

penguine wrote: »

It was a shock because I realised how quickly I've become used to interest rates being low, that it's hard to imagine they'll ever go back up to 7-8% again (even though I'm sure they will).

The biggest nightmare for those who have bought in the last few years and are not a long term fix rate is cost push inflation (prices going up, but wages frozen or reduced), which is already starting to rear it's head in 'life's essentials'.

My opinion is anyone not on a fixed rate, get one now, at least a five year one, but a 10 year being much better, and overpay.

Wookster

ad9898 wrote: »

memories are short though.

Oh yes!

Not that long ago, some people seemed to think house prices could never correct... some people (like Dan & Kenny) are still in denial.

Dan:_4

Wookster wrote: »

Oh yes!

Not that long ago, some people seemed to think house prices could never correct... some people (like Dan & Kenny) are still in denial.

I'm not in denal of anything wookie. I mearly tell it as I see it. Sorry if it's not what you want to hear.

FungusFighter

pizzagirl wrote: »

Maybe the headline should read:

Buyers blocked by proper valuations.

But a proper valuation would be don't-touch-it-with-a-bargepole

Dan:_4

penguine wrote: »

It was a shock because I realised how quickly I've become used to interest rates being low, that it's hard to imagine they'll ever go back up to 7-8% again (even though I'm sure they will).

True, we have had low interest rates, for too long. Anyway, it is worthwhile to point out that some of the sub-prime mortgages are at interest rates of 7, 8, 9 even 10%.