House prices suffer biggest drop since 2009 - Nationwide -2.6%

sabretoothtigger

The point of my post is that I personally don't feel that the drops over the last few years were worth the wait for many people.

Thats pretty much the case. The interest rate drops far outweigh the price differences for most long term debtors.
Its especially true if possible to fix the rates, otherwise people should expect to be paying twice or three times ? as much every month at some point and thats the basis to consider buying or not.

Generali

the_flying_pig wrote: »

I’ve hardly looked at the methodologies at all, much less given them any serious thought, but I suspect that the Halifax & NW methods amount to thesame thing basically. “multivariate regression analysis” and “mix adjusted average” sound like much the same thing.

Halifax are basically looking for the average house price for a ‘typical house’ – say a 3 bed house, but rather than only looking at sales of 3 bedhouses, they look at the sales of [say] 2 & 4 bed houses as well, & make inferences about the price of 3 bed houses based on changes to the 2s and 4s as well as just the 3s. NW sounds just the same, when it boils down to it. Both will move about it a bit given the small sample sizes etc.

They are similar but AIUI, the crucial difference is that the Halifax measurement becomes unreliable sooner as house sales fall. If you look at a graph of HBOS vs Nationwide MoM figures you can see the Halifax has become much noisier than the Nationwide ones.

RenovationMan

Zero_Sum wrote: »

but you said bought 12 months ago, so why would you average over the lifetime? 12 months ago, you'd only use the interest loaded 1st year, which will be nowhere near 4%

sorry if this has already been pointed out, as I've not read the whole thread.

You'd still have to pay that front loaded interest whether you bought a year ago or today, so you'd still be 4% further on in your mortgage than someone buying today.

Graham_Devon

RenovationMan wrote: »

You'd still have to pay that front loaded interest whether you bought a year ago or today, so you'd still be 4% further on in your mortgage than someone buying today.

You're no quitter Reno. That's for sure.

The above is a beautiful dance.

RenovationMan

Graham_Devon wrote: »

RenovationMan wrote: »

You'd still have to pay that front loaded interest whether you bought a year ago or today, so you'd still be 4% further on in your mortgage than someone buying today.

You're no quitter Reno. That's for sure.

The above is a beautiful dance.

I keep asking this Graham and you keep avoiding it, is my statement above wrong?

You can keep asking the same question as many times as you like with your various sockies, but the answer is always the same and it's always right. Someone who bought a year ago will be 4% further on in their mortgage than someone who bought today. Simples.

RenovationMan

RenovationMan wrote: »

I keep asking this Graham and you keep avoiding it, is my statement above wrong?

As expected, Graham ghosts out of the conversation...


... and yet I feel that he will come back into the conversation one way or another...



Note: It looks like that sockie is frothing at the mouth, very appropriate for Graham! :rotfl:

HAMISH_MCTAVISH

Oh for heavens sake you lot.....

You're both right, and you're both wrong.

Reno man is right in saying that each year of a mortgage that passes, you're 4% closer to paying it off.

And in terms of the total amount that you will have to pay to a bank over 25 years, you do indeed pay 4% of that every year.

The pedantic bears are right in saying that because of the way interest is calculated in repayment mortgages, more of the interest component rather than capital component is paid in the first few years. (although if you have an I/O mortgage and repayment vehicle, that's largely irrelevant)

But because of low rates, the difference for many people now is not actually that great,because the lower the interest rate, the higher the percentage of capital that is repaid the first few years.....

If someone had taken a fairly standard high street mortgage at base plus 0.5% for 2 years, reverting to the Nationwide or Lloyds/C&G SVR of base plus 2%, on a 100% mortgage for around the average house price in 2007 of 190K, from one of the major banks such as Nationwide or Lloyds, the situation would be as follows:

Initial mortgage balance = 190K

Current mortgage balance = 160K

Approximate capital paid per year for the first 5 years = 3.3% (16.5% total so far)

Approximate average interest paid for the first 5 years = 2.25% per year

Now compare that against average house prices and rents.....

Average house price fall from peak (Nationwide) = 11%

Average rental yield = 5.5%

ICBA working out the exact figure now, but for those on even half decent pre-crash tracker/SVR rates you'd now have been moderately better off buying at peak than deferring purchase and renting since.

For those on excellent pre-crash trackers of base plus 0.5% for life, you'd be well ahead by purchasing, even at peak, than renting since.

And for those on fixed rate deals, you'd probably be slightly worse off by purchasing at peak than waiting and renting since, but even then it's close if it was only a two year fix that reverted to a half decent SVR.

Based on average prices and rental yields.... Individual results may vary.;)

CRASH_BANG_WALLOP

its good to see that house prices are still falling. long may it continue i say

Mr._Pricklepants

RenovationMan wrote: »

As expected, Graham ghosts out of the conversation...


... and yet I feel that he will come back into the conversation one way or another...

...and as predicted by Renoman, his sockie miraculously shows up...

CRASH_BANG_WALLOP wrote: »

its good to see that house prices are still falling. long may it continue i say

Dan:_4

CRASH_BANG_WALLOP wrote: »

its good to see that house prices are still falling. long may it continue i say

I hope so to, but im not holding my breath.