Inflation and it's impact on my ability to buy a house!!

Harry_Powell

When I first came into this forum I was alarmed by a thread that was urging FTBers to buy 'sooner rather than later' because what FTBers save with falling house prices, they will lose with much increased mortgage premiums (due to double digit inflation).

A lot of people posted retorts on the thread and I was quite relieved TBH and went back to waiting for prices to fall. However, recently I've been seeing more and more talk about inflation and it's now been mentioned in Martin Lewis' newsletter that fixed mortgage rates are climbing and that people should secure a cheap deal while they can.

I also saw this reported on another forum that I've just joined: http://ftalphaville.ft.com/blog/2009/06/01/56441/taleb-goes-long-inflation/

"A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation."

I'm back to being alarmed again. I have the funds in place for my deposit and could buy a decent house for myself and my girlfriend that's large enough for us to start a family in the future. Should we buy now and get a long fix mortgage? If we fix, then our monthly outgoings will be low and inflation will inflate away the debt. If we jump too soon and inflation doesn't get out of control, we will have paid over the odds for the house.

Argh!!! What are other people's views? What would you do??

I have been priced out of home ownership for years due to HPI, I don't want to run the risk of being priced out for years due to unaffordable mortgage payments!!

lostinrates

Harry_Powell wrote: »

Argh!!! What are other people's views? What should I do??

You should do what right for you. frankly, my opinion is noone can give you the detail needed to assess that on a forum, its a complicted decision based on more than money, albeit if the money ain't right IMO its never right to go ahead.

I think you might have had a feeling I- or someone- might say that.:)

Lotus-eater

Look, no one really knows what are going to happen to house prices, don't listen to a load of idiots on a forum sprouting off what they consider good advice.
Talk about it with your GF and decide then, you can get the general picture on here, but I find it completely different from the real street.

You have to decide for yourselves and your own state of mind and circumstances.

I might tell you I expect prices to be lower in a years time than they are now. But what if I was wrong and it costs you money?

Ahh LIR beat me to it.

Harry_Powell

lostinrates wrote: »

You should do what right for you. frankly, my opinion is noone can give you the detail needed to assess that on a forum, its a complicted decision based on more than money, albeit if the money ain't right IMO its never right to go ahead.

I think you might have had a feeling I- or someone- might say that.:)

You're right, so I changed the text to "What would you do". Often it makes it easier to form your own decisions based on the logic and arguments of others... I hope! :eek:

inspector_monkfish

Harry_Powell wrote: »

When I first came into this forum I was alarmed by a thread that was urging FTBers to buy 'sooner rather than later' because what FTBers save with falling house prices, they will lose with much increased mortgage premiums.

A lot of people posted retorts on the thread and I was quite relieved TBH and went back to waiting for prices to fall. However, recently I've been seeing more and more talk about inflation and it's now been mentioned in Martin Lewis' newsletter that fixed mortgage rates are climbing and that people should secure a cheap deal while they can.

I also saw this reported on another forum that I've just joined: http://ftalphaville.ft.com/blog/2009/06/01/56441/taleb-goes-long-inflation/

"A hedge fund firm that reaped huge rewards betting against the market last year is about to open a fund premised on another wager: that the massive stimulus efforts of global governments will lead to hyperinflation."

I'm back to being alarmed again. I have the funds in place for my deposit and could buy a decent house for myself and my girlfriend that's large enough for us to start a family in the future. Should we buy now and get a long fix mortgage? If we fix, then our monthly outgoings will be low and inflation will inflate away the debt. If we jump too soon and inflation doesn't get out of control, we will have paid over the odds for the house.

Argh!!! What are other people's views? What should I do??

I have been priced out of home ownership for years due to HPI, I don't want to run the risk of being priced out for years due to unaffordable mortgage payments!!

i'd say stop dillying around and just do it man!!

if you spend you're whole life saying should i/shouldn't i?? you'll never get anything done!

if you buy a comfortable house, that is big enough to raise a family in, and you intend to stay there for a long long time, then you shouldn't have any reason to look at house prices again for many many years. So the thought of whether you paid over the odds shouldn't even come into the equation.

good luck dude

FungusFighter

You worry too much mate:D

So much on this board about catching the exact right perfect moment for things, in reality you just try and get the facts and do what you think is right at a given time and then live with the consequences. Whichever way you jump you'll be wondering what if, that's life mate:D:D

Dan:_4

Harry, no one can advise you on this mate, everyone on this forum spouts nothing but rubbish so you need to do what feels right for you, your GF, and your future.

lostinrates

Harry_Powell wrote: »

You're right, so I changed the text to "What would you do". Often it makes it easier to form your own decisions based on the logic and arguments of others... I hope! :eek:

Still, what people think they'd still relies on the information you've given. Sometimes what appears to be background noise is important.

My guess, would be you'll buy soon, buts thats very different to advice

chewmylegoff

Whatever you do, don't base your decision on examining the investment decisions of hedge funds. They don't know any more than you do what is going to happen.

cootambear

If buying a house is right for you now, take the advantage of the current market ie take your time to find a house that is right for you (which may not be the one thats the biggest bargain), but also be aware that buyers are still at a premium so you can be aggresive in negotiating asking prices down.

JonnyBravo

Like Fungus said, you'll be lucky to get the timing exactly right and there is an analagous position in share trading that if you miss the tops and bottoms by only 10% you do very well.
What you need to weigh up more is whether this position is right for you at this time. Long term rates are rising, but who knows where they will end?
Prices are likely to come down further but by how much dictates how important future rate rises will be relatively.

Happy guessing!