Base Rate effect on Mortgages

B_Real_2

Is now a good time to get a mortgage product or better to wait until Q1 or Q2 of 2010?

Stamp duty could come back down to £125k in Jan 2010, meaning I'm paying around £1,400 for a £140k property if I buy after xmas.

If I buy before xmas, I will save that £1,400, but am I buying into a mortgage product that will cost more than £1,400 over the short or long term?

I've got £24k in deposit now (so less fee's really £22kish). This means I'm looking at property worth around £145k, with a mortgage of £123k at 85% LTV requiring a deposit of around £22k.

Current products available to me are between 5.5 and 6.5%. Trying to get a handle on what will happen to these products after xmas, particularly if BoE base rate goes up, and beyond that if its worth saving up an extra 10k over the next year or two to get a bigger deposit and lower LTV (and therefore better products available).

But the longer I wait ... the more I spend on rent and the potential for houseprice to increase, presuming they don't fall much more. I'm in Edinburgh.

Any thoughts or comments welcome! Feel like I'm losing my way with all this!

B_Real_2

PS - as a follow up to this... my current thoughts regarding the direction of houseprices, in Edinburgh particularly are as follows.

More jobs (public & private) are still to go. BoE base rates can only go up. We're in dead cat bounce phase of economic bubble, When folk start losing their jobs and rates go up (pushing trackers, SVR's up?) house prices will decline. This effect will be flatter in Edinburgh than other parts of the country.

Thrugelmir

Stamp duty rates or threholds won't change until the next budget.

Could you afford the mortgage repayments at 8% mortgage interest rates?

Does £145k allow you a property you want to buy? Buying and selling houses is expensive. So better to wait rather than leap in.

Rising interest rates will cap HPI, also give you more interest on your savings.

Here's a thought for you. It's cheaper to borrow £110,000 at 6% then £150,000 at 4% over 25 years. In fact nearly £25,000 less in interest.

So it depends on your view of house prices locally, are they likely to rise or fall or stay the same, whether its better to buy now or later.

B_Real_2

Stamp duty rates or threholds won't change until the next budget.

The last budget increased SD to £175 until 31st Dec 09. It will come back down on 1st Jan unless they announce otherwise before then. Having said that, I'm not sure when the next budget is... April 10?

Edinburgh's a funny market - people here will always pay over the odds.

Thrugelmir

B_Real wrote: »

The last budget increased SD to £175 until 31st Dec 09. It will come back down on 1st Jan unless they announce otherwise before then. Having said that, I'm not sure when the next budget is... April 10?

Edinburgh's a funny market - people here will always pay over the odds.

Apologies you are correct. I overlooked the temporary increase in SD.

The trouble with temporary measures is that have the effect of distorting markets in the short term. As people rush to take advantage.

Buying a property should be as much in the heart rather than purely a financial transaction.