Wake up Bears its feeding time

Generali

the_ash_and_the_oak wrote: »

its an interesting point. if rates over the next 10-15 years are going to average 5% instead of the 10% they averaged for a good decade in the 1980s then it does double the amount that could be borrowed or doubles the multiple w no real problem. (if we think they are going to average 5% or so or the next decade)

the only question i would have about this would be - this takes interest out of the equation (10% on 2.5x wage vs 5% on 5x wage) but still leaves the question of the capital imo. To me this leaves us back at the question of puchase price vs salary

Agree about being able to let it out though (esp in places like London!)

It would be a great argument if, as in the US, people bought a house on a 25 or 30 year fixed rate mortgage however in the UK they don't.

By bidding up houses in this way and relying on interest rates staying low you're making yourself a hostage to fortune - interest rates could rise quickly and cause great pain. Of course they may not too but that is something out of your control. It's a bit like having nothing put aside for a rainy day - it may not be of consequence but it could also be really horrible.

the_ash_and_the_oak

Generali wrote: »

It would be a great argument if, as in the US, people bought a house on a 25 or 30 year fixed rate mortgage however in the UK they don't.

By bidding up houses in this way and relying on interest rates staying low you're making yourself a hostage to fortune - interest rates could rise quickly and cause great pain. Of course they may not too but that is something out of your control. It's a bit like having nothing put aside for a rainy day - it may not be of consequence but it could also be really horrible.

Thats basically my take on it. If (and its a big If) rates were to stay low I would want them to stay low for at least 10 years - given its going to take a while to pay a reasonable amount of capital off. To me the purchase price is something that would affect throughout the course of the mortgage - the interest rate only for a maximum of 5 years imo. Which is why I'd feel a lot more comfortable borrowing when rates were high, not when they are low

carolt

This is precisely why I'm lookig for a minimum 10 year fix.

And a low buying price, of course.

doire_2

StiflersMom wrote: »

... doubt it'll be six months.

Come February, we will see house prices picking up again at a good canter

Based on what?

carolt

Wishful thinking.

sabretoothtigger

sabretoothtigger

the_ash_and_the_oak wrote: »

its an interesting point. if rates over the next 10-15 years are going to average 5% instead of the 10% they averaged for a good decade in the 1980s then it does double the amount that could be borrowed or doubles the multiple w no real problem. (if we think they are going to average 5% or so or the next decade)

the only question i would have about this would be - this takes interest out of the equation (10% on 2.5x wage vs 5% on 5x wage) but still leaves the question of the capital imo. To me this leaves us back at the question of puchase price vs salary

Agree about being able to let it out though (esp in places like London!)

I dont totally disagree so long as its correct that interest on a mortgage forms the majority of cost in buying a house like Im pretty sure it does in most homebuyers cases

But the rate has to be fixed and then you have a proper estimate of cost where as floating rate could give a short term false perspective and be a problem.

Also this is just an argument to buy normally not to spend even more then normal, better to take a worst case scenario then presume too many positives.
That does remind me of those property programs where they took stupid risks overbuying & overspending hoping to profit.
Plan to break even at worst and hope for a profit unless its a business I guess

doire wrote: »

Based on what?

Inflation :j

I don't necessarily agree that house prices will dip over the winter months.

people dont like to move about around xmas? seems a fair argument short term

StiflersMom

carolt wrote: »

This is precisely why I'm lookig for a minimum 10 year fix.

And a low buying price, of course.

And if you profit from someone else's misery by picking up a repo, so much the better, eh?

Disgusting

chucky

carolt wrote: »

This is precisely why I'm lookig for a minimum 10 year fix.

And a low buying price, of course.

these types of long term fixes will not be cheap until credit is freely available again.
when credit is freely available house prices are already on the increase - you'll be hot by a double wammy. house prices more expensive and higher mortgage rates.

GDB2222

StiflersMom wrote: »

And if you profit from someone else's misery by picking up a repo, so much the better, eh?

Disgusting

You mean the lender's misery? I feel no sympathy for them.