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Debate House Prices
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Land Registry Prediction
Comments
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No probs.It would be good if you could support your assertion that typical mortgage rates have been 7.5% over the last 11 years.
http://www.housepricecrash.co.uk/graphs-base-rate-uk.php
SVRs range between 9% to 5%, outside of the unprecedented emergency base rate blips of the last couple of years.
According to your data set, over the last 10 years the mean variable rate has been 5.48%, the median has been 6% and the mode has been 2.5%.
In the 7 years prior to August 2008, the mean variable rate was 6.54%, the median 6.5% and the mode 6%.
I'm not sure how you get a typical mortgage rate of 7.5% from those numbers. Especially when, typically, people don't pay the SVR.0 -
Ha, ha. Sorry, I was having a rest but that's beyond funny.
Geneer is using the HPC table where they have simply added 2% onto the base rate every month for the last 14 years as being the authoritative source for the Typical Variable Mortgage Rate. Looks like an Excel formula used to populate that cell.
Great research Geneer. :rotfl:
Incidentally the argument is flawed in concentrating on SVRs. I have had loads of mortgages and they are hardly ever on SVR - can't be bothered doing the research but I expect you will find that the mortgage tarts were continually swapping one fix for another or one tracker for another.
Couldn't stay away eh pimp.
You're resolve crumbled I see. Par for the course.
The HPC table seems like a decent rule of thumb.
If you can ascertain I better source I'm all ears.
Sadly you have nothing to say about Hamishes selected 5% mortgage rates. Which, it transpires, is lower than the typical base rate for the last 11 years.
Which doesn't do much for your credibility.0 -
According to your data set, over the last 10 years the mean variable rate has been 5.48%, the median has been 6% and the mode has been 2.5%.
In the 7 years prior to August 2008, the mean variable rate was 6.54%, the median 6.5% and the mode 6%.
I'm not sure how you get a typical mortgage rate of 7.5% from those numbers. Especially when, typically, people don't pay the SVR.
Do you know how Hamish got 5% then? :rotfl:
Anyway, I would suggest you need to neglect the last 2 and a bit years of emergency base rates, which I see you have done.
So your 6.54 seems a reasonable number then.
Ok.
£150000 mortgage at 6.54% interest rates you will pay a total of £304969 over 25 years.
Wait a few years for a 20% fall in house prices. Okaydokay.
For a 120000 mortgage you will pay 243975. Combine that with saving in capital sum, and youve saved £80994. Nice!
A saving which will cover 11.2 years of rent (assuming rents of around 600PCM).
So there you have it. Waiting a few years for reduced prices does in fact result in significant savings.
Most of which will be in the initial years of the mortgage term.0 -
Do you know how Hamish got 5% then? :rotfl:
Anyway, I would suggest you need to neglect the last 2 and a bit years of emergency base rates, which I see you have done.
So your 6.54 seems a reasonable number then.
Ok.
£150000 mortgage at 6.54% interest rates you will pay a total of £304969 over 25 years.
Wait a few years for a 20% fall in house prices. Okaydokay.
For a 120000 mortgage you will pay 243975. Combine that with saving in capital sum, and youve saved £80994. Nice!
A saving which will cover 11.2 years of rent (assuming rents of around 600PCM).
So there you have it. Waiting a few years for reduced prices does in fact result in significant savings.
Most of which will be in the initial years of the mortgage term.
Is an SVR a typical mortgage rate?0 -
Sadly you have nothing to say about Hamishes selected 5% mortgage rates. Which, it transpires, is lower than the typical base rate for the last 11 years.
Which doesn't do much for your credibility.
Errm, what is the typical base rate for the last 11 years?
Clue: you can determine it from that HPC table...0 -
Anyway, I would suggest you need to neglect the last 2 and a bit years of emergency base rates, which I see you have done.
So your 6.54 seems a reasonable number then.
£150000 mortgage at 6.54% interest rates you will pay a total of £304969 over 25 years.
Wait a few years for a 20% fall in house prices. Okaydokay.
For a 120000 mortgage you will pay 243975. Combine that with saving in capital sum, and youve saved £80994. Nice!
A saving which will cover 11.2 years of rent (assuming rents of around 600PCM).
So there you have it. Waiting a few years for reduced prices does in fact result in significant savings.
Most of which will be in the initial years of the mortgage term.
We need to neglect the last two years and a bit of emergency interest rates? Why's that?
If someone decided not to buy in 2005, then decided not to buy when prices came down, then decided not to buy when prices went up and, in 2011, still hadn't purchased how would they calculate the financial wisdom of this decision?
For a start they wouldn't use 7.5%, or to be honest 6.54%, as a realistic starting point. Certainly the low rates homeowners are enjoying now cannot be just overwritten with one that is 3 x higher just to make the calculations look better. Try 3.85%.
If I'm this person who didn't buy in 2005 I'd have to look at the rent paid. Say 6 years at £600/ month = £43,200. Then I'd take the average house price now vs. then. If it was Scotland then a £150,000 property now was worth a few pounds under £120,000 in Q1 2005.
So far this adventure has cost me £73,200.
Then I'd look at what I could have done instead i.e. purchased for £120,000. Let's assume it's 100% mortgage because I could've got one in 2005 and I'm paying 6.49%. Six years later I'm in a house:
a) worth £30,000 more
b) have a remaining mortgage of £106,000
c) have shelled out a total of £58,284 in interest and capital
If I was the person above I'd have to admit that it hasn't worked out very well and I'm still paying rent and still waiting for a 20% fall.
Obviously everyone's situation will differ but the statement "So there you have it. Waiting a few years for reduced prices does in fact result in significant savings" should say "may" result in savings "if" waiting leads to reduced prices.
The longer it goes on the worse it gets and these figures are based on a pretty much worse case on the buying side and fairly cheap rent.0 -
We need to neglect the last two years and a bit of emergency interest rates? Why's that?
Because it would be somewhat unrealistic to project what are indeed emergency rates across the next 20 to 25 years.
If someone decided not to buy in 2005
Who mentioned 2005?0
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