Why are posters so Obsessed with House Prices?

FTBFun

davilown wrote: »

Who is missing out on the record low interest rates? Nobody can get any near 4.5% without 35%+ deposit and with 10% you're looking at 6%.
Most people, who are wanting to buy, are just saving as much as they can in order to get the bigger deposit.
3 years ago, I could get a 125% mortgage at 5.8% fixed.

I have a 4.29% fixed for 2 years with a 15% deposit.....

FTBFun

Chaos_A.D. wrote: »

By looking at your username you have recently bought, when you bought did you factor in maybe 7-8% rates over the lifetime of your mortgage, did you buy on your own or with a partner ? If you bought with a partner did you factor in unemployment, split up, divorce, death, children etc...

You may well have done this, but I bet hundreds of thousands haven't, and with wage freezes, cuts and below inflation settlements things could turn nasty very quickly as it already has done for millions of 'zombie households.'

I bought on my own, and also have budgeted that I can afford it still even if interest rates double (at least).

Your point is valid though, and i'm glad that lending criteria have tightened up somewhat.

borntobefree

Chaos_A.D. wrote: »

We know that paying a lower IR on a slightly more expensive property would be cheaper in the long run, that's obvious. The issue today is unless you can get a 25 year fix at 2% (you obviously can't) there is a real risk that in the short to medium term house prices are likely to fall, stagnate at best and IR's are almost certain to rise over that 25 year period.

Meaning, the likely outcome of buying now is the worst of both worlds.

Well to be honest, I wouldn't know that "You"/ "posters on this board" knew that at all.

If interest rates are likely to rise what exactly are you waiting for? Especially if you believe house prices are going to stagnate?

Do you know how much house prices have to fall to make the "wait" profitable? I never see any figures on here or HPC.

I have no idea how your post leads you to the concluson buying now would lead to the worst of both worlds - since with a base rate of 0.5% it's hard to see how mortgages will get cheaper.

chucky

borntobefree wrote: »

Well to be honest, I wouldn't know that "You"/ "posters on this board" knew that at all.

If interest rates are likely to rise what exactly are you waiting for? Especially if you believe house prices are going to stagnate?

Do you know how much house prices have to fall to make the "wait" profitable? I never see any figures on here or HPC.

I have no idea how your post leads you to the concluson buying now would lead to the worst of both worlds - since with a base rate of 0.5% it's hard to see how mortgages will get cheaper.

this is another one that needs explaining...

if interest rates are going to rise it must be because of inflation... which is a reasonable argument.

what isn't a reasonable argument is if inflation is on it's way - will prices rise for all assets and only property will be the only asset going downwards in value. their argument doesn't really hold much water...

Graham_Devon

borntobefree wrote: »

Well to be honest, I wouldn't know that "You"/ "posters on this board" knew that at all.

If interest rates are likely to rise what exactly are you waiting for? Especially if you believe house prices are going to stagnate?

Do you know how much house prices have to fall to make the "wait" profitable? I never see any figures on here or HPC.

I have no idea how your post leads you to the concluson buying now would lead to the worst of both worlds - since with a base rate of 0.5% it's hard to see how mortgages will get cheaper.

If people could just "buy now" we wouldn't even be having this discussion.

The issue is that people, in general, especially new families and those new to the housing market, simply cannot afford the price in the first place, regardless of the interest rate.

If people could just buy now, as you suggest, there would be no issue to talk of.

As for interest rates, again, for new people coming into the market, they are low, yes, but not majorly low...not when you base it on the last decade.

I bought in 2006, my fixed interest rate was 5.25% for 2 years, 90% LTV.

Move on 4 years....lowest base rates in 300 years. Having a look now, best fixed rate on a quick search is Yorkshire BS, 90% LTV, 4.9%.

The low base rate has only made a difference to those with current mortgages, not in a fix.

The interest rate for anyone buying now, is just 0.3% cheaper than what I bought for in 2006. So we save a tiny sum of money. Apart from the fact the fee is now £995 for the mortgage, and I didnt have a fee at all.

It's not as clear cut as you are trying to make it. Not for those buying.

Blacklight

Based on the percentages that are coming out of various indexes at the moment you're basically gambling that prices are going to fall for more than 40 consecutive months and during that time interest rates aren't going to increase any more than 2%.

Then there's the rent to pay...

Blacklight

Graham_Devon wrote: »

Stuff

People can buy Graham. If they couldn't then the whole market would be at a standstill.

Two average earners buying the average priced home with a Post Office 90% LTV at 5.29% variable is about 30% of their combined net income.

At 8% interest it's 40% of their income. How much would they be paying in rent?

What's the problem? I don't accept the argument that 'most people are priced out' at all.

[edit] actually they do 5.45% 2yr fixed for first time buyers with a 10% deposit.

Thrugelmir

chucky wrote: »

this is another one that needs explaining...

if interest rates are going to rise it must be because of inflation... which is a reasonable argument.

The BOE will use interest rates to control inflation when the time is right.

The market itself will determine interest rates. As we're leaving the days of the lowest capital ratios held by the banks on record. To a plain last seen around 30 years or so ago at the very least. The BOE can freewheel a fair amount as the lack of available credit will raise the cost of money over time. A natural rise will be slow and have a self adjusting effect on asset prices.

LilacPixie

I think everyone here would like to pay as little as possible for their home over the course of a mortgage. I know I certainly would.

I would move tomorrow but I don't have a big enough deposit for the home type I want. TBH I am not priced out the market I just have tastes beyond what is reasonable for my/our earnings at the moment.

housesitter

FTBFun wrote: »

I bought on my own, and also have budgeted that I can afford it still even if interest rates double (at least).

How nice that he spotted your username and assumed you were an idiot craving to get on the housing ladder.
Rather than the quite obviously savvy person who found a good rate in the market full of bad ones and didn't previously rush into the market with a lower LTV.

Your point is valid though, and i'm glad that lending criteria have tightened up somewhat.

Sadly not enough. I am still aware of people desperately trying to jump on the wagon who really need to rent and save. Yet this attitude of their right to own property still prevails even though it's apparently obvious they cannot afford to yet.

eg: Someone I know of has just gone 50:50 shared equity into a £60K house and is living on freecycle trying to furnish it so they can afford the rent every month.
90% mortgage. The deposit and fees went on the credit card.
A disaster waiting to happen.