Mortgage Rates going UP, UP, UP

inspector_monkfish

lostinrates wrote: »

You know, I feel I'm losing out. Maybe its because its a nice day and I've enjoyed doing some gardening in my parent's garden, and thinking about things I'd like to be growing,watering the baby trees I've grown and are in pots waiting for their new home and cursing the silly little path and fence that's habouring the bindweed that if it were mine I'd pull out . Or because I've stubbed my toe on the bed again in our bedroom stuffed over full of furniture. Or because I'm just coming to the limit of the amount of time I can stand this wretched temporary feeling for. Maybe its combined pressure of fear of any more cuts in DH's industry, and future employment, and not really nowing what the future will brfing etc etc. I'm not in the best mood today: which is a shame as its such a beautiful day.

got any 'weeds' in that garden you could roll up and smoke??
that might help you :D

IveSeenTheLight

penguine wrote: »

So I guess this isn't a good time to buy a house after all?

Actually, it may be a really good time to buy, before the rates go up further

Very interesting, worrying and responsible post by AD.

While the rates they are at now is not of great concern and still relatively low, the concern is if these are BoE base rate linked and we see the BoE rate inevitably increase in the future, then these mortgages could be really expensive going forward.

There would be nothing to stop the trend of paying 2-3% above BoE while we have become used to paying as little as 0.26% above BoE rate.

These percentages may seem small but over the mortgage rate will run into hundreds of pounds each month.

Paying a mortgage with interest rate of 5-6% is acceptable, but put these mortgages ahead in time with a BoE rate at 5-6% would mean that you would be 8-10% mortgage, which has not been seen for a long time.

At the end of the day the banks are looking to secure their profits and it as they are not in a competative market for selling mortgages at the moment, they can afford to increase the rates.

Is this a signal of the end of competative mortgage rates? I hope not, else regardless of the average house price, mortgages could become extremly costly, maybe even more so than at the height of the average house price.

ad9898_3

lostinrates wrote: »

You know, I feel I'm losing out. Maybe its because its a nice day and I've enjoyed doing some gardening in my parent's garden, and thinking about things I'd like to be growing,watering the baby trees I've grown and are in pots waiting for their new home and cursing the silly little path and fence that's habouring the bindweed that if it were mine I'd pull out . Or because I've stubbed my toe on the bed again in our bedroom stuffed over full of furniture. Or because I'm just coming to the limit of the amount of time I can stand this wretched temporary feeling for. Maybe its combined pressure of fear of any more cuts in DH's industry, and future employment, and not really nowing what the future will brfing etc etc. I'm not in the best mood today: which is a shame as its such a beautiful day.

Mmmm, some valid points, but it isn't much longer now, another 12-18 months will see the majority of the falls that are likely, and who knows, in that time your other half's industry may have picked up.

I think the fact that you are putting up with what you are means that deep down, you know buying now is a mistake, life is like a set of scales, you make decisions on the weight of the arguments on either side of it.

Dithering_Dad

ad9898 wrote: »

you can rent a better property for less money than you can buy

Isn't this always the case though ad? I can rent a 2 bed terraced house in my village for about £500pm, but to buy the same house would cost me £100,000.00. I could rent that house for almost 17 years before I spent £100k.

If you factor in the cost of borrowing £100k over 25 years at 6%, the interest only payments on that mortgage work out at £500pm. With a repayment mortgage set at the same rent (£500pm), it would take over 70 years to buy the house outright.

Why buy a house at all?

lostinrates

ad9898 wrote: »

Mmmm, some valid points, but it isn't much longer now, another 12-18 months will see the majority of the falls that are likely, and who knows, in that time your other half's industry may have picked up.

I think the fact that you are putting up with what are means that deep down, you know buying now is a mistake, life is like a set of scales, you make decisions on the weight of the arguments on either side of it.

Thanks Ad, a valiant attempt to cheer me up. Frankly I think the reason we haven't bought remains the right property: although I admit, it would test my nerves to buy now. We've been so close a couple of times. First time in a bidding war where it got too rich for my taste with the property, second time, with land where the size and layout was perfect for us but the noise of the nearby road was too much. What I have learned is that when we do find somewhere its going to cost us more than we thought because for all the patience we have shown hitherto I don't think I'll be able to deal with planning and stay sane: and the planning factor remains a huge gamble: something I'm beginning to wish we could afford not to take-even though building has been a long term dream.

I'm very, very close, some days, to buying a nice, normal house and giving up ambitions and fast forwards to growing old and bitter:o:D

ad9898_3

Dithering_Dad wrote: »

Isn't this always the case though ad? I can rent a 2 bed terraced house in my village for about £500pm, but to buy the same house would cost me £100,000.00. I could rent that house for almost 17 years before I spent £100k.

If you factor in the cost of borrowing £100k over 25 years at 6%, the interest only payments on that mortgage work out at £500pm. With a repayment mortgage set at the same rent (£500pm), it would take over 70 years to buy the house outright.

Why buy a house at all?

I wouldn't advocate renting a house long term DD (like 17 years as per your example), but despite QE, media/government ramping, and it being Spring (the best time of the year to sell), prices are still falling, and that isn't taking into account of all the negative issues we have for at least another 12-18 months as regards to the economy. If FTB'rs must buy now, because ...... well I can't think of a reason........ but if they have to buy, a 10 year fix is a must, but very few will do it, instead they will take out the most popular one..... the 2 year fix, which could be the most disasterous financial mistake they are likely to make.

Dithering_Dad

ad9898 wrote: »

I wouldn't advocate renting a house long term DD (like 17 years as per your example).

Why not? If you use a pure monetarist calculation to justify not buying this year or next year then does the argument not hold up indefinitely?

ad9898 wrote: »

If FTB'rs must buy now, because ...... well I can't think of a reason........ but if they have to buy, a 10 year fix is a must.

If you talk about people fixing for 10 years, then you must believe that we will have interest rates at a high level for at least 8 years. If you buy in two years time, will the gains you have made on drops in equity not be completely wiped out by the extra amount you'll be paying in mortgage interest payments?

Have you done the calculations based on the estimated drops in your area over the next 2 years as compared with how much more you'll pay on your mortgage over the 10 years (i.e. the time you'll expect to fix for)?

ad9898_3

Dithering_Dad wrote: »

Have you done the calculations based on the estimated drops in your area over the next 2 years as compared with how much more you'll pay on your mortgage over the 10 years (i.e. the time you'll expect to fix for)?

I'm not planning to have more than a 20% LTV mortgage, and thats at the most, hopefully it will be a cash purchase, prices have fell in my area by 4% in the last 3 months, and falls are accelerating slightly on the 6/12 month readings, so things are going my way at the moment.

Dithering_Dad

ad9898 wrote: »

I'm not planning to have more than a 20% LTV mortgage, and thats at the most, hopefully it will be a cash purchase, prices have fell in my area by 4% in the last 3 months, and falls are accelerating slightly on the 6/12 month readings, so things are going my way at the moment.

Ah, then in your case I agree that it's better to wait because you won't get hit with higher mortgage charges if you buy outright. However, are you not misadvising others though with your "Hold out for 2 years then buy" stance?

Only a tiny minority of potential FTBers on here will be buying with cash. Most will have at least 60% LTV mortgages, and in their case a few percentage points on a mortgage will make a significant difference to their finances.

ad9898_3

Dithering_Dad wrote: »

Ah, then in your case I agree that it's better to wait because you won't get hit with higher mortgage charges if you buy outright. However, are you not misadvising others though with your "Hold out for 2 years then buy" stance?

Only a tiny minority of potential FTBers on here will be buying with cash. Most will have at least 60% LTV mortgages, and in their case a few percentage points on a mortgage will make a significant difference to their finances.

Well if it's coming across as 'advice', then I apologise, it's really just an opinion, but to be honest, if my circumstances were different, I still wouldn't buy now, there is too much bad news going into the future.