MSE News: House prices up at fastest rate for three years

Fraise

SG27 wrote: »

Yes but as I said earlier the 25 year fix quoted would add another £170ish a month to my mortgage which would not be a comfortable amount for me to be paying.

And for friends with much bigger mortgages the extra would not be payable.

I'm still curious as t how a fixed rate mortgage would add another £170 a month to your repayments? How much is your mortgage and who are you with? I hope you answer me!:)

Doc_N

Fraise wrote: »

But you can fix a mortgage rate for 25 years if you so please, so I don't see the problem.

Two problems:

1 A 25 year fix will cost considerably more than a 2-5 year fix, so very few people take them out.

2 Because few people have 25 year fixes, large numbers of people are vulnerable to sharp, unaffordable increases in the amount they have to pay at the 2, 3, 4 or 5 year point.

If those people cannot afford the repayments (as has happened before) they will default and lose their homes. Those homes will be put on the market at low prices by the banks and other lenders (they don't care about the price, as long as the loan is covered) and the housing market will then fall as supply exceeds demand.

That's not any concern of this government, of course, because it won't happen until after the next general election.

harpoboy

Round my way house prices are up 10-15% year on year.

I may sell off one of my BTLs after the next election to enable me to go mortgage free.

Result!

SG27

Fraise wrote: »

I'm still curious as t how a fixed rate mortgage would add another £170 a month to your repayments? How much is your mortgage and who are you with? I hope you answer me!:)

Sorry only just saw this.

Mortgage is in my sig, YBS. Currently paying £490. According to a mortgage calculator 5.49% would add £155.

Turnbull2000

harpoboy wrote: »

Round my way house prices are up 10-15% year on year.

I may sell off one of my BTLs after the next election to enable me to go mortgage free.

Result!

Neighbouring property - Sold for 230,000 June 2012. Now under offer at £270,000, with no visible improvements.

Thanks to government intervention, sentiment is very positive, and buyers/sellers are panicking/hiking prices in response. Halifax/Nationwide/Land Reg indexed should hit 10% come next Spring. Exciting times ahead!

HAMISH_MCTAVISH

A lot of misinformation being spouted in this thread about "government interference" and such like.

Whereas the reality is that this is nothing more than the BOE and Govt doing their job to restore at least partial functionality to a mortgage market that has been completely dysfunctional since the global credit crunch hit, and not before time.

In my opinion the current artificial repressing of house prices through mortgage rationing is starting to end, and the lowest house building in a century is about to meet the biggest generational bulge of FTB age people in history.

We're already seeing prices shooting upwards as the fundamentals of supply and demand re-assert themselves after years of artificial mortgage drought.



Currently at more than 6% year on year, could well be 10%+ year on year in the next few months.

Soaring population and the existing million house shortage will almost certainly mean prices continue to rise, a situation worsened dramatically by the last 5 years of mortgage rationing causing house building to fall to the lowest levels in a century, and the next boom will likely be the biggest ever as a result.

Remember in the last boom, we had several years of 20% plus a year price rises, people should be careful not to get caught out this time around, it could easily happen very quickly indeed.

Regardless, the likeliest outcome by far is a near doubling in house prices in real terms over the next cycle, as the mortgage market and wider economy recover, and millions of FTB age people run into the worst housing shortage in history....



Of course, other opinions may vary.....

But they've mostly been wrong so far

HAMISH_MCTAVISH

And in other news......

Nine of the 10 regions tracked by LSL recorded price gains in the latest three months compared with a year earlier, according to the report. London price growth was 8.5 percent, compared with an average of 3.5 percent. In Wales, the pace of the decline eased. Nationally, house prices rose 3.8 percent, or 8,526 pounds, in September compared with a year earlier.

House sales rose 12 percent this year compared to 2012, with the increase in transactions predominantly in the first-time buyer sector of the market, Acadametrics said.

LSL said concerns about a housing bubble developing are overblown.

While prices are rising, it is only a “fledgling recovery,” Newnes said.

“It is not a boom or a bubble. It is a market correction, albeit a fairly quick one.”

The whole country will benefit from Help to Buy because it supports buyers in the southeast, where prices are higher, and in the north, where wage growth is slower, Newnes said.

http://www.bloomberg.com/news/2013-10-10/u-k-house-prices-rise-to-record-as-first-timers-drive-demand.html

HAMISH_MCTAVISH

Number of FTB-s increasing rapidly too, now that mortgage rationing is ending......

Lending to first-time buyers surged in August, according to new figures from the Council of Mortgage Lenders.

First-time buyers took out 27,100 loans in August, a 33pc increase on a year earlier.

Excellent news. :beer:

mrginge

I love you hamish, you're great.

You should start that graph at 1995, then your projection would be able to go even higher!

One thing i was wondering about though. That graph projects 22 years of continual increases. Given the evidence of the previous 22 years, how likely do you think that scenario is?

It looks to me like if you start at 1990 you get around half the years showing increases and the other half showing decreases. Your projection therefore seems to be out of step with the generally accepted concept of an economic cycle.

Perhaps we are at the start of another such cycle and there is some more modest hpi on the way. How much of that is superficial and mainly due to government props is debatable.

I remember another notable scotsman tell me that there was 'no more boom and bust'. I didn't believe him either.

HAMISH_MCTAVISH

mrginge wrote: »

One thing i was wondering about though. That graph projects 22 years of continual increases. Given the evidence of the previous 22 years, how likely do you think that scenario is?.

What, exactly 22 years, and exactly the figures estimated on the graph? Not very likely at all.....

I'm suggesting that something like that is the most probable outcome by far, and looking at the fundamentals of supply and demand, it is.

I noted on the graph "sometime in the late 2020's to mid 2030's", as that's when the next trough between demographic cycles of FTB age people is..... So there's at least a 7 year spread there.

There are currently about 700K people reaching average FTB age each year, that will rise by nearly 50% by the mid 2020's, and then trough (although still at levels 15% higher each year than was the case in 2008) by the mid 2030's.

Never again in our lifetimes will there be as few people competing for housing each year as there has been over the last few years, assuming the ONS population projections are correct.