Is it a good time to buy a house and fix the interest rate for as long as you can?

fullah25

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

rexmedorum

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

Good question, unfortunately nobody knows for sure due to not having a crystal ball. 
That siad, interest rates are indeed low and have been for a while. As for house prises, but nobody really knows what will happen there ether, but we're not building enough and interest rates are low.

I think the best you can do is make decisions based on teh current situation, but build in some contingency: if interest rates went to 5, 6 % could you still afford it? If you're a double earner, could you still afford it if one of you lost your jobs? etc.

user1977

I wouldn't base the timing of your house purchase around current interest rates.

Bear in mind the restrictions on what you can do during the fixed period without incurring penalties (e.g. you may in theory be entitled to "port" the mortgage product to another property, but that's always subject to your lender being in a position to give you a mortgage offer when that time comes).

lookstraightahead

Have no idea whether now is a good time, dtt eg pends on your circumstances and what you feel the market will do. Personally I think house prices will decrease. But I would definitely fix your rate while they are relativity low.

Snookie12cat

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

Think if it this way, even if they go up 0.5%, its still some of the cheapest money you will ever borrow (especially if you have a good LTV) and it will make more invested in a house than it ever will just sitting in your bank. Its never been a better time to have debt as long as you can afford it. I am buying a much larger home, solely because investing in property is normally a safe bet, especially if you plan to hold it for a decade or more. I have never seen property prices drop over the long term. 

The longer you lock in for the more you pay initially, so are you really saving in the long term? I tend to do 2yr fx or trackers and then just re-mortgage when the time comes. Although the rates will rise, I do not believe it will be by loads, so I am happy to take the risk rather than be tied into a higher rate.

Lumiona

Well we bought our last house at the height, 2006 and it took until 2019 for it to gain the lost equity back. However thanks to the recent hot market, we sold at a 46% increase. So whilst we are buying a bigger a property during this boom and the prices may go down some in the future, we are not planning to move for 10yrs+. We've fixed our mortgage at 0.99% for 5 yrs and have lots of equity from our last home, so in our situation it made sense to buy bigger and fix at a low rate. As long as we don't go into negative equity, I'm happy.

Crashy_Time

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

As long as you don`t mind the value dropping below the price you paid as future buyers don`t get the same favourable interest rate (if you believe interest rates will rise that is)

Snookie12cat

Crashy_Time said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

As long as you don`t mind the value dropping below the price you paid as future buyers don`t get the same favourable interest rate (if you believe interest rates will rise that is)

I think it's important to make sure any property you buy now isn't over priced. If you are from the local area and have been watching the market for a while, that will be clear. 
Definitely do not get into bidding wars as I agree, that's when you get into negative equity issues in the short and potentially longer term. 

Crashy_Time

Snookie12cat said:

Crashy_Time said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

As long as you don`t mind the value dropping below the price you paid as future buyers don`t get the same favourable interest rate (if you believe interest rates will rise that is)

I think it's important to make sure any property you buy now isn't over priced. If you are from the local area and have been watching the market for a while, that will be clear. 
Definitely do not get into bidding wars as I agree, that's when you get into negative equity issues in the short and potentially longer term. 

Not sure I agree in this environment, very little seems to be clear.

Snookie12cat

Crashy_Time said:

Snookie12cat said:

Crashy_Time said:

fullah25 said:

Given that interest rates are currently at an all-time low, surely they can only go up from here? Saying that, would it be right to say that now is a good time to purchase a property and one should try to lock in a fixed interest rate for as long as possible - i.e. 5 or even 10 years? Thoughts?

As long as you don`t mind the value dropping below the price you paid as future buyers don`t get the same favourable interest rate (if you believe interest rates will rise that is)

I think it's important to make sure any property you buy now isn't over priced. If you are from the local area and have been watching the market for a while, that will be clear. 
Definitely do not get into bidding wars as I agree, that's when you get into negative equity issues in the short and potentially longer term. 

Not sure I agree in this environment, very little seems to be clear.

I have been watching the market for years and checking sold prices of any I am interested in and any house with a £150k mark up on 2 years previous is ridiculous and overpriced - one agent is actually doing this. You get to see a pattern and I would be surprised if any surveyor agrees with these figures.

Racky_Roo

I think it's already been said but I'd say it's hard to predict what changes will occur in your life over the next 5 years, things can change dramatically and exit penalties can be pretty high so it's worth taking that into consideration.

I took on a 5 year fix 3 years ago thinking I wouldn't move in that time but then along came Covid and my plans changed as I wasn't needed in the office 5 days a week. I was able to port my mortgage but if I hadn't, I'd have paid a large redemption fee which could wipe out any savings you made. Fees can also be pretty high on longer fixed rates so build that in too