FTB Should I fix or SVR?

lookcloser

Thanks Thrugelmir.

Of course the (new?) Government will have bigger concerns than FTBs but without them it's difficult to see how the property market will pick up if FTBs are completely put off by high mortgage rates.

The problem for us FTBs is that although interest rates are at a historical low that isn't equating into low mortgage rates unless you've got 40% to put down. Having saved pretty hard for the last 5 years to get our 15% together in an attempt to buy a place it all seems a bit unfair. I know the banks are covering their own backs and want to make profits to make up for their huge losses but it's not great for the likes of us.

Thrugelmir

lookcloser wrote: »

Thanks Thrugelmir.

Of course the (new?) Government will have bigger concerns than FTBs but without them it's difficult to see how the property market will pick up if FTBs are completely put off by high mortgage rates.

The problem for us FTBs is that although interest rates are at a historical low that isn't equating into low mortgage rates unless you've got 40% to put down. Having saved pretty hard for the last 5 years to get our 15% together in an attempt to buy a place it all seems a bit unfair. I know the banks are covering their own backs and want to make profits to make up for their huge losses but it's not great for the likes of us.

The market for FTB's would pick up if prices fell. As higher rates would discourage people from buying therefore causing an adjustment in prices.

Even at 5% mortgage rates are low historically. Banks aren't making the margins overall that some assume. As they have to pay somebody interest for borrowing the money themselves. As a saver raising a deposit you shopped around for best rates.

Whatever option you choose. The amount of interest you pay over the term of the mortgage is in your hands. Overpaying by a little adds up every month adds up over 25 years.

lookcloser

We've been waiting and waiting for house prices to fall but unfortunately where we live (in Brighton and Hove) I've seen virtually no movement to speak of since the downturn...if anything prices are being driven again up due to lack of reasonable priced properties on the market. It's a shame but we've got to make that move!

Yep, overpaying is definitely the way forward. I'd never really thought about overpaying a great deal until I've looked at the figures and getting that LTV to a better percentage is oh so important.

Purely out of interest Thrugelmir what would you do in my shoes? I sense you're much more knowledgeable on these matters than I am.

kinglewis

If I was going to fix it would be for 5 years plus... tough call whether to fix for 10 years??? Depends if you are tied in for the full 10 years.. sometimes deals are available which allow you to fix for 10 years but only tie you in 5 years.

I would honestly be tempted by a ten year fix if was pretty certain I wasn't moving home / had young kids etc.... Interest rates are at a 300 year low!! I know you could hold out till they start to rise but that is a tough call even for the city bankers who earns millions!!

Of course the (new?) Government will have bigger concerns than FTBs but without them it's difficult to see how the property market will pick up if FTBs are completely put off by high mortgage rates

Interest rates are not controlled by the government. The BOE is seperate and increases / reduces int rates to control inflation (among other things). Therefore if inflation goes up (inflation can have a mind of its own!) the interest rates will follow. I understand the predictions are that rates will remain low for 12-18 months.. but the printing money that the government is doing will have an unknown effect... possibly to cause inflation which will push up rates.

It is a tough one for anyone to call as it's all guesswork... overpaying is certainly the best thing you can do. Get your ltv down and the deals will always be better.

We've been waiting and waiting for house prices to fall but unfortunately where we live (in Brighton and Hove) I've seen virtually no movement to speak of since the downturn...if anything prices are being driven again up due to lack of reasonable priced properties on the market. It's a shame but we've got to make that move!

Trust me there is never a 'right' time to buy... the only way someone can call the right time to buy is in hindsight.. which is easy for anyone. If interest rates go up.. prices may well fall.. but your mortgage will still be the same (if not higher) each month due to the higher interest rates!! All becomes swings and round a bouts..

When I bought my previous home in 2003 prices were going up rapidly and I was scared I was buying at the top of the peak.. so there are always fears. In that particular year I had to view a house and offer within an hour or so otherwise someone else would have bought it!! It was ridiculous. now you have the leisure of viewing, enjoying a second viewing and then negotiating someone down. Definately a buyers market...go for it!!

Thrugelmir

lookcloser wrote: »

We've been waiting and waiting for house prices to fall but unfortunately where we live (in Brighton and Hove) I've seen virtually no movement to speak of since the downturn...if anything prices are being driven again up due to lack of reasonable priced properties on the market. It's a shame but we've got to make that move!

Yep, overpaying is definitely the way forward. I'd never really thought about overpaying a great deal until I've looked at the figures and getting that LTV to a better percentage is oh so important.

Purely out of interest Thrugelmir what would you do in my shoes? I sense you're much more knowledgeable on these matters than I am.

Personally. If I liked the property a lot, and most importantly, expected to live there for at least 5 years I would buy it. Timing is nigh impossible to get right.

I would go for the SVR but overpay but as much as practically possible. Fixing over 4 years may not prove much of a benefit as interest rates are expected to remain low for at least the next 12 months. Though may edge up in that timeframe. At least by overpaying you will have a cushion against rises in the future.

Brighton is an expensive town, I have friends in the vincity. But even in a down market, prices should hold up as a popular place to live and very commutable to London.

I'm most likely totally wrong. But if you look upon your house as a home and not an investment then why get stressed.

Cannon_Fodder

Brighton may be expensive, but it wasn't immune.


[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=Brighton+And+Hove&ac=East Sussex&s=01 September 2007&e=01 September 2009&t=4[/IMG]

lookcloser

Thanks again to all for their advise...every little bit is helpful.

kinglewis. We thought it was a buyers market but with the lack of reasonable low end properties in the Brighton (and more so Hove area) for FTBs places in our price range have been going in a matter of days. I've lost count of the number of new properties on the market we'd arranged to see only to get a call from the Estate Agents saying our viewing had been cancelled as it was gone already....if you couldn't see it in the first couple of days of it being on the market forget it. Obviously this was not the case for every property but anything reasonally priced and in good condition was/is gone in a flash. Not sure if anyone else is experiencing this at the moment or it's just a local thing?

Cannon Fodder. If prices had dropped anything like the 60K like the graph suggests we would have bought already! I can only think the figures have be influenced by the expensive houses (500K plus) coming down significantly in price. I've been watching the local market like a hawk for the last 18 or so months and I'd say there's been about a 5K (10K tops) drop in decent properties suitable for FTBs...but like my last paragraph suggests any decent low end properties are being jumped on pushing these prices up. That's just my experience anyway.

and Thrugelmir, yes we love the property and can't wait to make it our home (and it's definitely not an investment) but we all to love save money don't we!