What do you think?

Percy1983

I agree that 50% drops aren't going to happen, but the point of a lessor total mortgage at a higher rate is the better situation to buy into.

IveSeenTheLight

Percy1983 wrote: »

I agree that 50% drops aren't going to happen, but the point of a lessor total mortgage at a higher rate is the better situation to buy into.

The theory is true, but in reality, it's not an option.

I'd like to buy at 1996 levels if I could.................
I'm not going to be successful if I wait for that to happen regardless what the rates are.

There are two things you should do with regards interest rates if you are considering taking a mortgage.

1. Factor in higher rates and what you can afford
2. Consider fixing to take away the risk for an agreed timeframe.

Right now, people can buy relatively cheaply and have the option to fix for a considerable time (someone posted 4.69% 5 year fixes if I recall correctly the other day)

You can fix at low rates to mitigate against rises, it would probably not be prudent to choose to fix if rates were 'hefty'

Percy1983

I agree you just have to make the best call with the options given at the time, personally I can withstand rates up to 22% and have got a 5 year fix.

sillysid

people have short memories...we bought our house in 1990'sh - IR 13%, and went up to 17% - good old mag thatch, even raised them twice in one day...within 3-6months of moving in, we couldn't give the place away and price dropped 30-40 thousand...

We were here a decade before we could sell at the price we paid it..

then the market went mental as we all know...all very well saying your house is worth 400, 000, but who on earth could afford the mortgage?

Our mortgage repayments now are less than what they were when we moved in over 20 years ago - endowments have failed tho, and investments to cover the shortfall were obliterated in 2008...

now, even with partial repayment vehicle to cover shortfall, it is still less than initial mortgage repayments...we must've been barking mad, my husbands salary at the time only covered the mortgage, I worked and he had a second job...

I cannot imagine sleeping at night if I was buying a house at todays prices, wages have not increased accordingly, and every other necessary utility is off the richter scale nowadays in proportion to income.

I don't know how this mess can be fixed, not enough affordable private or social housing, wages too low, so income is subsidised.
Ideally a massive increase in wages in line with inflation, but what employer can afford that?

IveSeenTheLight

sillysid wrote: »

people have short memories...

Our mortgage repayments now are less than what they were when we moved in over 20 years ago

now, even with partial repayment vehicle to cover shortfall, it is still less than initial mortgage repayments

I wonder, in your experience of the high interest rates, how do you think your position would be now if you hadn't bought.

You repayments are less than 20 years ago you say.
What's rent for a comparable home.
It'd be interesting to consider if you think you are better off despite high rates in the past or else you think you'd have been better off renting.

ukcarper

sillysid wrote: »

people have short memories...we bought our house in 1990'sh - IR 13%, and went up to 17% - good old mag thatch, even raised them twice in one day...within 3-6months of moving in, we couldn't give the place away and price dropped 30-40 thousand...

We were here a decade before we could sell at the price we paid it..

then the market went mental as we all know...all very well saying your house is worth 400, 000, but who on earth could afford the mortgage?

Our mortgage repayments now are less than what they were when we moved in over 20 years ago - endowments have failed tho, and investments to cover the shortfall were obliterated in 2008...

now, even with partial repayment vehicle to cover shortfall, it is still less than initial mortgage repayments...we must've been barking mad, my husbands salary at the time only covered the mortgage, I worked and he had a second job...

I cannot imagine sleeping at night if I was buying a house at todays prices, wages have not increased accordingly, and every other necessary utility is off the richter scale nowadays in proportion to income.

I don't know how this mess can be fixed, not enough affordable private or social housing, wages too low, so income is subsidised.
Ideally a massive increase in wages in line with inflation, but what employer can afford that?

Did you house really drop £40k in six months. The average house price was £59.5k at the beginning of 1990 and £55k at the end the biggest yearly drop in the 90s was 10%.

According to Halifax in relation to earnings house prices are about the same as 1990.

BobQ

homelessskilledworker wrote: »

Here is a question/scenario for everyone:)

Just say your monthly mortgage today is £1000 for arguments sake on a property that is worth £xyz purchased last month.

For the rest of the year interest rates double

Now the the property that was worth £xyz has halved in value(approx), but for anyone else buying that same property today the mortgage payment would still be £1000 monthly(no difference).



But my question is, would the property market spring into action and more house sell?

Have you considered a career in GCSE question writing?:)

I think those selling property in this bizarre market would probable take their house off the market and wait till there was more clarity in the market conditions.

BobQ

Niv wrote: »

What a pointless thread, homeless you have reached a new low (and that is saying something), may as well ask, aliens have landed, do you think your insurance will cover you if they blow your house up!

This is a far more relaistic scenario to debate!

sillysid

1've seen the light...

Timing! If i had bought 6months later I'd have had a 30k less mortgage, or I'd more than likely have bought a bigger house, 20 odd years later it doesn't matter. Psychologically it is tough to be in negative equity for a decade.

Rent comparable to my mortgage is approx 1/3 - 1/2 more expensive.

Regarding high IR's - suppose in retrospect it helped, as our budget had to incorporate that from word go, when things calmed down we went on a fixed rate for 5 years for peace of mind. Then kids (now young adults) come along, expenses rise, so suppose it was a marginal buffer.

If they had been lower what would it have meant? Less work. Maybe more materialism - I'd have been far too full of optimism to save to pay of my mortgage and didn't know about the failed endownments.

If I was to do it again, even tho I've effectively had shared ownership for 25 years, I'd still have bought, we were encouraged to buy, remember maggie thatcher's ethos - she would reward those who worked hard - !!!!!!!!, but hey ho. I'm near at end of my sentence, warts and all, if god spares, a few years and I'll be 'rent' free...

UKcarper -

Yes we did lose that much in such a short time, it was a new build and 6 weeks after we moved in the builder went bust. The new builder sold them off much cheaper.

Plus I think the 'average' drop in prices depended on what you bought and where you bought.

cheers

ukcarper

sillysid wrote: »

Yes we did lose that much in such a short time, it was a new build and 6 weeks after we moved in the builder went bust. The new builder sold them off much cheaper.

Plus I think the 'average' drop in prices depended on what you bought and where you bought.

cheers

Of course the average fall is just that average .

Sounds like you were unlucky but then new builds always seem to be more expenses and you are prone to losing more when prices fall.

Prices in elation to wages are pretty much the same as the were in 1990. High interest rates obviously making mortgage repayments higher so even though gas and electric are more expensive overall I would suspect you would be better off now. Not the best time to be buying in both cases.