Mortgage broker advises buyers not to buy houses at present

Doc_N

'I think now is a good time, purely on financial terms, for first-time buyers to hold off,' says Ray Boulger at mortgage brokers John Charcol. 'Those without a deposit would be better off saving while they wait and see what happens to the market.'

From today's Observer.

If a leading mortgage adviser like Ray Boulger, from a leading firm of mortgage brokers like John Charcol, tells first time buyers to hold off buying, that's a very clear warning that something very bad is around the corner for house prices.

When did mortgage brokers ever suggest anyone hold off buying?

Libra1975

first-time buyers without a deposit.

Doc_N

Libra1975 wrote: »

first-time buyers without a deposit.

'I think now is a good time, purely on financial terms, for first-time buyers to hold off,' says Ray Boulger at mortgage brokers John Charcol.

'Those without a deposit would be better off saving while they wait and see what happens to the market.'

He's saying ALL first-time buyers should hold off. He's going on to say that those who haven't got a deposit should save for a bigger deposit.

His advice clearly applies to all FTBs.

Here's a man who knows that prices are going to fall.

Running_Horse

What if you want, need, and can afford to buy a house?

WTF?_2

Running_Horse wrote: »

What if you want, need, and can afford to buy a house?

Go right ahead but in doing so be aware that you are likely paying more than you would in a six to twelve months time and that you may well be facing negative equity on it in the coming years, making moving house complicated should you have to do so down the line.

Running_Horse

So what he's really saying is don't buy a house at present if you want to make a quick profit on it.

Most people buy houses to live in.

Doc_N

Running_Horse wrote: »

So what he's really saying is don't buy a house at present if you want to make a quick profit on it.

Most people buy houses to live in.

No, what he's really saying is that all first time buyers should hold off buying and wait for prices to fall. He's not restricting his advice in any way to those wanting to make a quick profit.

And let's face it - nobody's going to be making any quick profits on residential property for a very long time. Quick losses, yes.

As more and more people hold back from buying, the present glut of property in many parts of the country will spread, and prices across all levels are going to fall just as they did in the late 80s/early 90s.

And still there are people getting sucked in and thinking prices can only rise! Poor fools.

telfordwhite

Doc_N wrote: »

No, what he's really saying is that all first time buyers should hold off buying and wait for prices to fall.

No what he is actually saying is buyers should hold off buying "while they wait and see what happens to the market."
There are no guarantees no matter how clued up he may be.

Why don't you listen to what he says rather than what you want to hear. metaphorically speaking.

real1314

I would interpret what he's saying as "the market is unlikely to go up by any significant amount over the next 6 months, so 1st time buyers would do better to save up whilst prices are static at present rather than rushing into buying due to fast rising prices, as people have done over the last few years.

if a FTB is in a low cost housing situation (e.g with parents), they could save £100 a week (mortgage equivalent less "keep") for 6 months and have an extra £2.5k towards their deposit. Over the last few years, this sort of action might have seen a property price rise by more than they could have saved, whereas at present they are likely to outweigh the price rise significantly.

e.g £100k house, based on 8% rises would have gone up by £4k whilst the FTB saved £2.5k in 6 months. 5% deposit goes from £5k to £7.5k but mortgage goes up from £95k to £96.5k. 12 months sees £108k, £10k deposit
but £98k mortgage.

£100k house based on 2% rises would have gone up by £1k, deposit of £5k is now £7.5k, mortgage goes from £95k to £93.5k. 12 months is £102k house, £10k deposit, £92k mortgage.

MissMoneypenny

Doc_N wrote: »

'I think now is a good time, purely on financial terms, for first-time buyers to hold off,' says Ray Boulger at mortgage brokers John Charcol. 'Those without a deposit would be better off saving while they wait and see what happens to the market.'

From today's Observer.

I would interpret what he is saying as wait and see what the market is going to do and save more, because it looks like we have peaked and there is a real chance house prices will drop.
Saving a deposit + getting interest on your savings + houses going down in price = house costing less money than if they bought now.

Running_Horse

It would cost £10,000 to rent a house round here for a year. So unless the fall was very substantial, that first time buyer might still be better off buying now.