interest rates have gone up

fimonkey

Well it's making me re-think, as a potential FTB with a sizable deposit in the bank and looking to make a move sometime June-ish. Now on the back of this (and other predicted) rises in interest rates I'm gonna put my plans to move on hold for a bit and look into renting whilst I put my deposit into a nice fat savings account. ..... Not rocket science (I came up with it all by myself) so am sure other FTB's thinking the same... SO.... Surely that will have an effect on the housing market? - Is it likely to be significant though? Comments welcome!

albacore1854

Depends what you are looking to buy. If its a place that you will be happy in for ten years or more then just get a long fixed rate, and you can ride the storm. Its only if you have an unplanned sale that you are exposed, if you can keep things ticking over it doesn't matter if the interest rate is 5%, or 15%.

HelpWhereIcan

albacore1854 wrote:

Must be a nice area if you can buy SOME repo's for 100K.

If a buy to let investor has a 100k lump sum, that can work out as a 15% deposit on 7 £95,000 properties. In some areas around here a repo with good rental potential can go for 60k so his 100k will be the deposit on 11 properties in theory.

albacore1854 wrote:

Or if it is, is your mate of same opinion as me that when it starts this crash is going to pale the 90's into insignificance, in terms of the misery it will inflict on those that have taken on larger debt in whatever manner.

Favoured buy to let properties round here are 2-3 terraces/semis which are between 95-120k at the mo (depending on area). I do not think he expects a dramatic crash, just a significant correction giving him a property (which he retains for the long term) at 20% less than he pays now. No quick back to backing or redevelopment for him (he does that with off plan).

Not every area is as overpriced as some in the South East, although I think first time buyers struggle in all areas due to price/wage differentials.

backtomum

xtratime wrote:

5.25% isnt that bad.

My first morgage 18years ago was 15.4%.

I remember it well - but then again I only had a 25k mortgage then. What is the average mortgage now - £140k? What interest rate would hurt at that level of borrowing - 7%?

albacore1854

What do these places rent out at?

albacore1854

backtomum wrote:

I remember it well - but then again I only had a 25k mortgage then. What is the average mortgage now - £140k? What interest rate would hurt at that level of borrowing - 7%?

I had 750K at 17%, and by christ did that hurt

movieman

If a buy to let investor has a 100k lump sum, that can work out as a 15% deposit on 7 £95,000 properties. In some areas around here a repo with good rental potential can go for 60k so his 100k will be the deposit on 11 properties in theory.

If a lot of properties are being repoed, banks will expect a heck of a lot more than a 15% deposit for a BTL loan, to cover them against costs and negative equity if they then have to repo that. I believe that traditionally they've expected more like a 50% deposit until recent years?

In any case, if prices are dropping, who's going to rush to buy a depreciating asset? They certainly don't seem to have been doing so in America where prices have dropped dramatically in some areas.

Do you honestly think Bulgarian, Romanian or people from Huddersfield can really afford our houses.

And don't forget that record numbers of people are leaving Britain, and most of them are either taking large amounts of money with them (typically gained by selling a house they bought years ago for a small fraction of the price) or skills that would have allowed them to 'afford' a house in the UK.

We're exporting rich and/or skilled people and importing poor and often unskilled... probably not a good long-term plan.

grownupgirly

Dont mean to gloat...I have just got REALLY lucky this week- the offer documents came through today and I signed and sent it off immediately. Phew. ....I wonder if that offer is still on for anyone else?...

md_14uk

Addiscomber wrote:

In two words, almost certainly.

or definitely maybe!!!

grownupgirly wrote:

Dont mean to gloat...I have just got REALLY lucky this week. I got a 2 year fixed mortgage in April 04 at 5.19% with HSBC, then procrastinated for AGES about gettting a new mortgage once it had come to an end last April,(meantime, paying 5.5 then 5.75%!), but...last Friday I saw a 'sale' offer in HSBC of 5 years fixed at 5.17%, fee-free, so jumped at the chance (saved the hassle of lots of paperwork of moving to another company) - the offer documents came through today and I signed and sent it off immediately. Phew. ....I wonder if that offer is still on for anyone else?...

Me too! Completed on a house today that I first saw in August 2006, the fixed rate is for two years at 4.6%!!!!!!!!! Shame I have another one elsewhere for 90k that's on a tracker!