Buy now or wait?

mystic_trev

sarah_elton wrote: »

EDIT: Also, if +0.50% is 12:1, and not +0.50% is 14:1, you always win. Put £1 on each, and you win either £12 or £14 for an outlay of £2. Someone must have made a mistake with their quoted odds. Either that or I'll be putting £100 on each of the above tonight.

Yep - It's possible in certain circumstances which is why some people here do "matched betting" and make money, albeit small amounts.

Here's the thread

http://forums.moneysavingexpert.com/showthread.html?t=325861

Hope that helps.

mystic_trev

thesaint wrote: »

So if interest rates were to do anything other than rise 0.5% I would win £280, is that correct(£20 stake)? I will decipher this betting blindness and put down some money if this is the case.

NO - Betfair is a "Betting exchange" So you are exchanging bets against another person (persons) It's really a case of DYOR

kingkano

thesaint wrote: »

Sorry for hijacking this thread.:o

I clicked on your link, clicked sports, but can not see 'financial bets'.

I knew there is a reason I don't gamble:mad: .

So if interest rates were to do anything other than rise 0.5% I would win £280, is that correct(£20 stake)? I will decipher this betting blindness and put down some money if this is the case.

No sorry. Not sure how that poster gets 14:1 exactly.

If you put a £20 stake in the lay side, you would win £20 if its anything but a 0.5% raise. If it IS a 0.5% raise, you would lose £280 to the other person. Basically you are the bookie offering the 14:1 in this case.

pricedout_1

Tiger_greeneyes wrote: »

Mystic Trev - that's my opinion too - if it's going to be your home, then you need to look at property as a long-term investment. As I said above, you've still got to live somewhere so it makes no difference whether you're in rented or own if the property prices are going to dip.

If that's true then what's the point in buying into a depreciating asset? May aswell rent in that case and let a landlord take the hit.

Personally I am waiting to see how far up IR's go. As long as inflation continues to rise the BoE will be forced to continue raising IR. Who knows how far they will go up? If IR reach a peak and start going down again then the risk of house prices tumbling will be reduced making it safer to jump on the ladder, but as long as IR are heading in the wrong direction the risk is there. Don't forget, "affordability" is the new lending criteria, not multiples of income, so prices are now more susceptible to IR fluctuations.

wibble68_2

hughgallagher wrote: »

Personally I am waiting to see how far up IR's go. As long as inflation continues to rise the BoE will be forced to continue raising IR. Who knows how far they will go up? If IR reach a peak and start going down again then the risk of house prices tumbling will be reduced making it safer to jump on the ladder, but as long as IR are heading in the wrong direction the risk is there. Don't forget, "affordability" is the new lending criteria, not multiples of income, so prices are now more susceptible to IR fluctuations.

At the moment a 6% base rate seems to be the higher end of predictions.

Many analysts are now suggesting that the BOE forecast for lower inflation by the end of the year is a bit optimistic.


OP,

As a guide, if you can't afford a mortgage on 1 - 2% higher than current rates, then don't buy.

Tiger_greeneyes

hughgallagher wrote: »

If that's true then what's the point in buying into a depreciating asset? May aswell rent in that case and let a landlord take the hit.

Simple - it's my home. The prices can do what they like - I'm not going to move for at least ten years. I'm not going to pay someone else rent for ten years 'just in case'. I like the stability of having my own front door.

If it was for an investment, then I'd think twice.

pricedout_1

Tiger_greeneyes wrote: »

Simple - it's my home. The prices can do what they like - I'm not going to move for at least ten years. I'm not going to pay someone else rent for ten years 'just in case'. I like the stability of having my own front door.

If it was for an investment, then I'd think twice.

ok, well that's good for you, but the original post was not about you it was about whether or not to buy now as a FTB. Your advice was along the lines of "buy now anyway because it doesn't make a difference if prices dip". I am saying that that advice is wrong as long as inflation and interest rates are rising because the further up they go the greater the risk of negative equity in a few years time. Then you are stuck unless you fund the difference to move up the ladder in say 3,4,5 years time. IMO we are finally approaching a critical point in the current housing market cycle and we won't know untill then end of the year or even well into 2008 what the effects of raised IR,inflation, HIPS etc will be.

The alternative is rent low and as long as you save half your annual rent again in ISA's, investments and high interest accounts you are covering your rent by reducing the starting point of your eventual mortgage and capital/ + interest over the term of the mortgage.

sciencegeek

just a comment on the betfair stuff,

it is my undersatnding (may have got it wrong though) that if you want to 'lay' a bet and the odds are 14:1 you need to risk £14 of your money for every £1 you hope to win.

you need a BIG amount of capital to win any kind of decent money by 'laying' bets that are unlikely to happen.

If you risk your £14 you will PROBABLY win a pound
just as if you 'back' a horse at 14:1 you will PROBABLY lose your pound.

however, if you 'back' and lose you have lost £1, but if you 'lay' and lose you will lose £14. A big risk so dont gamble your rent money on it!!

BTman

thesaint wrote: »

Who is expecting a 0.5% rise? I have never placed a bet in my life, but I would put a few quid on this not happening.

Go on, put your money where your mouth is.. Inflation is above 50% over the target.. ie 3.1% with a target of 2%..
I would not be surprised to see a 0.5% rise, or the BoE may rise it 0.25% for the next two consecutive months.
I see at least 6% by the end of this year...

CB1979_2

BTman wrote: »

Go on, put your money where your mouth is.. Inflation is above 50% over the target.. ie 3.1% with a target of 2%..
I would not be surprised to see a 0.5% rise, or the BoE may rise it 0.25% for the next two consecutive months.
I see at least 6% by the end of this year...

why don't you as well then

why don't you both put £50 against each other then :money: