Not a good time to buy

Procrastinator333

You are exposed to the same risk.

If you don't buy you are exposed to the risk of prices going up
If you buy, you are exposed to the risk of prices falling

Just because in number 2 you have bought the house, doesn't mean you haven't lost out. You are then stuck paying a higher mortgage than everyone else for the rest of your life.

If you buy, you are exposed to rising interest rates (assuming a variable)

If you buy, you are exposed to interest rates on a fixed if rates go down. It may not feel like it because you pay the same rate, but you are still paying more than everyone else. So it is still a risk.

By buying you are exposed to pretty much the same risks, just in reverse. Just because they feel less tangible, doesn't mean they are any less tangible.

It is a gamble either way, I'm just choosing to gamble on this side of the coin. As I ahve shown in another thread I'm currently doing very well out of having not bought. I still see more downside for houses than up so I'm happy where I am.

If you don't get the mechanics of the maths and risk then not sure what else I can say! Depending on how interesting the football is later I might have to break out the calculator again to show you.

chucky

Procrastinator333 wrote: »

You are exposed to the same risk.

actually no - you're exposed to it much more

i buy 2010 and pay mortgage back by 2025
you buy 2013 and pay mortgage back by 2028

i'm may be exposed to the same risk as you for 3 years (which i'm not anyway) but you're then exposed to the same additional risk for 3 years after i have paid off my mortgage. your total exposure is 6 years.

in addition i'm 3 years ahead of you into paying capital back on my mortgage at todays inflation - i've reduced my exposure by even more while your still gambling on future house price inflation and interest rate rises.

silvercar

Its a risk, its a gamble..

the real danger is that if you were in position to buy and delay you could find yourself unable to buy in the future.

Either because deposit requirements increased or prices rose against you or interest margins on mortgage rates rose.

If you wait and then found that you couldn't buy you would be stuck and that is the risk that isn't worth taking.

carolt

silvercar wrote: »

Its a risk, its a gamble..

the real danger is that if you were in position to buy and delay you could find yourself unable to buy in the future.

Either because deposit requirements increased or prices rose against you or interest margins on mortgage rates rose.

If you wait and then found that you couldn't buy you would be stuck and that is the risk that isn't worth taking.

V unlikely that all 3 of those would happen together due to the simple obstacle of affordability. If house prices rose so that no-one could afford them, in an environment of rising interest rates and rising deposits required, then (a) no-one would buy them, (b) prices would fall back again and (c) if by some miracle prices rose upwards ever to infinity without a break, it would be much cheaper to rent.

Personally, if you can buy and it's a good time in yor life to buy, then do. If you don't need to or want to, then don't.

This 'buy now before you miss the boat!' approach looks a bit silly in the light of the history of the past 2 years - esp with an election coming up. A few months after the election, it might be easier to see a direction and see how the economy is panning out, but right now, it's a brave man who would give a blanket instruction that others are better off buying now, come what may.

Yakubu22

HAMISH_MCTAVISH wrote: »

And no doubt you thought the same thing 10 months ago......

Before house prices rose by almost 10%.;)

Which turned into a pretty big loss for your gamble.

Yeah and I decided not to buy a lottery ticket last week when someone won £Ms. I'll never forgive myself for such a big loss

GDB2222

I've given up trying to second-guess this housing market, but I would urge anyone buying now to fix their mortgage for a decently long period. Interest rates may stay low for a long time, in which case you'll be paying a bit more. However if rates go up quite a lot, that could be catastrophic.

I noticed that HSBC were doing variable-rate loans at 4% over base (or thereabouts). That's fine as long as base stays at 0.5% or thereabouts, but 2 years ago base rate was 5.5% which would more than double the mortgage interest payments if rates get back up to that level.

Bootski

Procrastinator333 wrote: »

The nxt government, probably tory, will have to make cuts. This has been accepted by just about everyone. The only question that leaves is how big will the cuts be. The conservatives like their cuts and they like a smaller government.

http://www.statistics.gov.uk/statbase/TSDdownload2.asp

In 1997 at the end of the last tory government there were 5.2m public sector employees. That now stands at 6.1m. Labour have been sticking to their plan of spend spend spend and the public sector has grown every quarter for about the last 2 years. There is a large jump in there, I believe a portion of that is the inclusion of the banking staff.

Maybe I'm wrong, but how can this growth carry on? With cuts on the way, a reversal is the only realistic option. If it is the tories, it will be a steeper reversal than labour. I don't see either party sacking thousands of public sector employees, but even if turnover only runs at a couple of %, it would be easy to reduce the size just by not replacing leavers. Post May, cuts of 100k or more per annum look likely. Is the private sector going to pick up this slack? Doesn't look like it at present. GDP therefore stagnates or falls as unemployment continues to rise or at best stagnate.

If public sector workforce is not reduced, how can either party bring the deficit under control? Taxes, guess so, but that would take a lot of extra taxes and that means a lot less money for people to spend on things, like say mortgages. Less spending, GDP stagnates or GDP falls.

If they don't cut jobs or raise enough extra tax, then what happens, the deficit stays high and gilt markets punish us, pushing up interest rates. The mountain of debt the UK has both pricate and public costs more and more, less to spend, GDP stagnates or falls.

There are so many different ways the housing market can take a hit in the above that I am left as a very happy renter. With all this hanging over the UK, why not wait for 6-12 months and see how this plays out?

Can the UK avoid these scenarios? What alternative scenario do you see? Genuinely curious, does any one see a path out of this mess that doesn't end badly for the UK economy?

If what you've read, and the advice you've been given tallies with your gut instinct - don't buy now:cool:

Of course there's alway the fact that...........they could be wrong, and your instinct too;)

Sickening isn't it, to know what to do:o

rictus123

Whens a good time to buy then

Procrastinator333

chucky wrote: »

actually no - you're exposed to it much more

i buy 2010 and pay mortgage back by 2025
you buy 2013 and pay mortgage back by 2028

i'm may be exposed to the same risk as you for 3 years (which i'm not anyway) but you're then exposed to the same additional risk for 3 years after i have paid off my mortgage. your total exposure is 6 years.

in addition i'm 3 years ahead of you into paying capital back on my mortgage at todays inflation - i've reduced my exposure by even more while your still gambling on future house price inflation and interest rate rises.

No - If the buyer is on a repayment mortgage, then the renter saves the difference for a larger deposit. When they buy they ahve the same remaining mortage value. They can chose a 22 year term and have the same period.

Re-read my earlier example, I have copied it for you:

The scenario is based on a interest only mortgage for the buyer. So when the renter buys, they both still have the same mortgage value.

Why is it based on a repayment mortgage I hear you ask. Because any overpayment element can be save on the opposite side by the renter and used as a larger deposit.

E.g. Buyer: Interest £20k over 3 years plus £5k towards repayment. At the end, the remaining mortgage for the buyer is £95k.

The renter pays £20k in rent and puts away the £5k as a deposit. The renter then buys with a £5k deposit and has the same £95k mortgage. The renter can pick a 22 yr term if that is what they want.

I think I'm giving up on this, I have had to explain this simple maths to several people across several threads.

Bootski

rictus123 wrote: »

Whens a good time to buy then

When the time is right, Stupid:D