House price crash news

Dithering_Dad

nrsql wrote: »

I've posted about this before. I don't think it's a bad thing to be interest only when you are starting out. Hopefully wages would rise and (as long as you don't change your standard of living along with it) you can start paying off the capital then. A bit like the old low start mortgages.
I wish I'd done that when I started out on a 30k mortgage - I could have done with the money then but it would be easy to pay off now. (That's not strictly true - I never had to find out if I could afford it on that salary).

Of course you are assuming that your wages will rise - but barring catastophes which wouldn't affect the argument it looks a pretty safe risk if you are young.

Gotta agree with this - If you actually look at how much we actually pay off our houses during the early years, it's a drop in the ocean.

I wish I could go back in time and tell a young Dithering Dad to get a more expensive house on interest only (and thus have the same monthly mortgage payment as on the smaller house) so that when the houseprices rose I would have had a much larger increase in my equity.

I've gained with houses, not from the piddly amounts I've repaid, but by the huge increases in equity!

Dithering_Dad

Yant1 wrote: »

Housing is gonna crash, so is he stock market, every company in the world will collapse, the horseys of the apocalypse will come and make the skys black, rivers will boil and something else bad will happen. I have a feeling in my bones

Should that be a "feeling in your waters"?

(Did you see how I linked us back to the OP. Slick I calls it!)

[Deleted User]

That is only true in your circumstances, what about those that bought at the start of the 90s when house prices peaked but interest rates continued to rise, they then didnt get teh same price for it 10 years later after paying 15% interest rates. Well its getting like back to that situation now, so would it be best for them to rent a room for £300 a month or take on a £1200 a month interest only mortgage with £350 spare a month to live off.

What would jesus do?

edit, ok then its a feeling in the waters possible a infection but i think its a sign the world will end (yep i am pretty bored right now to be talking such rubbish)

Guy_Montag

Dithering_Dad wrote: »

Gotta agree with this - If you actually look at how much we actually pay off our houses during the early years, it's a drop in the ocean.

I wish I could go back in time and tell a young Dithering Dad to get a more expensive house on interest only (and thus have the same monthly mortgage payment as on the smaller house) so that when the houseprices rose I would have had a much larger increase in my equity.

I've gained with houses, not from the piddly amounts I've repaid, but by the huge increases in equity!

A drop in the ocean, but without those drops you'd never pay off your mortgage.

Used to be the case that equity increased by paying off the capital, rather than by hoping to find some mug to encourage to join this pyramid scheme.


Oh & will the SM crash? of course. When? No idea.

Dithering_Dad

Yant1 wrote: »

That is only true in your circumstances, what about those that bought at the start of the 90s when house prices peaked but interest rates continued to rise, they then didnt get teh same price for it 10 years later after paying 15% interest rates.

Well, they'd probably be in a better shape to afford their monthly mortgage payments than those who had the same interest rates to pay but also had an additional couple of hundred quid on top as part of their repayment.

Dithering_Dad

Guy_Montag wrote: »

A drop in the ocean, but without those drops you'd never pay off your mortgage.

But you will, you just get larger houses with Interest Only mortgages than you could afford with repayment mortgages and gain more on equity rises. Once you retire you downsize your 10 bedroomed house and buy a 3 bed semi for cash!

Wow, I have to say guys that I'm loving it in here, is it always this exciting??

I usually hang about on the DFW and MFW threads, but will venture further afield in MSE land if it's this good!

[Deleted User]

Yes but on a cheap 100k mortgage you repay in 15 years you pay about 50K in interest but on a 150K interest only mortgage for 30 years you pay about £50000000000000, its the cheapest houses that see the biggest increases traditionally its terrorist housing or terrace i forget which. So the guy that buys a terrace then doesnt move then saves heavily will have the most money those that move often get stung in fees every time and larger and larger amounts of duty, council tax, interest payments those that overstretch themselfs to go interest only are mugs for me to get good interest on savings

Dithering_Dad

Yant1 wrote: »

Yes but on a cheap 100k mortgage you repay in 15 years you pay about 50K in interest but on a 150K interest only mortgage for 30 years you pay about £50000000000000, its the cheapest houses that see the biggest increases traditionally its terrorist housing or terrace i forget which. So the guy that buys a terrace then doesnt move then saves heavily will have the most money those that move often get stung in fees every time and larger and larger amounts of duty, council tax, interest payments those that overstretch themselfs to go interest only are mugs for me to get good interest on savings

The trouble is that unless you can find a large enough terrace, as soon as you start having pups, you outgrow the house and it becomes an ordeal. If you do have a large enough terrace, when the pups grow up and leave then you rattle around in the house!

Also, if you live in a terrace and have awful neighbours then it becomes a nightmare of banging on walls, phoning the police, trying to find a parking space, etc, etc. No, better to get an interest only and get that detached house with garage and driveway!!

nrsql

Dithering_Dad wrote: »

Gotta agree with this - If you actually look at how much we actually pay off our houses during the early years, it's a drop in the ocean.

I wish I could go back in time and tell a young Dithering Dad to get a more expensive house on interest only (and thus have the same monthly mortgage payment as on the smaller house) so that when the houseprices rose I would have had a much larger increase in my equity.

I've gained with houses, not from the piddly amounts I've repaid, but by the huge increases in equity!

The idea is that you get the same house - one that you could afford on a repayment mortgage. The money you don't pay by getting on inserest only you use a bit to save and a bit to enjoy yourself. It gives you some leeway if interest rates rise or something esle happens. You aren't stressed by what's going on and can have a bit of a life while waiting for your wages to increase.

Don't assume there will be a huge increase in equity - and it doesn't matter anyway until you downsize. In fact while you're moving up in property you should be disappointed that your house is increasing in value.
Same as with a btl - the important thing is the rental income compared to the mortgage - not the value of the property unless you sell.

housesforcourses

As someone else mentioned for there to be a real supply shortage rents would have had to have increased along with house prices. This has not happened as a result I dont believe the shortage argument.

The housing market wobbled in 2005 when interest rates were at 5% why do you think things will be any better now with interest rates at 5.5% and increasing (according to Mervyn King in the inflation report today).

Whilst house selling prices are still increasing, this reflects the fact that the data to produce these figures are approx 3-6 months old (they have to be as the LR data is from sales that happened 3-6 months prior). According to home.co.uk 8 out of 11 regions in the UK saw below inflation level asking price increases last month. Mortgage approvals are down as well indicating the market is weakening.

Sterling is at a high therefore if the BofE drop interest rates then sterling will tank thereby importing inflation as a result realistically they cannot drop interest rates at the moment (again BofE indicated this in the inflation report today, they expect they will have to keep rates at this or higher levels until 2009).

For all those who say stagnation is likely I tend disagree, because of BTL. One of the reasons we have seen such massive gains in prices is because of there being so many sepculators in the housing market. Things are different this time. As they are speculators and because they are not living in these houses I think that when the market begins to turn we will see a lot of BTLers exiting the market. This will like any other speculative bubble drive prices down.