Mortgage broker advises buyers not to buy houses at present

dreamalittle

Running_Horse wrote: »

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.

Not if the mortgage interest in the first year on that house would be close to or more than the rent. Paying interest is "dead money" just as much as paying rent is, especially if prices are stagnant or falling.

real1314

Running_Horse wrote: »

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.

Well, at £10k rent then the house price is likely to be around £150k or even more, so a 95% mortgage would be around £12k a year. Anyway, the point I was making was if the FTB is in a low housing cost situation, which many may well be - with parents, renting a shared house, council housing etc.

Doc_N

telfordwhite wrote: »

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.

Of course there are no guarantees - nobody said there were - but when someone who makes his living from selling mortgages tells people not to buy in the present market, there's a pretty big clue there as to what's actually happening in the market.

His words are very clear - I accept that. But if you read between the lines I think the message that comes across is equally clear. It's not even what I want to hear, really - I already own a house that I'm never ever going to need to move from until they carry me out in a box. So when house prices fall, I lose out because my house is worth less if I want to use it to raise money. I do feel, though, that house prices need to come down - mainly to help the country's younger people who are being forced to rent just because they can't afford to buy any more.

I'm delighted that the balance is at last shifting. It won't help me any, but I've made more than enough out of my houses (just one at a time) over the years, and it's time for younger people to have their chance for a change.

Gorgeous_George

Right, you cannot rent the house that you want to buy so that is not normally an option.

If FTBers buy a 2 bed now only to find that the same money could buy a 3 bed in 12 months' time, they'll kick themselves.

If they don't buy now but rent instead and find that they can only afford a 1 bed flat in 12 months' time, they'll kick themselves.

It is not necessarily just about how much they can afford but about how much a lender will lend. No point in being able t opay a £200K mortgage if you can only borrow £100K.

Calling the bottom of the market is difficult. Even choosing a good time to buy is a gamble. No-one knows for sure if now is a good time to buy or not. I wouldn't buy but then, I don't have to decide.

GG

carolt

Wish there were more people like you about, Doc N. Nice to hear from someone for whom it's not just me, me, me.

I can't believe there are still people trying to deny which way the market is headed! How much clearer can the signals get than one of the country's top mortgage brokers telling 'first-time buyers to hold off'?

Can he make it any CLEARER????!!!!! :rolleyes: Or does he have a vested interest in 'talking down the market' too? Is it just possible that maybe, just maybe, he knows what he's talking about, because it's his job? Or is every two-bit property 'investor' who posts their tuppennyworth on these pages better qualified to really know what's going on?

You decide!

carolt

Oh, and Running Horse - people sometimes want - and if they're lucky in the present market, can afford - to buy a house.

But noone ever NEEDS TO BUY.

People only ever NEED to sell.

Which is why the market will go down. Once people who want to buy decide to wait a bit longer - after all, they're not usually homeless now, just not living in their perfect home yet - people who NEED to sell eg those facing repossession etc will have no choice but to sell at a lower price if they are to sell at all. As Gorgeous George says, would you scrimp and save to buy a 2 bed house now if you thought you could afford a 3 bed a few months down the line? That's my situation, and I'm quite happy to follow Ray Boulger's advice.

Not got a property you're desperate to sell, have you, Running Horse?

Libra1975

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.'

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.

do you think he can lend me his time-machine so I can check out the lottery numbers for next saturday.

As is pointed out time after time after time on these boards no-one KNOWS what is going to happen they can only speculate.

And no I still don't think it's clear from what he says (or even reading between the lines as you seem to be able to do) that he encompasses all FTBs.

Libra1975

As with everything context is important, I have just found the article and his quote is flanked by 2 paragraphs discussing 100% and 125% mortgages his comment is by the tone of the article discussing people without deposits.
http://observer.guardian.co.uk/cash/story/0,,2179948,00.html

Please don't get me wrong, I don't think that house prices are going to rise in the next few years but nor do I think there is going to be a crash in prices either.

Me_Myself_2

Nice to have a balanced view Libra.

MM

carolt

That is extremely misleading analysis, Libra1975.

The end of the paragraph before, which leads into the quote under discussion, is as follows:

But with signs that the housing market is slowing down, or even falling in some parts of Britain, experts are warning borrowers to act with caution.


This gives a pretty unequivocal context to the original quote.

Sure, the article talks about the numbers of 100% or over mortgages taken out in recent years, but this is only in the context of how the vast majority of these have either now been pulled by lenders or are being offered at prohibitively high rates, due to the current credit crunch. How you can argue that restricting people's ability to buy houses is not going to lead to less houses bought or at lower prices, I don't understand.

If I can't borrow it, I can't buy it. Simple.