Would affordability really be any different if house prices dropped?

chucky

Thrugelmir wrote: »

Yes it is. Over 25 years it is cheaper to borrow and repay £150,000 at 4% rather than £130,000 at 6%.

What matters is the total cost of borrowing over the longer term, not singularly house prices or interest rates.

and how much capital you pay to lower the amounts of interest owed...

carolt wrote: »

So buy now ONLY if you can get an excellent long-term fixed rate - or a huge chunk off the price.

you miss the point about affordability completely.

long term cheap fixes will only be available when house prices are higher and increasing. there will be very small windows of opportunity where rates and house prices are low. 1995/1996 was one and the first half of this year was the other. it seems like it will be a good few years before that arises.

the_ash_and_the_oak

Thrugelmir wrote: »

Yes it is. Over 25 years it is cheaper to borrow and repay £150,000 at 4% rather than £130,000 at 6%.

What matters is the total cost of borrowing over the longer term, not singularly house prices or interest rates.

tho tbf when you sign up to pay 4% or 6% its unlikely you will pay 4% (or 6%) for 25 years, but more likely somewhere up to 5? lets say in 5 years time at the end of a fix that rates are 2% (or 12 or 7 or whatever) and in both cases remortgaging occurs - due to the cheaper rate (6000 a year interest) in the former to the latter (7800 a year interest) - the former case should have made up 9000 on the latter, now both going in at 141k and 130k (minus any capital theyve paid off obv)