House Price Crash Discussion Thread

m00m00

and the misery of over extending yourself just to get on the ladder, and facing almost inevitable repossession when the short term interest only fixed rate ends .....

how is that quantifiable emotionally ?

m00m00

and just for pickled pink

property prices will go up because they gone up in the past.

this is deduction

the flaw in deduction is applying necessary conditions to a contingent scenario. There is no absolute guarantee with deduction, it is at it's very best a case of being an educated guess.

pickledpink

Moo,

Not everyone overstretches themselves you know!!

Some people actually take out mortgages they can afford! It's only the people who have probably lied about their true income who are now feeling the pinch.

Yes, interest rates can and do go up (they go down too!) but a fixed rate mortgage covers you on that! Don't forget, wages increase too...........:p

If you take out an interest-only mortgage then of course a property slump will affect you - but only if you want to sell, or can no longer pay your mortgage cos you told big fat porkies to get one in the beginning.

We have good times and we have bad times in our life. But if you can't ride the waves there's little point in trying to jump onto something you have no hope of clinging on to.

A little realism is what's needed on this site. Some people seem to think it's their God-given right to be a home-owner; well it isn't! You need to work at saving for a home, and work to pay the mortgage you agreed on.

Most mortgages are spread over 25 years, and for most young couples the first few years are undoubtedy a struggle, but they learn to compromise as they know they will reap the benefits when their property increases in value; their wages rise; and their repayments become eventually negligable.

Some of you on here do nothing but MOAN!:o

mr.broderick

pickledpink wrote: »

Moo,

Not everyone overstretches themselves you know!!

Some people actually take out mortgages they can afford! It's only the people who have probably lied about their true income who are now feeling the pinch.

Yes, interest rates can and do go up (they go down too!) but a fixed rate mortgage covers you on that! Don't forget, wages increase too...........:p

If you take out an interest-only mortgage then of course a property slump will affect you - but only if you want to sell, or can no longer pay your mortgage cos you told big fat porkies to get one in the beginning.

We have good times and we have bad times in our life. But if you can't ride the waves there's little point in trying to jump onto something you have no hope of clinging on to.

A little realism is what's needed on this site. Some people seem to think it's their God-given right to be a home-owner; well it isn't! You need to work at saving for a home, and work to pay the mortgage you agreed on.

Most mortgages are spread over 25 years, and for most young couples the first few years are undoubtedy a struggle, but they learn to compromise as they know they will reap the benefits when their property increases in value; their wages rise; and their repayments become eventually negligable.

Some of you on here do nothing but MOAN!:o

It's ok pinky we all know you bought sensibly calm down.

merlinthehappypig

neverdespairgirl wrote: »

But you wouldn't necessarily take that stance for 25 years.

OH and I are vastly better off renting at the moment. We pay a lot less in rent than we would on the interest-only section of a mortgage, and get nice interest on our savings as well.

The fact that this is true now does not mean we will do this for 25 years, however. At the moment, we are paying our rent, stashing money away monthly in our savings account, and are very happy about this.

Should the situation change, we will reconsider buying. I doubt very much we will still be renting in 25 years' time.

Exactly.

This isn't an argument about whether people are better off renting or buying, though it appears to have turned into one.

Clearly, whatever figures you use to justify it, over the long term people are better off buying, as long as they can afford to. I don't think anyone, even the most hardened supporter of HPC would deny that.

What is not beyond doubt is that you need to pick your time to buy.

This is not it, unless by some miracle you can buy for less than the cost of renting. Historically this has been the case, but it is not the case now.

I appreciate that my example isn't representative of everyone, but it does illustrate the enormous difference between the cost of renting and the cost of buying a house. That is unprecedented, as is the gap between the base rate and the savings rates available. All my savings are earning more than most lender's SVR which is very unusual indeed. Coupled with the fact that house prices are reducing, however ostrich like people are prepared to be about this, then this is not the time to buy unless you have to.

It's not my place or anyone else's to say 'you must buy' or 'you must rent'. Each case should be considered on it's own merits and what suits one person won't suit another, but, by every possible measure, renting a while longer and saving for a bigger deposit is the sensible thing to do in the current financial climate.

I have both owned and rented. Each one was the sensible thing to do at the time, except for owning in the early 90's so have no axe to grind at all. I appreciate that financial considerations aren't the only ones to take into account as well.

Vincenzo

merlinthehappypig wrote: »

Exactly.

This isn't an argument about whether people are better off renting or buying, though it appears to have turned into one.

Clearly, whatever figures you use to justify it, over the long term people are better off buying, as long as they can afford to. I don't think anyone, even the most hardened supporter of HPC would deny that.

What is not beyond doubt is that you need to pick your time to buy.

This is not it, unless by some miracle you can buy for less than the cost of renting. Historically this has been the case, but it is not the case now.

I appreciate that my example isn't representative of everyone, but it does illustrate the enormous difference between the cost of renting and the cost of buying a house. That is unprecedented, as is the gap between the base rate and the savings rates available. All my savings are earning more than most lender's SVR which is very unusual indeed. Coupled with the fact that house prices are reducing, however ostrich like people are prepared to be about this, then this is not the time to buy unless you have to.

It's not my place or anyone else's to say 'you must buy' or 'you must rent'. Each case should be considered on it's own merits and what suits one person won't suit another, but, by every possible measure, renting a while longer and saving for a bigger deposit is the sensible thing to do in the current financial climate.

I have both owned and rented. Each one was the sensible thing to do at the time, except for owning in the early 90's so have no axe to grind at all. I appreciate that financial considerations aren't the only ones to take into account as well.

Quite.

One question - who are your savings with and at what rate? My ISAs are earning near/at some lenders SVRs as you put it but some of the rest fall short. Unless you are referring to these regular saver accounts that offer high rates over 12 months?

merlinthehappypig

Many of the accounts we have are closed to new savers, unfortunately. Luckily we managed to get a lot into Northern Rock's 6.9% fixed rate bond. This was fixed rate for a year, but unusually with instant access and no penalties for withdrawals so the best of both worlds (plus the 100% Government guarantee!)

We have some in fixed rate ISA's at near 7% and the rest at 6.25% or 6.5% feeding a variety of regular savings accounts at an average of around 8%. It's all a little complicated, but gives me something to do! Sadly you have to keep switching funds to get the best rates. Roll on instant transfers in May. My wife thinks I'm nuts, but as we have only ever owed money before it's a nice feeling.

Vincenzo

merlinthehappypig wrote: »

Many of the accounts we have are closed to new savers, unfortunately. Luckily we managed to get a lot into Northern Rock's 6.9% fixed rate bond. This was fixed rate for a year, but unusually with instant access and no penalties for withdrawals so the best of both worlds (plus the 100% Government guarantee!)

We have some in fixed rate ISA's at near 7% and the rest at 6.25% or 6.5% feeding a variety of regular savings accounts at an average of around 8%. It's all a little complicated, but gives me something to do! Sadly you have to keep switching funds to get the best rates. Roll on instant transfers in May. My wife thinks I'm nuts, but as we have only ever owed money before it's a nice feeling.

Makes sense to me. I am a little lazy when it comes to moving money for the best rates. Funny as I am always hot on the tail of the best mortgage deal when I need one.

VFR-Rider

Apologies, this is a totally off topic Q

merlinthehappypig wrote: »

<snip>Roll on instant transfers in May.<snip>

Any more info on this? :money:

carolt

wolvoman wrote: »

Financially perhaps but not emotionally.
People here on this MSE board seem to forget that for many people, the security and knowledge of owning your own home is impossible to financially quantify.

I couldn't agree more. For people like my parents, say, who bought in the 1950's and paid it off in the early 80's, it's great that they never have to worry again about what house prices/rental prices do.

They are secure. They own their own home.

BUT people who have a (sometimes large, sometimes huge) mortgage on a house do not 'own' it - the bank does. For people stupid enough to take out interest-only mortgages, that situation will continue indefinitely, unless they save the amount the house costs elsewhere. For people on repayment mortgages, the bank owns it until such time as they have paid back the debt. If they become unable to pay off the mortgage, the bank chucks them out and takes it back, same as any landlord.

In 'normal' financial situations, ie where house prices are reasonable multiples of incomes, mortgage rates (currently uncoupled from interest rates) aren't sky high, and unemployment is low, you're right, buying is more secure than renting, as the chances of getting repossessed by the bank are lower than the chances of getting moved on by a landlord (unless you're very unlucky/poor at budgeting).

But we are not in a 'normal' financial situation. I have 3 kids and there is no way I would risk my family's financial future on the current state of the housing market/economy. House prices are far too high, the amount that would have to be borrowed to buy somewhere frankly rubbish far too much, if we could get a mortgage for it at all in the current climate, rates too high to make economic sense of it, and the very high likelihood we would be in negative equity within a short space of time far too great.

For me, at least 'security' comes from knowing I can currently lose no more than my deposit, maximum, and knowing I have not taken on unsustainable mortgage debt to buy somewhere much nastier to live in than I currently rent. I couldn't justify to my kids having to move to a much tinier house in a nastier area just so we could 'own' it. I like being able to sleep at night without worrying about how the hell I'm going to pay off the mortgage.

Obviously, 'security' means something different to you from what it does to me.