Telegraph: wages collapse at fastest rate in 60 years

Alan_M_2

Dan: wrote: »

Couldn't agree more. The general public could not care less about house prices, interest rates, time to buy, mortgage products etc.

They will buy when the time is right in their life, end of.

You also need to take into account that the most read Newspaper in the country is "The Sun". People also have a habit of believing what they hear in the news and whilst "We're all doomed" is what they hear, they are unlikely to change their spending habits.

Alan_M_2

Joeskeppi wrote: »

Really? What's your source for this fact you've stated?

None whatsoever, I didn't even suggest a source or that it was a fact...it's a hunch (opinion) and I'll either be right or wrong and we'll know at the end of the year if I was......

I cannot see rate holding at the current level for more than 4-6 months.

Do you have any sources/facts that suggest different?

Also I'd be interested to know how you'd produce a fact for a future event that hasn't happened yet....

and there was I thinking this was a forum for discussions and opinions...are we to only post fact now?

Dan:_4

Alan_M wrote: »

None whatsoever, I didn't even suggest a source or that it was a fact...it's a hunch (opinion) and I'll either be right or wrong and we'll know at the end of the year if I was......

I cannot see rate holding at the current level for more than 4-6 months.

Do you have any sources/facts that suggest different?

Also I'd be interested to know how you'd produce a fact for a future event that hasn't happened yet....

and there was I thinking this was a forum for discussions and opinions...are we to only post fact now?

This is something no-one can know for sure. If I had of said that the base rate would be 0.5% this time last year, I would have been laughed out of MSE.

Your quite right, It's all predictions and personal opinion. My opinion is the Government will want to keep interest rates as low as possible for as long as possible, regardless of inflation. I think we may see 0.25 rises during 2010 and 2011 until we get around the 7% mark.

thegibdog

Dan: wrote: »

Also, this is where Dithering Dad's arguement comes in. If you wait for another 5-10ish% drop, it could quickly be wiped out with higher mortgage payments when interest rates increase.

Alan_M wrote: »

The problem with this...and it is by far the largest problem is, the vast majority of the general house buying public simply do not understand this so it doesn't enter their calculations. Despite it being quite possibly correct.

The thing is though that the mortgage rates out there at the moment for first time buyers are actually worse than they have been for a long time, especially when compared to the Bank of England base rate and the governments inflation figures.

The banks are not willing to lend money for houses at cheap rates and with small deposits because house prices are falling and are likely to continue to do so. Better mortgage deals will come on the market when house prices level off so I don't think it's a particularly good time FTBs to be taking out a mortgage.

carolt

Exactly.

The mortgage I was approved for 2 years ago would have cost me less than buying the same house with a 20% reduction in price would cost me now - because the long-term 10-15 year fixes I was looking at then have not come down significantly in price. In fact, for those without huge deposits, they've gone up - by about 1%. Which balances out the fall in house price.

Until house prices have fallen sufficiently or long-term fixed rates have come down, the only FTB's it makes sense to buy now are those with enormous deposits. And there are hardly enough of those to have much effect on the market.

Yes - short term fixes may be cheaper now than at the peak - but only for the short-sighted few who are unaware that interest rates will shoot up soon.

I can't see high interest rates having a markedly positive effect on house prices, to put it mildly - so I don't think there's any hurry to buy.

JonnyBravo

carolt wrote: »

Yes - short term fixes may be cheaper now than at the peak - but only for the short-sighted few who are unaware that interest rates will shoot up soon.

And so if rates do shoot up soon, as you predict, will house prices drop enough before this happens for FTBers to buy or will the rates rise at the same time (or before) prices drop and then it never "makes sense"?
OK I've over simplified it here, but you get my drift, is it possible with your scenario that it never makes sense?

the_ash_and_the_oak

JonnyBravo wrote: »

And so if rates do shoot up soon, as you predict, will house prices drop enough before this happens for FTBers to buy or will the rates rise at the same time (or before) prices drop and then it never "makes sense"?
OK I've over simplified it here, but you get my drift, is it possible with your scenario that it never makes sense?

Good question here btw.

Think the 'best time to buy' is later than this point. Feeling that (in abstract at least) best time is right after high rates have done their damage to prices, and are then beginning to come down again - which means somewhat counter-intuitively its best to to borrow when rates are at their highest but when you feel that 2 years down the line or whenever you can re-fix at a a lower rate. At this point it starts to become gradually cheaper to borrow again pushing prices gradually back up again. With high initial rates and low initial cost kinda like a scenario of rates coming down as prices go up imo

Your question is interesting because as you say it may 'never make sense' in a way. I also think this depends on how much deposit you have saved. The more you can save up the less the IR matters as it will be taking up a smaller % of purchase price.

Think all this is years away imo

Snooze

carolt wrote: »

Exactly.

The mortgage I was approved for 2 years ago would have cost me less than buying the same house with a 20% reduction in price would cost me now - because the long-term 10-15 year fixes I was looking at then have not come down significantly in price. In fact, for those without huge deposits, they've gone up - by about 1%. Which balances out the fall in house price.

Until house prices have fallen sufficiently or long-term fixed rates have come down, the only FTB's it makes sense to buy now are those with enormous deposits. And there are hardly enough of those to have much effect on the market.

Yes - short term fixes may be cheaper now than at the peak - but only for the short-sighted few who are unaware that interest rates will shoot up soon.

I can't see high interest rates having a markedly positive effect on house prices, to put it mildly - so I don't think there's any hurry to buy.

I remember reading on here not long ago someone arguing this point by saying some lenders were offering 90-95% mortgages again. I can't remember which company(ies) it was but a friend of my gf who lives down south desperately wanted her own gaff and went to one of the 90% lenders to see about a mortgage on a place she'd found. All went hunkydory and she got an offer. She was over the moon until the lender did the valuation and came back 10% under what 3 local agents had valued it as. The owner wouldn't budge, the lender wouldn't budge so it was game over.

Personally I don't think that this supposed 'kick-start' to the housing market by offering 90/95% deals again is anything more than sound bites. I don't think the lenders have got any intention of lending at those LTVs for a looooooooooong time yet (especially while house prices are still dropping) and it's simply a PR exercise to make them look good and look like they care, while behind the scenes they're using the 'we say the house is worth x% less so find the cash or do one' to get out of their original LTV offers. :cool:

Rob

Alan_M_2

Dan: wrote: »

This is something no-one can know for sure. If I had of said that the base rate would be 0.5% this time last year, I would have been laughed out of MSE.

Your quite right, It's all predictions and personal opinion. My opinion is the Government will want to keep interest rates as low as possible for as long as possible, regardless of inflation. I think we may see 0.25 rises during 2010 and 2011 until we get around the 7% mark.

I see the same small incremental rises, but I wouldn't be surprised to see it start this year although i imagine the government will be keen to keep them as low as possible until the general election.

Dan:_4

Alan_M wrote: »

I see the same small incremental rises, but I wouldn't be surprised to see it start this year although i imagine the government will be keen to keep them as low as possible until the general election.

You could be right.

I just don't see any Government raising interest rates while in recession.