Is now a good time to buy for FTBs

MEM62

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

Herzlos

Even being stuck in negative equity for a while isn't that bad a prospect when looking at the longer term or alternatives.

You need to live somewhere, and you're still going to be better paying off a £100k mortgage on a £90k house, than paying someone else to pay off the same mortgage + profit. Throw in 10 years of inflation and house price increases and you may be down to an £80k mortgage on a £150k house.

It may not be a good time to buy and sell immediately, but you're going to lose thousands on the transaction anyway.

Schwarzwald

RelievedSheff said:

Schwarzwald said:

RelievedSheff said:

Sarah1Mitty2 said:

RelievedSheff said:

Sarah1Mitty2 said:

tbo127 said:

It’s hard to know if you buy and then you’ll regret it a couple of years later. 

Imagine taking the advice to pile in two years ago, and fixing at a super low rate for two years, then coming off that fix now?

Yes imagine having an extra two years worth of equity in your asset. How terrible that would be! 

At double or more the original monthly mortgage payments for many people it is a disaster, but as you said on another thread that no one is struggling with their mortgage it obviously isn`t something that affects you.

Any evidence of these mortgage repayments that are "double or more" the original payment?

Our current contractual repayment is £1194 at 2.34%. Using a rate of 5.3% takes that up to £1330. Hardly a massive rise and less than we currently pay as we overpay the mortgage every month.

I have a 1.4% 2yrs fixed ending end of this year.
lender just informed me that going to variable rate would indeed double my monthly mortgage payments from approx 1,800 to 3,600.
not sure why this is hard to believe?

and i do imagine that an monthly increase of this magnitude >1,500 pcm represents a challenge for many borrowers … 

i think that the next 6-9 months will be quite interesting, i’d expect that many will try to sell in order to avoid the monthly mortgage increase, bur renting at much lower costs isnt guaranteed unless people downsize and also finding a buyer wont be easy as i’d expect that there simply will be more supply than demand.

back to the OP, hard to answer, nobody knows, personally i would wait a few months but then start looking, politics might jump in and change the market dynamics, especially in light of election year.

But why would you go onto the SVR when much cheaper options are available? 

You just wouldn't!

My point was not that it is obv not sensible to go on a SVR, but you questioned that mortgage rates can/do double in the current environment, and while i often disagree with @Sarah1Mitty2  on their posts, a doubling mortgage rate is easily possible in this environment.

Schwarzwald

Mstty said:

Schwarzwald said:

RelievedSheff said:

Sarah1Mitty2 said:

RelievedSheff said:

Sarah1Mitty2 said:

tbo127 said:

It’s hard to know if you buy and then you’ll regret it a couple of years later. 

Imagine taking the advice to pile in two years ago, and fixing at a super low rate for two years, then coming off that fix now?

Yes imagine having an extra two years worth of equity in your asset. How terrible that would be! 

At double or more the original monthly mortgage payments for many people it is a disaster, but as you said on another thread that no one is struggling with their mortgage it obviously isn`t something that affects you.

Any evidence of these mortgage repayments that are "double or more" the original payment?

Our current contractual repayment is £1194 at 2.34%. Using a rate of 5.3% takes that up to £1330. Hardly a massive rise and less than we currently pay as we overpay the mortgage every month.

I have a 1.4% 2yrs fixed ending end of this year.
lender just informed me that going to variable rate would indeed double my monthly mortgage payments from approx 1,800 to 3,600.
not sure why this is hard to believe?

and i do imagine that an monthly increase of this magnitude >1,500 pcm represents a challenge for many borrowers … 

i think that the next 6-9 months will be quite interesting, i’d expect that many will try to sell in order to avoid the monthly mortgage increase, bur renting at much lower costs isnt guaranteed unless people downsize and also finding a buyer wont be easy as i’d expect that there simply will be more supply than demand.

back to the OP, hard to answer, nobody knows, personally i would wait a few months but then start looking, politics might jump in and change the market dynamics, especially in light of election year.

Anyone that takes out a 2 year fix is imo very short sighted always a 5 year plan. But moving on from that.

Presuming you have a 25 year mortgage. Existing repayments of £1800 at 1.4% means borrowing in the range of £450k. 

It's all relative so although your headline of £1800-£3600 will be scary media click bait in reality to get a mortgage of £450k in the first place you are on a decent salary.

I suspect if the daily mail are reading your post they will be in touch soon (joking I think)

Without extending your mortgage and keeping the existing term (guessing 23 years left) @ 5.25% five year fix which is possible as of today £2875 a month.

Still £1000 more a month but again presumptive but there is over £120k in household income and that's on the low guess side so take home pay over £6,300 whilst nit enjoyable.....doable.

Pretty much agree wtih all said, from 2 years being short sighted back then to the fact that numbers are all relative.

>£1,000 mortgage service increase isnt that painful if you have excess disposable income and sufficient savings, and temporary price drops and going into negative equtiy on paper for some time not that much of an issue if you dont intend/plan/forced to sell during that period ...

angelasocks

Bigphil1474 said:

I think it's still swings and roundabouts. House prices are going down but mortgages are more expensive and more difficult to get. If you can get an affordable mortgage, then you are likely to get more for your £ at the moment. It's more of a buyers market than 2 years ago.

I've been tracking a few houses as we are putting ours on the market in next couple of weeks, so looking to buy. Most of the properties that aren't being sold seem to have dropped by at least 5 to 10% in last 3 months. The one I really am interested has gone down from about £340k before Xmas, down to offers over £290k as of last week. It's vacant and looks perfect for us.  Another one has had price dropped from £325k to £300k from April to last week - this is West Yorkshire.

Me too looking to buy in West Yorkshire

Sarah1Mitty2

MEM62 said:

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

More realistically, you are paying back a large debt over time, and you are vulnerable to inflation/interest rate spikes in that time, many people won`t be able to hold on to the house now because they can`t afford the debt, "equity" won`t feature in their financial future unfortunately.

MEM62

Sarah1Mitty2 said:

MEM62 said:

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

More realistically, you are paying back a large debt over time.

You are paying out anyway - either serving mortgage repayments or by paying rent.  

Sarah1Mitty2 said:

MEM62 said:

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

and you are vulnerable to inflation/interest rate spikes in that time.

You are vulnerable to inflation in most aspects of life.  You cannot isolate yourself from that whichever route you go.  At least with a mortgage you have periods of certainty whilst any fixed rate is in place.    

Sarah1Mitty2 said:

MEM62 said:

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

many people won`t be able to hold on to the house now because they can`t afford the debt

That only applies to those that have sailed too close to the wind in terms of affordability.  Agreed many have been tempted to do this as, for many years, they have considered exceptionally low interest rates to be the norm.  They are now discovering that they are not.  With my first flat in the 80's I went form a mortgage payment of £300-ish an month to over £700 so I have been through it.  In my case I knuckled down to hang onto the place. 

Sarah1Mitty2 said:

MEM62 said:

Sarah1Mitty2 said:

MEM62 said:

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

If not now then when?  

If you need somewhere to live you can either buy or rent.  The former is an investment, the latter isn't.    

It isn`t really, it is a highly illiquid  (and for many people now a highly leveraged) asset that is very difficult to sell in property downturns/crashes and you can lose your deposit and also go into negative equity where you would need the banks permission to sell, and if borrowing mortgage debt you are exposed to interest rate fluctuations for decades (you can fix but not for the full term of the mortgage) You can walk away from a rental, you can`t walk away from a mortgage debt.

Of course it is.  It gains equity over time and eventually places you in a position where you are not paying either mortgage or rent.  For many, it will be one of the best investments that they make.  The argument that being illiquid and not easily disposable means that it is not an investment just does not hold water.  Not every investment you make needs to be liquid.    

Yes, you can walk away from a rental but what that got to do with the fact that buying your home being an investment?  Making life decisions based only on what you can easily walk away from is hardly the best philosophy, is it?    

"equity" won`t feature in their financial future unfortunately.

That is not necessarily true either.  I have just sold said flat for £210,000 more than I paid for it.  A nice pre-retirement windfall.

But even if circumstances for most are different and they cannot release the equity, they will still one day be in a position where they do not have monthly rent costs.  You cannot, particularly when looking at your latter years, be in a better position by paying rent.  So anyway you look at it, buying your home is an investment with considerable benefit.     

Sarah1Mitty2

tbo127 said:

Is now a good time to buy for first time buyers given the falling property prices? 

Are you renting or living with parents/family?

theartfullodger

Buying property is a bit like getting married.  

You won't know until some years later if it was a good idea on not......

Sarah1Mitty2

theartfullodger said:

Buying property is a bit like getting married.  

You won't know until some years later if it was a good idea on not......

There are warning signs that can tell you much earlier than that, warning signs for property are now flashing red, I would advise any FTB to step away from this market until the full effect of rate rises is known.