Interest rate increase wrong time to buy?

raq

ossie1 wrote:

Simply ask yourself the right questions?

Do you love the person you are with and want to live with them?

If the answer is yes, do you want to live in rented accomodation for the rest of your life or do you want to own your " dream home" which you both can call your own.

Do you know the area you want to live in and do the house prices seem fair for what you will be paying?

Do you intend to live there for a number of years, thereby effectively minimising the risk of negative equity being caused by a house price crash? Remember, no-one knows what will happen. No expert thought there would be a rate increase last week but there was.

Buying a house is scary but it is also one of the most exciting things that you can do, particularly if it is with the person that you love ( Been there, done that ). You are only on this planet once ( can't prove otherwise ) so take a chance and make an impact on this world. Do what your heart desires and reach out and grab it before life passes you by.

Enjoy........

My husband always states this when I have a moan about the cost of living. We started of with a £36k mortgage 10 years and moved to a much better area 2years ago. Don't regret the move at all as it has everything a family could ask for but I do sometimes thing oh I was only paying £350 a month then and now I pay £700.00. ( our house got £75k equity in it )

You only get what you pay for .

pioneer

I can remember walking around in 1995 thinking "what was that all about; the whole *loody lots worthless", probably referring to the Thatcher Brainwashing go get it; yuppie years. I can remember Banks talking of irresponsible lending multiples and how they would never let it happen again. I can remember constant news, documentaries of how distressed people were, how much money they lost and how they would spend the rest of their lives paying for rabbit hutches they didn't own, even handing back the keys and walking away from it didn't mitigate the debt.

Equate your Life to how many years you want to give away for your rabbit hutch.

£100,000 of hutch = £100,000 (Mort) + £100,000 (Int)

However to get the £200,000 you will have to pay Tony and Gordon Too & Eat & god forbid do something that you want to do like LIVE and have a life. Therefore you will have to earn £400,000 gross for your hutch; by the way that’s 20 years at 20K/Year and you have only borrowed £100K; oh and by the way don't get sick, divorced or bored as you will only have yourself to blame.

Ask yourself a question, look at a graph, does the market have more upside or down ? Are you prepared to be snared and can you do the time ?

meanmachine_2

ossie1 wrote:

Firstly, banks do not have insane lending multiples. Their multiples and affordability calculators with which they ascertain an applicants "maximum loan" are based upon their attitude to risk whilst still following the guidelines laid down by the FSA to be a responsible and prudent lender.

Not all banks are the same - whilst they may not seem to care, they are not all imprudent in what they do or how they do it.

This is meant to be a consumer revenge site.

Apologists for amoral profiteering banks really don't fit with the ethos of the site.

Do you even know who Martin Lewis is?

ossie1_2

meanmachine wrote:

This is meant to be a consumer revenge site.

Apologists for amoral profiteering banks really don't fit with the ethos of the site.

Do you even know who Martin Lewis is?

Whilst I don't disagree totally with your view on what this site is meant to be about, I have a couple of points for you.

I thought that it was about people helping other people. Whether this is to save money, make money, reclaim money, get advice or make suggestions. Didn't realise it was about revenge.

Understanding the way in which an organisation works and the reasons behind it does not make you an apologist. Knowledge is power and advice given or comments made with little or no knowledge can be carefree, dangerous and in some cases improper.

As I am aware of who Martin Lewis is, I thought that this site was set up to help the consumer. Didn't realise it was just a forum for slagging off big institutions.

movieman

Firstly, banks do not have insane lending multiples.

LOL. Banks have been lending people huge amounts of money on 'lie to buy' mortgages... amounts that would have been considered mind-bogglingly absurd only a decade ago, at a time when interest rates are rising back to historically normal levels and bankruptcy has never been easier or come with less social stigma.

In a couple more years they'll be seeing record bad debts as people choose to walk away from vast amounts of negative equity through bankruptcy, and claiming they never realised that lending ten years of income to someone who lied on their application form was a bad idea.

toonfish

meanmachine wrote:

This is meant to be a consumer revenge site.

Apologists for amoral profiteering banks really don't fit with the ethos of the site.

Do you even know who Martin Lewis is?

who exactly is the consumer getting "revenge" against by deciding whether or not to buy a property?

talksalot81

toonfish wrote:

who exactly is the consumer getting "revenge" against by deciding whether or not to buy a property?

The lenders and the system beneath them!

mk1mini

Having read this thread, whilst I believe there are some good comments, I feel I would like add my 2p worth.

At present there is high migration into this country, from E.Europeans. This is putting a demand on the housing market as a whole. This is driving the price increase in housing stock (both rental and sales). There are no figures to show this trend decreasing (in fact to the contrary with Romania, and Hungary joining the EUand Turkey still wanting to join).

Another point worth mentioning is; if you are buying to live in the property the price is all relative. Once you are 'on the ladder', if the house prices drop, the next step up is smaller.

For Example:
At current prices your current house = £100k, and the new house is £150k so therefore £50k difference.

If the housing market drops by 10%,your current house = £90k, and the new house is £135k so therefore £35k difference. This is a £15k saving, on price difference. But as you have lost £10k on your actual house price, the difference is only really £5k.

I hope that makes sence. So a drop in housing prices can be beneficial if you are moving up the ladder. It is only when you are leaving the ladder for any reason, house price drops arent beneficial.

MickKnipfler

Don't forget that 34.276% of statistics are made up on the spot!

talksalot81

mk1mini wrote:

So a drop in housing prices can be beneficial if you are moving up the ladder. It is only when you are leaving the ladder for any reason, house price drops arent beneficial.

This may well be the case for someone with significant equity in the property but it is nowhere near a simple if that is not the case. For anyone with a 100% mortgage they will suddently find themselves in negative equity which means they cannot move, they cannot remortgage (thus repayments could become enormous) and are basically stuck. The only way out is to sell or be reposessed - neither of which is beneficial!