About to exchange - should I lower my offer?

Sarah1Mitty2

htcclub said:

With the base rate priced in to get to 5-6% in the next 2 years. I see this to mean that when you add bank margins, we could see mortgage rates of 8+% in a year or two.
This will exacerbate the likelihood of a price crash.
Should I gazunder now? is this a valid reason?
I think I found a home I could be in for 6+ years, so the price could cure by that time if it did fall. But the prospect of 10-20% down seems so scary.
I wonder if I should even ask my vendors to accept a lower offer and try to get their purchase lowered also?

I think asking them to lower their purchase price is the way to go, everyone is protected them.

propertyhunter

Because you are only fixed for 2 years, there is a greater risk for you entering into a remortgage when interest rates are still high. If you had a 5-year fix, then there's less risk since the impending recession will eventually lead to interest rates coming down a bit to stimulate demand and economic activity.

I would ask for a reduction. If they say no, then you asked the question and you know where you stand and can make a more informed choice then. If they remarket - more fool them - everyone is on edge right now, and I don't see buyers rushing forward. If their EA knows what is good for them, they will not suggest remarketing. Asking for a reduction is not the calamity that others make it seem like - if this was summer 2021, then you'd likely be shown the door, but it's not. The economic situation is absolutely dire because we have a shambolic government. 

jimpwarsop

The girl child (offer accepted at offer price) wonders whether she should lower her offer.

I asked her what she thought I would do if someone tried that with me.

"OK, I'll forget that" .

Its despicable, dishonourable and shows a distinct lack of morals.

Sure some will do it, it might work.

lookstraightahead

jimpwarsop said:

The girl child (offer accepted at offer price) wonders whether she should lower her offer.

I asked her what she thought I would do if someone tried that with me.

"OK, I'll forget that" .

Its despicable, dishonourable and shows a distinct lack of morals.

Sure some will do it, it might work.

Is it any worse than a multitude of other scenarios that buyers have been facing?

eg - actively seeking a bidding war, saying you'll move into rented and then keeping the buyer waiting for ever when you don't, limited prospective purchasers to 1 or 2 viewings and 20 mins max?

all of these things have been happening because of market conditions. Now everything's changing. What goes around comes around, or is it what comes around goes around ....

sidneyvic

I have seen so many houses reduced by 20k this week., the market has absolutely died in just a couple of weeks. (300k down to 280k) so quite big drops.
I would give your vendor the option of dropping the price or you pulling out as the market is clearly not the same as when you made the offer. 
BUT if you do agree a new price, you will need a new mortgage offer at the new price and most probably at a new interest rate.
I remember the 90's market with so many people repossessed or stuck in negative equity. Prices bumped along unchanged by very little for years, people had long memories back then......

[Deleted User]

htcclub said:

With the base rate priced in to get to 5-6% in the next 2 years. I see this to mean that when you add bank margins, we could see mortgage rates of 8+% in a year or two.
This will exacerbate the likelihood of a price crash.
Should I gazunder now? is this a valid reason?
I think I found a home I could be in for 6+ years, so the price could cure by that time if it did fall. But the prospect of 10-20% down seems so scary.
I wonder if I should even ask my vendors to accept a lower offer and try to get their purchase lowered also?

Do it. Otherwise you will end to in dire straights in all likelihood.

[Deleted User]

I thought about this myself, especially with the media coverage, the uncertainty and the amount of money I was buying at £490k for a 3-bedroom semi-detached.

With some further analysis decided to exchange and complete at the agreed price.

I really wanted the house and had searched for some time and did not want to lose the house.

I had a mortgage offer of 2.88% secured in June and lender does not allow transfer to another property.

I was fed up with viewing and offer not been accepted due to the competition, but I do feel the market is calming down now but rates have gone up quite a bit. 

It is a personal decision, what would you do if seller says no and decides to relist, if you really like the property and the price is affordable maybe just go ahead and exchange.

You can decide to wait but might not find a property that you like as much. 

[Deleted User]

Zoe02 said:

I thought about this myself, especially with the media coverage, the uncertainty and the amount of money I was buying at £490k for a 3-bedroom semi-detached. [...] I had a mortgage offer of 2.88% secured in June and lender does not allow transfer to another property.

Have you done the maths to check higher interest rates would be affordable if they persist? Assuming you have say a 20% deposit & 25 year mortgage, total interest repayable @ your old rate of 2.88% = £158,360.31.

At current rates of say 6.2% & all other things being equal, total interest repayable would more than double to a whopping £380,140.55. Run the figures through a calculator like this: https://www.mortgagecalculator.uk/

Personally I would lower the offer.

TheJP

htcclub said:

lookstraightahead said:

When anyone ever buys a property they should expect value and interest rates to go up and down. It's no different now to whet your could experience a few years down the line.

Personally if you did this to me I would remarket. 

I find it similar to vendors who want a bidding war. Did you pay over asking? Are you making up the difference between valuation and what you're paying?

payed 1% over asking, valuation was spot on. Ok that's a fair point about how things will go up and down. I suppose I am trying to rationalise why I should own a house with an 8% interest rates, when I can rent instead, I suppose I may have to suck up this isn't a short term investment?

housebuyer143 said:

It's hardly the sellers fault you didn't give some thought to the future and think that rates could go up and house prices down.  The writing has been on the wall since march so there is no excuse for waiting this long to offer less. 

You can do it, but it's disgusting behaviour and your reasoning isn't based on anything real, just all assumptions of the next 6 years. 

Sorry, but this is mostly untrue. The tax cuts from the government last week meant markets have priced in worse prospects for the economy, and swap/mortgage rates have gone up in the last few days. So it is a very recent thing, things are even more bleak.

Well I would argue that assumptions and forecasting are the basis for pricing in most markets.

Having said this, its definitely a lesson learned that I should have fixed at 5 years and not 2

The interest rate on rented houses will be passed onto the renter. Id rather pay off the house and the rate rather than have the liberty of doing it for someone else's gain.

lookstraightahead

The interest rate on rented houses will be passed onto the renter. Id rather pay off the house and the rate rather than have the liberty of doing it for someone else's gain.

But most of it isn't paying off the house, it's interest to the lender. And there is no way that rents will go up that much so quickly anyway.

If you'd rather pay bankers than a landlord, then I see your argument.