Anyone saving to buy a house for cash?

marathonic

tara747 wrote: »

Anyone who can accurately predict interest rate movements over even the next 5 years (never mind 10-15 years) should immediately give up the day job, vast riches await.

It's not an out-of-this-world prediction given that:

• banks do their own internal predictions with regards to future rates when working out what to charge for a fixed rate mortgage;
• they add a margin to their predictions for profit required to reward them for taking the risk of rates rising beyond their predictions;
• after doing such calculations, not one, not two but three lenders have come up with 10-year fixed rates of 3.89% or below (there's probably more than three lenders with such low 10-year rates if you consider some of the smaller, regional lenders too)

tara747

None of them has a crystal ball.

marathonic

Noone does. We can all just have our own point of view and best guess. Sure, rates could rise to 6% next year. In my opinion, there's about as much chance of this happening as there is of rents rising 30%.

I'm backing most of my 'guesses' up with, at least some sort of, evidence supporting them as opposed to just quoting cliches about 'crystal balls' and 'old chestnuts'

Fair play if you do end up buying in cash, it's an enviable position to be in. But also be aware of the risk that the market will surge out of reach, at least if buying in cash, and also that, at any point, you could be back posting a thread such as this:

https://forums.moneysavingexpert.com/discussion/4805355

Ownership, in my opinion, should never be cheaper than renting due to the security it offers. However, it just so happens that, in my area, ownership is cheaper than renting and I'm not currently being forced to pay a premium for the inherent security.

tara747

marathonic wrote: »

Noone does. We can all just have our own point of view and best guess. Sure, rates could rise to 6% next year. In my opinion, there's about as much chance of this happening as there is of rents rising 30%.

I'm backing most of my 'guesses' up with, at least some sort of, evidence supporting them as opposed to just quoting cliches about 'crystal balls' and 'old chestnuts'

Fair play if you do end up buying in cash, it's an enviable position to be in. But also be aware of the risk that the market will surge out of reach, at least if buying in cash, and also that, at any point, you could be back posting a thread such as this:

https://forums.moneysavingexpert.com/discussion/4805355

Ownership, in my opinion, should never be cheaper than renting due to the security it offers. However, it just so happens that, in my area, ownership is cheaper than renting and I'm not currently being forced to pay a premium for the inherent security.

:rotfl: My LL has absolutely no intention of selling this house.

And I'm only calling them 'old chestnuts' because you're posting them. We've already established that you're chucking £402 a month down the toilet, while telling renters that they're wasting their money. :rotfl:

Anyway, thank you for your comments. Although we may not agree, it's been interesting to see another point of view.

marathonic

tara747 wrote: »

:rotfl: My LL has absolutely no intention of selling this house.

And I'm only calling them 'old chestnuts' because you're posting them. We've already established that you're chucking £402 a month down the toilet, while telling renters that they're wasting their money. :rotfl:

Anyway, thank you for your comments. Although we may not agree, it's been interesting to see another point of view.

Where do I start?

With ANY sensible landlord, a good tenant will be the LAST person to find out that the landlord has any intentions of selling. The landlord will not want to spook the tenant into moving until the last possible moment. Whilst they may actually have no intention of selling (which only he/she will know), peoples circumstances change and, even I, could be forced into selling in 12-18 months if something strange happened. I have absolutely no intention of selling but would be a fool to think that this was a given. The landlord could sell to up-size his PPR, pay for medical bills, pay for living expenses after retirement/redundancy, etc.

I'm not saying that renters are wasting money, that 'old chestnut' was words you put in my mouth. What I said was that renters have 'nothing to show at the end of it'. This is FACT.

It's not money for nothing, it's money for a service that provides a roof over your head. It just so happens that it's more money than what an owner would pay for the roof over their head, with the added benefit that they've a house to show for it at the end of the mortgage term.

Anyway, it looks like we'll never agree in this one so, for me, it's time to resign to the fact that I win this debate and move on! :cool:

My only word of advice is that, unless you intend to rent for life, keep a damn good eye on the property reports because there will come a point where house price inflation exceeds your savings rate bringing a cash-buy further and further out of reach. With a supposed 2% rise last month and the next report out in two weeks, we may already be there. Also, don't base your views on property prices on asking prices alone - houses tend to achieve closer to, or over, asking prices in an upmarket whilst, last year, you could have bought for 10-15% below asking easily (mine was 15% below).

saverbuyer

marathonic wrote: »

Where do I start?

With ANY sensible landlord, a good tenant will be the LAST person to find out that the landlord has any intentions of selling. The landlord will not want to spook the tenant into moving until the last possible moment. Whilst they may actually have no intention of selling (which only he/she will know), peoples circumstances change and, even I, could be forced into selling in 12-18 months if something strange happened. I have absolutely no intention of selling but would be a fool to think that this was a given. The landlord could sell to up-size his PPR, pay for medical bills, pay for living expenses after retirement/redundancy, etc.

I'm not saying that renters are wasting money, that 'old chestnut' was words you put in my mouth. What I said was that renters have 'nothing to show at the end of it'. This is FACT.

It's not money for nothing, it's money for a service that provides a roof over your head. It just so happens that it's more money than what an owner would pay for the roof over their head, with the added benefit that they've a house to show for it at the end of the mortgage term.

Anyway, it looks like we'll never agree in this one so, for me, it's time to resign to the fact that I win this debate and move on! :cool:

My only word of advice is that, unless you intend to rent for life, keep a damn good eye on the property reports because there will come a point where house price inflation exceeds your savings rate bringing a cash-buy further and further out of reach. With a supposed 2% rise last month and the next report out in two weeks, we may already be there. Also, don't base your views on property prices on asking prices alone - houses tend to achieve closer to, or over, asking prices in an upmarket whilst, last year, you could have bought for 10-15% below asking easily (mine was 15% below).

But Tara will have something to show for it, she'll have a bundle of cash because in her market (and most of the desirable markets in N.I.) it is still considerable cheaper to rent than buy. We've already established the same is true in Derry.

I agree though, if all you are looking at what is the cheapest roof over your head, it could be cheaper to buy in less desirable areas.

I think Tara, like me, would rather save, pocket the thousands we save renting over buying and when we do buy, we will buy in a good area.

The average price is around the 100k mark with the vast majority of sales under the 150k mark (in Belfast, Derry is much lower). I can't see the middle of the market running away, the exact opposite, there's more chance of it continuing to fall. Historically Low transaction levels mean it will always bounce around a bit.

saverbuyer

marathonic wrote: »

It's not an out-of-this-world prediction given that:

• banks do their own internal predictions with regards to future rates when working out what to charge for a fixed rate mortgage;
• they add a margin to their predictions for profit required to reward them for taking the risk of rates rising beyond their predictions;
• after doing such calculations, not one, not two but three lenders have come up with 10-year fixed rates of 3.89% or below (there's probably more than three lenders with such low 10-year rates if you consider some of the smaller, regional lenders too)

Very low life-time tracker rates spring to mind.

The banks do not have a good track record predicting rates, BOI, WB, Skipton…

marathonic

saverbuyer wrote: »

But Tara will have something to show for it, she'll have a bundle of cash because in her market (and most of the desirable markets in N.I.) it is still considerable cheaper to rent than buy. We've already established the same is true in Derry.

I would disagree with this to a certain extent. It's not most of the desirable markets, it's THE most desirable markets. For example, my house would be in the top 30% of the Derry (and 5 mile radius) market with regards to asking prices and is cheaper to buy than to rent. It's only when you get to the top 15-20% of the market that the opposite is true.

I wouldn't class the top 30% of the market as "the cheapest roof over your head".

However, I do realise that I'm on the wrong board to argue that a mortgage can be a good thing.....

saverbuyer

marathonic wrote: »

I would disagree with this to a certain extent. It's not most of the desirable markets, it's THE most desirable markets. For example, my house would be in the top 30% of the Derry (and 5 mile radius) market with regards to asking prices and is cheaper to buy than to rent. It's only when you get to the top 15-20% of the market that the opposite is true.

I wouldn't class the top 30% of the market as "the cheapest roof over your head".

However, I do realise that I'm on the wrong board to argue that a mortgage can be a good thing.....

I get your point all I'm saying is that even within Derry, in the places I would actually want to live in (those comparable to S.Belfast) it is still cheaper to rent than buy. It's all anecdotal. I have no idea where your house would fit into the percentage desirability. I only know the areas I would live and renting is considerably cheaper even now.

In Tara's market it is considerably cheaper to rent than buy.

The "considerable cheaper" in "less desirable areas" was in the Derry v Belfast context. Belfast, south in particular is much more desirable.

tara747

marathonic wrote: »

Where do I start?

With ANY sensible landlord, a good tenant will be the LAST person to find out that the landlord has any intentions of selling. The landlord will not want to spook the tenant into moving until the last possible moment. Whilst they may actually have no intention of selling (which only he/she will know), peoples circumstances change and, even I, could be forced into selling in 12-18 months if something strange happened. I have absolutely no intention of selling but would be a fool to think that this was a given. The landlord could sell to up-size his PPR, pay for medical bills, pay for living expenses after retirement/redundancy, etc.

I know that he has no intention of selling, because this house belonged to his parents (and the mortgage is long paid off, another reason why my rent is so low). He has a very sentimental attachment to it and wants to leave it to his children, who are currently at primary school.

Sure, he could be hit by a bus tomorrow. So could any of us.


I'm not saying that renters are wasting money, that 'old chestnut' was words you put in my mouth. What I said was that renters have 'nothing to show at the end of it'. This is FACT.

Fair enough. You have nothing to show for your £402 a month either, though.


It's not money for nothing, it's money for a service that provides a roof over your head. It just so happens that it's more money than what an owner would pay for the roof over their head, with the added benefit that they've a house to show for it at the end of the mortgage term.

My rent is less then the interest on most people's mortgages (never mind rates, buildings insurance, life assurance, maintenance). :T

Anyway, it looks like we'll never agree in this one so, for me, it's time to resign to the fact that I win this debate and move on! :cool:

You tell yourself that if it makes you happy. :rotfl::rotfl:Me, I'd rather agree to differ - but some people just can't do that.

My only word of advice is that, unless you intend to rent for life, keep a damn good eye on the property reports because there will come a point where house price inflation exceeds your savings rate bringing a cash-buy further and further out of reach. With a supposed 2% rise last month and the next report out in two weeks, we may already be there. Also, don't base your views on property prices on asking prices alone - houses tend to achieve closer to, or over, asking prices in an upmarket whilst, last year, you could have bought for 10-15% below asking easily (mine was 15% below).

Thanks for the advice, much appreciated.

My replies in pink.