Another 50% to fall off property - Robin Griffiths (Expert Economist)

michaels

dopester wrote: »

Some interesting and amusing points of discussion in this thread. I'll re-read it after the match.

Hope you aren't a Gooner...

I see no signs of strain in the market for anything but first homes. Lots of people who bought 5-10 years ago still have lots of equity and may now need to upsize for family reasons and with low interest rates affordability is a lot better than it was 1 and 2 years ago.

Anecdotally even the been on for ages dross in my town is now selling with multiple offers as long as it has 3 or more bedrooms.

scousethife

Expert economist?

Did he predict houses prises falling before it started , did he predict interest rates hitting an all time low when they did?

Ive seen a lot of "expert opinion" over the last few years and not one of them got it right.

Seems to me the only thing they "exceed in" is getting paid for bad guesses

GDB2222

dopester wrote: »

Cars may need replacing but this person can't afford or risk buying a new car again, nor to pay off the deposit. Is very reluctant to take on a new credit deal for an expensive new car (even a basic one) when there may be changes of employment circumstances for them in the future

In summary, if something needs replacing, it doesn't mean people can afford or get the credit to replace it. In this instance I am sorting them out with an old runabout-car which has been cheaply but expertly DIY maintained in good-working-order for a while.

So I'm not convinced about your bounce coming from replacing non-essentials, when the money, savings, credit, or willingness to take on debt are reduced. Even if a car is viewed as an essential, more people will have to make compromises.

If I can add my own anecdote to this. My DW wrote off her car last autumn, and we simply haven't replaced it. We 'manage' with one car that's 13 years old. In happier times, we would probably have replaced it straight away, but we were quite shaken by a 25% drop in the market value of the family's assets.

Cannon_Fodder

whathavewedone wrote: »

Oh and to say that house prices trebled in a decade as though that happened nationwide is simply misleading.

+195% is enough to constitute "trebling", imo.


[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=E&W-ALL&s=01 April 1997&e=01 January 2008&t=1[/IMG]
http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?step=4&locationType=0&area=E%26W-ALL&reporttype=1&datetype=1&from1=04%2F1997&from2=01%2F2008&image2.x=22&image2.y=11

Land Registry figures.

dervish

Cannon_Fodder wrote: »

+195% is enough to constitute "trebling", imo.


[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=E&W-ALL&s=01 April 1997&e=01 January 2008&t=1[/IMG]
http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?step=4&locationType=0&area=E%26W-ALL&reporttype=1&datetype=1&from1=04%2F1997&from2=01%2F2008&image2.x=22&image2.y=11

Land Registry figures.

you have conjunctivitis of the brain! :mad:

RDB

We are in the bear trap, the Halifax fig out today will just make it worse.

Anyone buying now will regret when prices fall huge amounts when interest rates go back up.

Dithering_Dad

RDB wrote: »

We are in the bear trap, the Halifax fig out today will just make it worse.

Anyone buying now will regret when prices fall huge amounts when interest rates go back up.

Except those who buy with fixed interest mortgages. People on here tend to forget that you don't normally stay in the same house for the rest of your life, especially if you're a FTB. The average stay is 7 years. What you negotiate on the price of the house is immaterial because it's unlikely that you'll ever wholly own that particular house (unless you all have enough money to buy a house outright).

You have to remember that the important thing is the mortgage. Two things affect the amount you pay on a mortgage - the size of the mortgage and the mortgage rate. It's all very well waiting 3 years or more before you buy in order to get a smaller mortgage, but not if you end up with a much higher mortgage rate because you waited to buy until interest rates were higher.

The two can cancel each other out. You could end up living in rented digs for 3 years longer than one of your peers who buys now, and after a 7 year period you'll have paid the same amount of mortgage interest. The only difference will be that your peer has enjoyed owning his own home for 3 years longer than you.

Graham_Devon

Dithering_Dad wrote: »

Except those who buy with fixed interest mortgages. People on here tend to forget that you don't normally stay in the same house for the rest of your life, especially if you're a FTB. The average stay is 7 years. What you negotiate on the price of the house is immaterial because it's unlikely that you'll ever wholly own that particular house (unless you all have enough money to buy a house outright).

You have to remember that the important thing is the mortgage. Two things affect the amount you pay on a mortgage - the size of the mortgage and the mortgage rate. It's all very well waiting 3 years or more before you buy in order to get a smaller mortgage, but not if you end up with a much higher mortgage rate because you waited to buy until interest rates were higher.

The two can cancel each other out. You could end up living in rented digs for 3 years longer than one of your peers who buys now, and after a 7 year period you'll have paid the same amount of mortgage interest. The only difference will be that your peer has enjoyed owning his own home for 3 years longer than you.

You have to remember that the important thing is also the price. Not just fixing on a mortgage.

DD, you keep saying this on several threads. Could you provide us with some available mortgage deals in which you could carry out what you have said.

A&L offered me one the other day, 2.99% fixed for 2 years, going up to 4.99% for 3 years I think and then SVR thereafter. By the time your out of the fix, you'll hit the massive interest rates.

All seems lovely, until you saw the conditions attached. 65% LTV and a massive great fee.

I'd rather pay less for the house, ta!

Dithering_Dad

Graham_Devon wrote: »

You have to remember that the important thing is also the price. Not just fixing on a mortgage.

DD, you keep saying this on several threads. Could you provide us with some available mortgage deals in which you could carry out what you have said.

A&L offered me one the other day, 2.99% fixed for 2 years, going up to 4.99% for 3 years I think and then SVR thereafter. By the time your out of the fix, you'll hit the massive interest rates.

All seems lovely, until you saw the conditions attached. 65% LTV and a massive great fee.

I'd rather pay less for the house, ta!

When I first started my 'get a fixed rate' campaign, Alliance and Leicester had a fixed rate mortage, fixed for 5 years at a rate of 3.99% that was fee free. You had to have a 40% deposit, but if most FTBers on here are to be believed - especially the regulars - everyone has hefty deposits, some even claim to have 50% and more.

Obviously as time goes by and we get closer to the point when interest rates start rising, these deals will fall away to be replaced by ones with higher rates and possibly higher arrangement fees (remember though, most arrangement fees are a set amount that you'll pay regardless of how much you paid for your house - so if you wait 3 years to buy you'll still be paying the same arrangement fee but you'll also be paying a higher mortgage rate).

I can only base these decisions on my own circumstances, and you guys must base your decisions on your own. If I had been wating 3 to 5 years for a HPC, I personally would not want to spend a further 3 to 5 years waiting to buy a house at the lowest point, especially if it meant that my monthly mortgage payments were at the same level as someone who bought 3 years before me.

As far as proving my calculations - it's impossible to do (as I'm sure you're aware ) because everyone is different and this calculation relies on the following factors:

1. Your credit worthiness (no point even looking at getting a decent mortgage rate if you have a bad credit history).
2. The cost of the house you're buying
3. The size of your deposit
4. Your LTV (Loan To Value) determined by #2 & #3 above.
5. How much your mortgage arrangement fee is (though you'll pay this anyway whether you buy now or later and I suspect these will only increase in price over time).
6. How much you're paying in rent per month.
7. How much your fixed rate mortgage would be per month.
8. How long you think you'll actually live in your new house (average is 7 yrs)
9. How long you want to fix for (I'd suggest between 5 years and the time noted in #8.)

I'm sure I've missed some variables, but you get the idea.

Put all these into the mix and see how much they come to if you buy a house in 3 months time, or buy a house in 3 years time (obviously based on what you estimate a similar house will cost and what you think the mortgage rate could be).

If the calculations work for you, then maybe you should consider buying - if not, then stay in rented for as long as it takes until the calculations do work. Simple.

p.s. there is a thread on the mortgage board where they track the best fixed rate deals...

dopester

Dithering_Dad wrote: »

You have to remember that the important thing is the mortgage. Two things affect the amount you pay on a mortgage - the size of the mortgage and the mortgage rate. It's all very well waiting 3 years or more before you buy in order to get a smaller mortgage, but not if you end up with a much higher mortgage rate because you waited to buy until interest rates were higher.

The two can cancel each other out. You could end up living in rented digs for 3 years longer than one of your peers who buys now, and after a 7 year period you'll have paid the same amount of mortgage interest. The only difference will be that your peer has enjoyed owning his own home for 3 years longer than you.

Last night I ran a few calculations for Chris. The value of the home he was going to buy via one of the government-homebuyer help schemes, has fallen from an initial £250K... to the 230K he was to buy it at. Then he rented instead and saw the same property fall to £210K, and now £190K. £40K lower than the amount he was going to proceed at.

If you had £40K on a mortgage over 25 years @4% your total repayment obligation: £213 per month = £63,900 to repay. (£40K loan to repay + £23,900 of interest)

If you had £40K on a mortgage over 25 years @ 5%, your total repayment obligation: £237 per month = £71,100 over 25 years to repay. (£40K loan to repay + £31,100 of interest)

What you are saying that, yes, he might see the value of that property fall another £40K, but it will still end up hurting more as interest rates on the lower amount you will have to borrow will be higher... costing you more overall?

Somehow I don't see it.