First Time Buyers - Enough is Enough!

dougk_2

Its actually about £190k interest only or £130k Repayment.

Still enough to buy a 2 bed maisonette or terrace in most parts of the country.
(if in london then the average salary will be higher).

Yes the fixed rate will run out eventually but you can get them to cover the whole term if you want.

Credit card interest rates and other loan rates only affect you if you use them - I don't and never would. I don't beleive in borrowing for anything apart from for a house. If you don't have - you go without.

Woby_Tide

So basically the long and short of it is, that regardless of whether prices crash or stay the same or rise rapidly, the people on both sides of the fence can produce enough statistics, historical averages and interpretations to data that buying a house is neither good nor bad and whichever way you want to look at it another counter argument can be found and twisted to suit that point of view?


meanmachine: Q" How can a mortgage be six times someone's salary but only 25% of their monthly outgoings?"

A: Interest rates

dougk_2

I agree W_T.

There is not a right and wrong answer - its like politics its personal choice.

There will always be people who cannot afford to buy a house and always people that can. There will always be people who want to buy and those that do not.

If prices rise there will be some winners and some loosers and if prices crash or drop there will be winners and loosers.

There are better times to buy a property and worse times to buy (depending on both your financial position an dcircumstances as well as the economic conditions)

The answer is there is no answer!

meanmachine_2

dougk wrote:

There are better times to buy a property and worse times to buy (depending on both your financial position an dcircumstances as well as the economic conditions)

Correct, and for the "average" person on an "average" wage, May 2005 is the worst possible time to buy a property, based on the age-old income multiplier, perhaps in the history of the UK property market.

You can dress it up as much as you want, but anyone who borrows six times their salary is going to lose their home at some point, or be forced to sell.

A 25 year period of history where IR rates don't go back to their historical average? Sorry, that's a gamble I wouldn't recommend my worst enemy makes.

dougk_2

meanmachine wrote:

A 25 year period of history where IR rates don't go back to their historical average? Sorry, that's a gamble I wouldn't recommend my worst enemy makes.

Given that statement surely it make sense to get a 25 year fixed rate at about 5.5% then now while you can?????? ;-)

Woby_Tide

meanmachine wrote:

Correct, and for the "average" person on an "average" wage, May 2005 is the worst possible time to buy a property, based on the age-old income multiplier, perhaps in the history of the UK property market.

So September 1992 for example when house price to earnings ratio was around 2.75-3x would have been a better time then yes?

meanmachine_2

Woby_Tide wrote:

So September 1992 for example when house price to earnings ratio was around 2.75-3x would have been a better time then yes?

No, provided you had a sizeable amount of equity to offset higher IR rates, the best time would have been in 1994.

Lots of stock, low prices and a buyer's market. And you would, by now and by today's standards, have a miniscule mortgage.

I'm not saying never buy. I'm just saying not now (if you can possibly avoid it).

nelly_2

Id have said yes, paying 3 times rather than six times an amount, for anything would be more favourable. I cant see how it cant be. But your obviously trying to lead it into something, probably an interest rate thing .

meanmachine_2

dougk wrote:

Given that statement surely it make sense to get a 25 year fixed rate at about 5.5% then now while you can?????? ;-)

No thanks.

Doubtless, 10 years down the line we'll end up in the Eurozone and tied to low rates of 2%, regardless of its impact on the economy (see Germany).

deemy2004

Pal wrote:

If I recall correctly, on a recent thread I argued that house price falls in the region of 50% were entirely possible and you poo-pooed the idea. Changed your mind?

LOL

The last calc was from First Buyer heaven

First one will be most probably so something in the region of 10% or so....After that I don't know, too many what if's... still is fun to contemplate a 50% drop