First time buyers priced out...

Cleaver

Percy1983 wrote: »

So if prices go down I will be paying a higher rate of interest for the next 25 years?

Yes short term it may be slightly worse but overall a cheaper house with a higher rate of interest for the first few years is better than an over priced house.

Where did Julie say either of these things? She was just pointing out, correctly, that a cheaper ticket price for a house doesn't necessarily mean that the overall cost of the house will be cheaper. I presume by using the phrase ' doesn't necessarily' Julie is meaning that it could be cheaper either way, it all depends on future unknowns, and the main point she's making is that assuming a house price fall of 20% (for example) doesn't mean the cost of that house will necessarily be 20% cheaper for you overall.

chucky

Percy1983 wrote: »

Yes short term it may be slightly worse but overall a cheaper house with a higher rate of interest for the first few years is better than an over priced house.

good luck in trying to get yourself a mortgage!

julieq

The optimum buying point for affordability was in early 2009 with a tracker mortgage arranged in Sept/Oct 2008. Anyone fortunate to get that combination has just about ultimate affordability, with a tiny mortgage repayment. It'll average out over time in all probability, but a few years paying nothing is an enormous head start.

In fact it would have been far better to have taken that combination than to wait a few months for a further 10% correction (even had there been one rather than a bounce back), because at that time the available mortgage rates were high multiples of the available tracker based rates from just prior to the crash.

The race for a first time buyer is now to build a deposit and get into the market before everyone else, because as sure as eggs is eggs when they all get to the market en masse, prices will increase. There is already more strength in prices in the first time buyer sector than anywhere else.

Meanwhile rents are going up. If you're a dual income couple paying rent and attempting to build a deposit up, you'd be excused for thinking the world has stacked itself against you.

Cleaver

julieq wrote: »

The optimum buying point for affordability was in early 2009 with a tracker mortgage arranged in Sept/Oct 2008. Anyone fortunate to get that combination has just about ultimate affordability, with a tiny mortgage repayment. It'll average out over time in all probability, but a few years paying nothing is an enormous head start.

Whilst I know what you mean, it doesn't really matter all that much when you buy a house in the long term, does it? Over your 25+ year ownership you're probably going to see a couple of crashes and a couple of booms, interest rates at 3% and interest rates of 10%, periods when you're earning huge amounts of money and can overpay and periods when you're really struggling with no job and can barely get by. You'll probably have babies, make a fortune, lose some money, win some, lose some, get jobs you love, get jobs you hate. Pick a winning share, pick more losing shares. Have a mid-life crisis and start a business that doesn't work. See emerging markets appear then dissapear, see stock market crashes and see political events that affect your life. Bascially, 25 years is basically a really long time.

Obviously I'm not advocating paying loads of a house if you can get it cheaper in a few months, that would be stupid. I'm just saying that in 2020 or 2030 you will have been through so much that looking back at the ticket price on the house you bought in 2011 will show you that £20k here or there didn't really make all that much difference. It's the general goings on in your life that makes your house affordable or not over the long term.

When we bought our first house in 2003 the £552 monthly mortgage payment was a real stretch and the thought of overpaying, at least the first 18 months, was just laughable. It was quite a scary time, knowing that if one of us lost our jobs and couldn't get another we'd really struggle. Without sounding like a cocky pr*ck, we're now able to overpay by around £1,000 a month because our circumstances in life are a world away to how we were 8 years ago. We could find out tomorrow that both of us are losing our jobs, and our current very affordable house suddenly becomes rather less affordable. The ticket price starts to seem very irrelevant.

The_Fox_3

You don't half talk a load of garbage, and i have never seen anyone generalise as much as you. for someone who thinks they are and expert on menatl conditions i would read up a little on the subject of believing your own thoughts too much.

There is no race for FTB's, before this is all over they will be pleading for those without debt to come in and support, deposit or no deposit. just because you and your "boyfriend" over stretched yourself with debt it is just spitefull to get other youngsters to do the same because of your mistaken actions.

Horrible person!

Graham_Devon

julieq wrote: »

The optimum buying point for affordability was in early 2009 with a tracker mortgage arranged in Sept/Oct 2008. Anyone fortunate to get that combination has just about ultimate affordability, with a tiny mortgage repayment. It'll average out over time in all probability, but a few years paying nothing is an enormous head start.

In fact it would have been far better to have taken that combination than to wait a few months for a further 10% correction

While it's nice to see you have taken my issue with your tracker mortgages into account, and moved the timeframe back ...

You are now talking pure pot luck. Not something someone could have really envisaged and taken advantage of.

If we'd have known the month that the market was going to bottom out for that cycle, then fair enough. But if we'd have known that before the event happened, you wouldn't have got the tracker mortgage....as they'd have been wise to the future when setting out mortgage rates too.

Le_Chuck

julieq wrote: »

The optimum buying point for affordability was in early 2009 with a tracker mortgage arranged in Sept/Oct 2008. Anyone fortunate to get that combination has just about ultimate affordability, with a tiny mortgage repayment. It'll average out over time in all probability, but a few years paying nothing is an enormous head start.

In fact it would have been far better to have taken that combination than to wait a few months for a further 10% correction (even had there been one rather than a bounce back), because at that time the available mortgage rates were high multiples of the available tracker based rates from just prior to the crash.

The race for a first time buyer is now to build a deposit and get into the market before everyone else, because as sure as eggs is eggs when they all get to the market en masse, prices will increase. There is already more strength in prices in the first time buyer sector than anywhere else.

Meanwhile rents are going up. If you're a dual income couple paying rent and attempting to build a deposit up, you'd be excused for thinking the world has stacked itself against you.

I'll raise you 2002, when prices were less than half of what the are today & rates were also fairly low (base rate of 4%)

Cleaver

Graham_Devon wrote: »

You are now talking pure pot luck. Not something someone could have really envisaged and taken advantage of.

If we'd have known the month that the market was going to bottom out for that cycle, then fair enough. But if we'd have known that before the event happened, you wouldn't have got the tracker mortgage....as they'd have been wise to the future when setting out mortgage rates too.

I agree, and I think it relates to my post above. To a certain extent when you buy a house is largely irrelevant, at least in terms of mortgage rate and the price of the house. If I were a FTBer today, I'd be asking myself the following questions:

• Do I have at least a 20% deposit for the house I want?
• Am I buying a house which seems good value? By that I mean, not my own definition of 'good value' ("pah, that house on for £200k is blatantly only worth £100k...". I mean a house that is similar to 2005/6 prices, or isn't priced at top whack, street record price.
• Can I get a mortgage for 4% / 5% fixed for five years or so?
• Is my mortgage repayment 35% or less than my monthly pay?
• Am I ready to see my house go up and down in value over the next decade? Am I ready to face interest rates at 8%?
• Am I ready to see further falls of maybe 10% or more and just be happy that I've bought a house I love, at a rate I can afford that I'm in for the long term? Will I be comfortable seeing my house fall in value?
• Do I really feel that I want to buy a place rather than renting one? Do I know why I want to buy rather than rent?

If you can answer 'yes' to all of these, then buy a house. Stop worrying about price falls, stop trying to time the market and stop over analysing. You're owning something for decades and decades with hundreds of unknown factors, but you'll probably end up okay. If you answer 'no' to any of the questions, then don't buy a house.

Cleaver

Le_Chuck wrote: »

I'll raise you 2002, when prices were less than half of what the are today & rates were also fairly low (base rate of 4%)

As Graham has pointed out though, you never know what's round the corner. There were many predicting from 2002 onwards that house prices were due a crash. Hindsight is a wonderful thing.

chucky

Cleaver wrote: »

To a certain extent when you buy a house is largely irrelevant, at least in terms of mortgage rate and the price of the house.

all these people that are trying to buy at the optimum point to save a few thousand pounds are going to get one hell of a shock when they miss out by trying to be smart.