Experts... Price to fall in 2011

Procrastinator333

luvpump wrote: »

The Rally of the last few months has all the hallmarks of a the classic Bulltrap !
The Economy was saved from oblivion by crashing interest rates & money printing, now its payback time ! .
Sadly, huge job cuts & less disposable income for us all over the coming years , Interest rates will also start to normalise next year ... The decade of Austerity has begun..

As Mervyn king allegedly said .."Whichever party wins this election will have to inflict such painful austerity measures on the British population that they will soon find themselves out of power for a generation" .. That is why house price reductions are obvious !

A Bulltrap ey, that sounds interesting, is there anything to explain it a bit more, like a graph perhaps?

SilverStandard

Procrastinator333 wrote: »

A Bulltrap ey, that sounds interesting, is there anything to explain it a bit more, like a graph perhaps?

If you look at the last few cycles over the last hundred years there was often a bull trap, if you bought then you would be kicking yourself.

treliac

luvpump wrote: »

As Mervyn king allegedly said .."Whichever party wins this election will have to inflict such painful austerity measures on the British population that they will soon find themselves out of power for a generation" .. That is why house price reductions are obvious !

Not much point then..... if Labour are going to be back in a few years, just to undo whatever's been achieved and ruin the economy again.

RenovationMan

SilverStandard wrote: »

If you look at the last few cycles over the last hundred years there was often a bull trap, if you bought then you would be kicking yourself.

But surely in other bull traps, they did not have these historically low interest rates? I know it depends on how much you think house prices will fall, but there must be a good argument for buying now and securing a low mortgage rate? or even securing a mortgage if the stories are true about future mortgage rationing.

The one thing I do know about houses is that before you buy it, the price consumes your thoughts and as soon as you move in, the mortgage amount consumes them. Remember though, you're paying the mortgage for a lot longer than you're negotiating the price.

silvercar

The one thing I do know about houses is that before you buy it, the price consumes your thoughts and as soon as you move in, the mortgage amount consumes them. Remember though, you're paying the mortgage for a lot longer than you're negotiating the price.

So true, yet some still increase their mortgage.

bigheadxx

RenovationMan wrote: »

But surely in other bull traps, they did not have these historically low interest rates? I know it depends on how much you think house prices will fall, but there must be a good argument for buying now and securing a low mortgage rate? or even securing a mortgage if the stories are true about future mortgage rationing.

The one thing I do know about houses is that before you buy it, the price consumes your thoughts and as soon as you move in, the mortgage amount consumes them. Remember though, you're paying the mortgage for a lot longer than you're negotiating the price.

Mortgage rates are only low in the short term. Anybody buying now with a tracker or a 2 year fix is going to see their payments increase by a bigger % than any time previously when rates start to rise.

RenovationMan

There are some good longer term fixes available if you want some security. You can get a 4.75 fix for 5 years with a 20% deposit with Furness BS. Britania are doing a 4.19% 5 year fix but you'll need a 25% deposit.

You say that mortgage rates are only low in the short term, out of interest how would you define short term?

Harry_Powell

RenovationMan wrote: »

There are some good longer term fixes available if you want some security. You can get a 4.75 fix for 5 years with a 20% deposit with Furness BS. Britania are doing a 4.19% 5 year fix but you'll need a 25% deposit.

You say that mortgage rates are only low in the short term, out of interest how would you define short term?

You're going to struggle to find any FTB's who have a 25% deposit, especially down south. Most will have lower deposits, higher LTV ratios and higher rates and therefore will need to make their savings on the purchase price, not on the mortgage rate. Hence why so many are on here cheering down the market. Fair play to em, that's what I was doing until I bought last year.

In the context of a 25 or 30 year mortgage, I'd define short-term as 5 years, so by the time a current FTB has paid down his mortgage enough to get close to one of the 20%/25% LTV mortgage, the rates you quote will no longer be available and we'll be back to BoE rates in the 4-5% range. Your plan works for you, but not for everyone. You've fallen into the trap that many on here fall into where they think their own circumstances are everyone's circumstances.

IveSeenTheLight

bigheadxx wrote: »

Mortgage rates are only low in the short term. Anybody buying now with a tracker or a 2 year fix is going to see their payments increase by a bigger % than any time previously when rates start to rise.

There are 5 year fixes which are historically low.
Being able to secure these low rates for 20% of the standard duration of a mortgage is not to be dismissed.

bigheadxx

There is only one way for interest rates and that is up. Its now more likely that rates will remain at their current level until into the new year but will increase beyond that well into the future. Whilst a 5 year fix of 5% is low by historic standards rates may stay around this level for several years.

The real danger for interest rates is beyond 5 years where the consequences of QE may become evident and the UK will be seeking to control rising inflation in the years beyond that. In the short term it is likely that the government will want to inflate away some of its debt but it cannot make this too obvious, hence the "tough" cuts in spending.

For a hedged peace of mind bet I would personally be going for a 10 year plus fix sometime during the course of 2011.