To buy or hold off?

dankello

Hi, I am looking to buy a house in the northwest but really worried about the interest increase. Is it best to buy now or hold off for the time being? 

I don’t want to commit to a fixed rate mortgage if the interest rates ‘might’ come down or if house prices drop imminently. 

I know there is a lot of uncertainty but any tips would be greatly appreciated.

Thank you

mi-key

It's a tough one! None of us know what will happen in the next 6 or 12 months. I really don't think house prices are going to drop much ( analysts are predicting 10 - 20 % depending on area. The biggest crash we ever had when the stock market crashed they only fell by 15%, and recovered within a couple of years ) but savings on the house price will probably be wiped out by having a higher mortgage rate.

Really you have to think of it long term, interest rates and house prices tend to even out over the lifetime of the mortgage, and houses ALWAYS go up in value long term.

In any case, think of it as your home, not what it is worth or what percentage you are paying. If you want to buy, can afford it, and build in a margin for rates going up a bit ( not that they are likely to go up massively from what they are now ) then go for it. If we worried about every possible outcome we would never buy a home (  We could get taken over by China in 5 years who decide they are going to confiscate all are houses and rent them to us at 10 times the current rate ) 

PK_London

Rates shooting up to 6% is a game changer. I don't think prices will crash but I definitely don't think they will rise so fast.

With rates rising from 2% to 6%, your purchasing power has dropped 30% so 6 months ago if you could borrow £100k, that's now just £70k. That will impact some prices. Have a think about what you can afford with current rates, have a purchasing budget based on that and then go house hunting. Its a buyers market. If you can find something nice that you like you have nothing to lose offering what you think its worth. Some seller's wont need to sell quickly whereas others might so there's no one size fits all when it comes to prices going up or down or by how much, it depends very much on the circumstances of the seller.

I will still lock in the best mortgage deal you can now as its possible the BOE may raise rates sooner and higher than anyone currently expects. Go to a broker - or even several if some are too slow or busy since you only pay them on completion of a sale.