What is the actual future for mortgages and rates? As frankly every news article in hindsight...

adamL

I've gone from 1.29% fixed to just accepting a new fix at 3.93%. Monthly payment wise it's going from approx £2000 to £2500. The house next door rents for £3200 and is older inside than ours. I am still far better off buying than renting. The rent is effectively the interest payment which is going up from £450pcm to £950pcm. There has been no increase in the value of the property since bought about 4 years ago. 

Meanwhile our joint pay after tax has increased by about £300 per month through standard yearly pay rises. So overall slightly worse off this year than last, but give it 2 years and we will be better off again. That £3200 rent will only ever go up.

CSI_Yorkshire

weddingringman said:

CSI_Yorkshire said:

weddingringman said:

Had mortgage rates remained around 4-5% these last 10 years then property would probably be 30-40% cheaper. 

That's a pretty bold statement.  Anything to back it up?

I can't see it.  We aren't isolated from money elsewhere, so domestic pressures aren't the only factor, and it's still a supply-constrained market.

It’s entirely rational and there’s no credible argument to the contrary. 

You only have to look at one of the responses in this thread - “I bought a bigger house than I needed because rates were low”. Fair play - but that’s why prices are so high. How many thousands of people did the same? 

In 2021 when rates were at their lowest, you could borrow 300k with a 60-75% LTV and get a rate of around 1.44%, fixed for 2 years. That equated to about £1190 per month (25 year term). Today, it’s costing you £1700…

(I’m using my lender, first direct, no product fees).

That’s £6000 per annum extra in interest. You can’t tell me house prices wouldn’t be significantly lower had rates remained around 3-5% over the last 10 years instead of dipping below 2% across most LTV bandings. 

I can't tell you that higher rates wouldn't have had prices lower - I think they probably would.  Low rates, as you well know, push the price up.

You're being pretty definitive with numbers though.  4-5% interest rates for the last 10 years would probably make prices 30-40% lower?  That's saying that a 4-5% interest rate would keep prices stagnant - as 60-70% of today's average price is about equal to mid-2013 to 2014 average prices.

It might be plausible, just about, but you can't say that there is no credible argument that it wouldn't be 5%, 10%, or 15%. 

weddingringman

CSI_Yorkshire said:

weddingringman said:

CSI_Yorkshire said:

weddingringman said:

Had mortgage rates remained around 4-5% these last 10 years then property would probably be 30-40% cheaper. 

That's a pretty bold statement.  Anything to back it up?

I can't see it.  We aren't isolated from money elsewhere, so domestic pressures aren't the only factor, and it's still a supply-constrained market.

It’s entirely rational and there’s no credible argument to the contrary. 

You only have to look at one of the responses in this thread - “I bought a bigger house than I needed because rates were low”. Fair play - but that’s why prices are so high. How many thousands of people did the same? 

In 2021 when rates were at their lowest, you could borrow 300k with a 60-75% LTV and get a rate of around 1.44%, fixed for 2 years. That equated to about £1190 per month (25 year term). Today, it’s costing you £1700…

(I’m using my lender, first direct, no product fees).

That’s £6000 per annum extra in interest. You can’t tell me house prices wouldn’t be significantly lower had rates remained around 3-5% over the last 10 years instead of dipping below 2% across most LTV bandings. 

I can't tell you that higher rates wouldn't have had prices lower - I think they probably would.  Low rates, as you well know, push the price up.

You're being pretty definitive with numbers though.  4-5% interest rates for the last 10 years would probably make prices 30-40% lower?  That's saying that a 4-5% interest rate would keep prices stagnant - as 60-70% of today's average price is about equal to mid-2013 to 2014 average prices.

It might be plausible, just about, but you can't say that there is no credible argument that it wouldn't be 5%, 10%, or 15%. 

I threw a percentage in, that’s an estimate based on the area I live in but it’s going to vary greatly from area to area. Prices would be significantly lower if rates had held at 5% all these years though, it’s just impossible to argue otherwise as it fundamentally impacts how much you can borrow.

I live in Scotland and they say its detached properties that’ve risen the most in recent years. That’s very apparent in the sold prices. People have bought detached 4 or 5 bed homes in less desirable towns or areas, and as rates have fallen / prices have risen, it’s clear these properties have began to represent an alluring alternative to either living in the city or in a small place in a more desirable area. 

I’m talking about historically undesirable towns with schools in the bottom 10-15% for Scotland, where a detached house now costs a staggering 300-400k. That’s insane against the back drop of average prices in our country and indeed the valuations of places in more desirable areas. 

Maybe it’s just symptomatic of how desperate people are for a family home.