Buying a House December 2021 - June 2020 - Thoughts please

Getting_greyer

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

They've done it before, well when the government set the rate. But won't see it until inflation starts to look out of control.
Edit.  What I'm saying is that existing mortgage deals are not a top priority for the MPC when setting rates.

Thrugelmir

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

With a large mortgage doesn't require a significant immediate change in rates for the impact to be felt.  Given that the average term of a new mortgage has become longer and longer. 

Crashy_Time

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

Credit markets have the final say though and if we end up with loads of defaults on commercial property (cue loads of vaccine talk to get people out there shopping/working/spending) there will be credit shocks that can affect mortgage rates IMO.

mither_2

Crashy_Time said:

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

Credit markets have the final say though and if we end up with loads of defaults on commercial property (cue loads of vaccine talk to get people out there shopping/working/spending) there will be credit shocks that can affect mortgage rates IMO.

I agree with this and with comments from Thrugelmir and getting greyer. 
We've tried to manage the variables by going for a 5 year fix from Barclays. 1.70% seems reasonable (we could get a lower rate on a 2 year fix or on a  5 year with other lenders) and the repayments will be the same as what we pay in rent. Our 25% deposit is at risk off course being the difference between continuing to rent and buying.
Both our jobs are secure enough for now and we have savings set aside whereby we could keep paying the mortgage for a couple of years if we both lost our jobs. 
If things go well the intention would be use the 10% annual allowance to reduce the mortgage balance each year. By the time we come to remortgage in 2026 who knows where interest rates will be but hopefully our LTV will be lower (if the house loses value it likley won't)  
The house has a big garden, off street parking, in a good school area, lots of parks nearby and has good transport links. We would be happy to stay for 5 years so this shouldn't be an issue. The area could go down hill but so could any other.
Our contingency would be move out of the property, get a consent to let from the lender (Barclays offer BTL mortgages but no guarantee they would allow us to let the property) and then rent the property out and hopefully cover a large proportion of the rent.
I'm aware that being a landlord is getting more difficult (potentially alot of them selling up could push down the market) but this is something we would be prepared to do if necessary. I was in a similar situation with an earlier property where I had to relocate for work and Santander gave me a CTL. 
 There is the concern about going into negative equity but after researching the market the house is probably about the same price as it would have been 2-3 years ago i.e. the local market hasn't increased significantly since 2016/17 so we would be in the same position as many others.
We will benefit from the stamp duty saving if it goes through in time (the chain is short and so we have a decent chance) but we have agreed that even if it doesn't we will still go ahead.  
Its unfair on the chain I know but if something did change between now and completion that scared us off we could still back out an we would only lose any legal fees that we had paid at that point. 
I've found the comments and questions here every helpful. If anyone else here has any thoughts then do let me know.   

Scotbot

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

The govt doesn't set rates the BoE does and they are independent of the govt.  Thinking that political sentiment will stop rate rises is folly.

Crashy_Time

I don`t think letting it out will work out very well if the area "went downhill" (is this something you think could happen?) I think by buying at this stage you should be planning on a LONG stay, because remember even if you fix at a good a rate future buyers may not be able to do so meaning house prices will be under pressure (again)

mither_2

Scotbot said:

mither_2 said:

mither_2 said:

Crashy_Time said:

Did you cover rising mortgage rates OP?

This has occurred to us. We have a 25% deposit and so rates are relatively low. Once the fix expires could be more of a problem. 

But I would expect that the government can't raise rates significantly as so many people have such large mortgages. 

The govt doesn't set rates the BoE does and they are independent of the govt.  Thinking that political sentiment will stop rate rises is folly.

This is true. We have allowed for rate increases in the future and will monitor them during the fixed rate period. 
When I purchased a house previously (2010) the rate was 5.1% for a 4 year fix. Nothing to say that this won't be the case in 2026 when the initial fixed rate period expires. 

mither_2

Crashy_Time said:

I don`t think letting it out will work out very well if the area "went downhill" (is this something you think could happen?) I think by buying at this stage you should be planning on a LONG stay, because remember even if you fix at a good a rate future buyers may not be able to do so meaning house prices will be under pressure (again)

There is always the risk that it will go downhill but i wouldn't say the risk is any higher with the area than any other across the country. 
Its a suburb in North London (zone 5), fairly well connected to get around  but not too far from the M25. 
I'm assuming that the whole country will be impacted by the damage to the economy from C19, Brexit etc. I don't think here will be any worse than anywhere else. It may fare better than central London where prices are far higher. 
I'm hopeful that with more people working from home rather than commuting to central London there will be more places (cafes, restaurants etc) opening up or at least the existing ones surviving.
We don't have a crystal ball but yes I can imagine us living here for much longer than 5 years. Its a house with plenty of room and we could expand it if we wanted to.     

mither_2

Crashy_Time said:

I don`t think letting it out will work out very well if the area "went downhill" (is this something you think could happen?) I think by buying at this stage you should be planning on a LONG stay, because remember even if you fix at a good a rate future buyers may not be able to do so meaning house prices will be under pressure (again)

From your username can I assume that you expect there to be a property crash at some time in the future? What do you think will cause this and when do you expect it to occur? 
Genuine question. 
I bought my first home in 2010. I was certain it would lose value as the economy looked shaky at the time and I was very nervous about purchasing it. I sold it last month and the price had increased 53%. No way did I see that coming. This is probably not unusual in various places in the country. 
I suspect there will be a crash at some point but am unsure when this might be. We seem to keep pushing the problem into the future. I'm certainly assuming if I buy in the next 3 months that it will lose value in the short term, possibly the medium term too but if we stay long enough hopefully prices will recover. Certainly not expecting any price increases.
As with last time we're going for a house with a driveway and a decent size garden in a suburban area.
My logic is that there will always be a demand for similar properties for families, couples, house shares . Its whether there will be enough buyers that can afford it that will bring down the prices. 
  




 

badger09

mither_2 said:

Crashy_Time said:

I don`t think letting it out will work out very well if the area "went downhill" (is this something you think could happen?) I think by buying at this stage you should be planning on a LONG stay, because remember even if you fix at a good a rate future buyers may not be able to do so meaning house prices will be under pressure (again)

From your username can I assume that you expect there to be a property crash at some time in the future? What do you think will cause this and when do you expect it to occur? 
Genuine question. 
I bought my first home in 2010. I was certain it would lose value as the economy looked shaky at the time and I was very nervous about purchasing it. I sold it last month and the price had increased 53%. No way did I see that coming. This is probably not unusual in various places in the country. 
I suspect there will be a crash at some point but am unsure when this might be. We seem to keep pushing the problem into the future. I'm certainly assuming if I buy in the next 3 months that it will lose value in the short term, possibly the medium term too but if we stay long enough hopefully prices will recover. Certainly not expecting any price increases.
As with last time we're going for a house with a driveway and a decent size garden in a suburban area.
My logic is that there will always be a demand for similar properties for families, couples, house shares . Its whether there will be enough buyers that can afford it that will bring down the prices. 
  




 

Just to give a little context  - if you take a quick look at Crashy_Time's posting history, you will see the same predictions being made for the last 6 years - at least.