what a crazy housing market

lookstraightahead

Slithery said:

Crashy_Time said:

getmore4less said:

Thrugelmir said:

mubeye said:

Crashy_Time said:

Flugelhorn said:

just been to see a property - house over 500K, multiple people viewing -at least one offer already in, much work needed, lots of bad DIY and covering up of problems etc - very uninspiring

just wondering how long it will be before the madness stops  and people can take time to consider whether the property is really worth it ?

When mortgage rates rise people`s minds will become very focussed on the amount of debt load they are carrying.

Sure, but they might have paid off a big enough chunk of their mortgage by that point, to not care. 

Mortgage terms have become longer and longer over the past 40 years. Surprising how little capital you repay in the early years of the mortgage. 

Rates are lower so people pay off the debt faster in the early years.

there is a leveling effect.

The problem is that when rates rise you are paying more to maintain the debt as the property value falls, and as lower rates have encouraged people to take on more debt than they probably should have there will be trouble ahead for many if mortgage rates rise.

Lenders have had to stress-test customers for increased inflation for years now. If they couldn't afford it they wouldn't have been lent the money.

The problem is lenders only stress test at the time of buying. Once a mortgage is in place borrowers can do what they like.

a great example is shiny new estates. People buy a family home, or a starter home. Then they want shiny new cars to go with these homes. Then they make other life decisions (perhaps children, or holidays, or part time jobs) and before they know it they're in lots of debt with big loans. Then interest rates go up. And they literally can't afford it.

Debt is now a major part of living, I've seen really expensive cars (usually 2 4x4) outside very moderate houses.

present forum excepted, most people haven't got a clue about interest, debt, mortgage repayments.

JonMitchell

Flugelhorn said:

just been to see a property - house over 500K, multiple people viewing -at least one offer already in, much work needed, lots of bad DIY and covering up of problems etc - very uninspiring

just wondering how long it will be before the madness stops  and people can take time to consider whether the property is really worth it ?

Where about is the property if you don't mind me asking. any rightmove link

RyanHello

Wages aren't keeping up with property prices. The UK has the most expensive housing market in Europe ( outside Monaco).. 

Like someone else said on here. You have people living in modest /small houses with big 4x4s on their drive.. 

Something has to pop sooner or later... this can't go on.

nicknameless

Got to lol at people saying that interest rates won't go up substantially over the lifetime of a mortgage.  Seems we've entered a new reality?

SpiderLegs

nicknameless said:

Got to lol at people saying that interest rates won't go up substantially over the lifetime of a mortgage.  Seems we've entered a new reality?

Well they haven’t gone up substantially over the last twelve years and the circumstances which would require them to increase in the future haven't significantly changed, so I wouldn’t be ‘lol’ing too much if I were you.

getmore4less

getmore4less said:

Thrugelmir said:

mubeye said:

Crashy_Time said:

Flugelhorn said:

just been to see a property - house over 500K, multiple people viewing -at least one offer already in, much work needed, lots of bad DIY and covering up of problems etc - very uninspiring

just wondering how long it will be before the madness stops  and people can take time to consider whether the property is really worth it ?

When mortgage rates rise people`s minds will become very focussed on the amount of debt load they are carrying.

Sure, but they might have paid off a big enough chunk of their mortgage by that point, to not care. 

Mortgage terms have become longer and longer over the past 40 years. Surprising how little capital you repay in the early years of the mortgage. 

Rates are lower so people pay off the debt faster in the early years.

there is a levelling effect.

just thought its worth checking.

£100,000 25y 4% £528pm in 5 years £87k  17k
£100,000 40y 2% £303pm in 5 years £91k  8k
£100,000 ----- 2% £528pm in 5 years £77k £23k   
£174,200 40y 2% £528pm in 5 years £159k 14k

The same amount out gives you a greater buying power over a longer term for a relatively  small reduction in the amount paid back.

Crashy_Time

lookstraightahead said:

Slithery said:

Crashy_Time said:

getmore4less said:

Thrugelmir said:

mubeye said:

Crashy_Time said:

Flugelhorn said:

just been to see a property - house over 500K, multiple people viewing -at least one offer already in, much work needed, lots of bad DIY and covering up of problems etc - very uninspiring

just wondering how long it will be before the madness stops  and people can take time to consider whether the property is really worth it ?

When mortgage rates rise people`s minds will become very focussed on the amount of debt load they are carrying.

Sure, but they might have paid off a big enough chunk of their mortgage by that point, to not care. 

Mortgage terms have become longer and longer over the past 40 years. Surprising how little capital you repay in the early years of the mortgage. 

Rates are lower so people pay off the debt faster in the early years.

there is a leveling effect.

The problem is that when rates rise you are paying more to maintain the debt as the property value falls, and as lower rates have encouraged people to take on more debt than they probably should have there will be trouble ahead for many if mortgage rates rise.

Lenders have had to stress-test customers for increased inflation for years now. If they couldn't afford it they wouldn't have been lent the money.

The problem is lenders only stress test at the time of buying. Once a mortgage is in place borrowers can do what they like.

a great example is shiny new estates. People buy a family home, or a starter home. Then they want shiny new cars to go with these homes. Then they make other life decisions (perhaps children, or holidays, or part time jobs) and before they know it they're in lots of debt with big loans. Then interest rates go up. And they literally can't afford it.

Debt is now a major part of living, I've seen really expensive cars (usually 2 4x4) outside very moderate houses.

present forum excepted, most people haven't got a clue about interest, debt, mortgage repayments.

Exactly, and so can the economy/credit markets, the cheaper people can buy their home the better for them in the long run.

jimbog

nicknameless said:

Got to lol at people saying that interest rates won't go up substantially over the lifetime of a mortgage

which is why nobody did say that

Crashy_Time

Many have relied on it though, including people giving advice to "buy now"?

SpiderLegs

Crashy_Time said:

Many have relied on it though, including people giving advice to "buy now"?

Crashy you have been advising people to not ‘buy now’ since you joined the forum. And everyone you have given that advice to would have been worse if if they had listened to you.