Why not buy a property now?

red_bertie

Good point, job security is rarely guaranteed and would need to be evaluated in any house-buying scenario.

RB

carolt

red_bertie wrote: »

If it were me, I was a FTB and found something that fit the bill and I could afford it I would definitely buy.

Unless you are hard-nosed and looking to make money, you will be buying a home not a house.

Homes are usually bought with heart ruling over head.

If you are happy with the purchase and prepared to stay in it for up to 10 years, you will be emotionally committed to the property and yes, it could be cheaper next year, or not, but at least you will own your own home.

RB

But the OP said he might want to move within the next 5 years. So being 'stuck' in his house is a problem for him. It might not be for all FTB, but it is for him.

BobProperty

teabelly wrote: »

Population growth is major driver of prices. The credit crunch is what is stopping everything in its tracks at the moment.

Is it just me or is that a contradiction? House prices depend on sentiment and affordability NOT supply and demand. If no one could get a mortgage would it stop people wanting a house? No, it wouldn't stop them wanting one (i.e. demand) but the practicality may be it precludes them from buying.

teabelly

It's a bit of both. Population drives the increased levels of demand but availability of mortgages drives how much of that demand can be satisfied. Even if prices fall it doesn't necessarily mean any more will be able to buy as deposit requirements will increase just as fast as any price falls. Banks will protect their position and they hold all the cards so if they want to enforce 25% deposits for FTBs believing them to be the highest risk then they will. BTL investors will be treated better than FTBs as they generally have lower default rates. Those trading up will be treated reasonably if they have a good payment record and have a reasonable chunk towards a new house. FTBs are going to be the losers in either the continued high price inflation or a crash as even if prices crash banks probably won't touch FTBs with a pole unless they have a massive deposit. A scenario may unfold where FTBs have to find 20-25% deposits but BTL investors still only have to find 15% and are given better rates. Seeing as a large proportion of FTBs can't even scratch a 5-10% deposit together then far more will be priced out than at the moment. But you got what you wished for but unfortunately it won't pan out and give you the advantage that you hoped, you still won't be able to buy and you should have just gone ahead and done it when you could rather than trying to speculate on what the housing market was going to do. As most of the investors say, don't bet against trend which is what all those that have waited and hoped prices would fall have been doing.

carolt

teabelly wrote: »

Banks will protect their position and they hold all the cards so if they want to enforce 25% deposits for FTBs believing them to be the highest risk then they will. BTL investors will be treated better than FTBs as they generally have lower default rates. Those trading up will be treated reasonably if they have a good payment record and have a reasonable chunk towards a new house. FTBs are going to be the losers in either the continued high price inflation or a crash as even if prices crash banks probably won't touch FTBs with a pole unless they have a massive deposit. A scenario may unfold where FTBs have to find 20-25% deposits but BTL investors still only have to find 15% and are given better rates. Seeing as a large proportion of FTBs can't even scratch a 5-10% deposit together then far more will be priced out than at the moment. But you got what you wished for but unfortunately it won't pan out and give you the advantage that you hoped, you still won't be able to buy and you should have just gone ahead and done it when you could rather than trying to speculate on what the housing market was going to do. As most of the investors say, don't bet against trend which is what all those that have waited and hoped prices would fall have been doing.

Come back in 2 years time and say BTLetters defaulted less than FTB's. As has been pointed out before, FTB's have very strong emotional reasons for holding onto their house - it's their home, and they need somewhere to live; but to a BTL 'investor', it's just another investment, and if it is underperforming, ie losing them money, they will sell. Those who bought a few years ago with low LTV won't, necessarily, but all those who bought recently and were relying on capital growth to make the sums work, will soon have to bail out before they get repossessed. 'Deciding' to 'hold onto it for the long term', even if they want to, may not be an option open to them once their current mortgage period runs out and they are unable to remortgage to anything other than SVR, as prices fall and their LTV amount consequently rises.

According to the Times, here:

http://business.timesonline.co.uk/to...cle3722548.ece

"Seven out of ten buy-to-let investors borrow between 71 per cent and 90 per cent of a property's purchase price."

So that's an awful lot of them very vulnerable if prices fall by even 5 or 10%.

BTL is increasingly being seen as a highly risky area by most lenders and a large number of BTL mortgage companies have pulled out of the area/gone bust in recent months. Expect more to do so as the crash, correction or whatever you want to call it, gathers steam.

And don't forget that BTL investors are often highly geared, another reason making them far more risky than homeowners.

The days when landlords got better mortgage deals than those buying their own homes are over, mercifully.

Gorgeous_George

Anybody buying in today's market has bigger balls than me.

Either that or they need their head read.

I'm sure that there will be exceptions to the rule but I like to follow the rules.

GG

mr.broderick

Gorgeous_George wrote: »

Anybody buying in today's market has bigger balls than me.

Either that or they need their head read.

I'm sure that there will be exceptions to the rule but I like to follow the rules.

GG

Like I've always said GG It's ok to talk the talk on here but who out of the big noises on here, when the optimum time comes and they drop, who's going to walk the walk and go for it, can't wait for it to all happen, sat here with popcorn watching my laptop...

teabelly

Chap on breakfast news was saying the same thing as me. Banks will require larger deposits and FTBs will still be priced out so no point them getting all smug about price drops as most of them still won't be able to afford much. Experienced BTL investors who have lower default rates than a normal mortgage holder will therefore represent lower risk levels so they will have better rates. FTBs with less than 10% deposits will be the new sub prime untouchables.

As you had already said deposits were increasing due to a possible price crash then where do you think al those FTBs that can't scrape together the 5% deposits needed now are going to find the 10-20% deposits necessary to avoid negative equity if your house price crash scenario plays out? You can't jump up and down about banks lowering LTVs and not see the obvious consequences. It will be harder to buy and as prices fall LTVs will also lower to protect the banks who have been burnt by negative equity in the past. Letting more repossessions occur if they are sold off cheap will make the problem worse so LTVs would lower again. Banks will make huge losses and we'll end up paying for them.

Or the govt could just pile in billions to the banks so they can carry on lending at a similar rate to previously and keep the whole show on the road as it will cost us less in the long run.

As they have just announced 40bn I think the government has just said loud and clear where it wants the housing market to go. Upwards, no matter what.

chrisandanne

Seen in the Yorkshire Building Society......New Mortgage offer requires 22K in a deposit account for the entire term of the mortgage, other figures 6.3 and 0.89. What a cheek !!

They didn't have a leaflet, probably haven't had time to print them yet, so I don't know what deposit would also be required. Ax

monkeybutler_2

" Please God, let me live long enough to hear an American President admit that they did not land on the Moon in 1969."

To my knowledge Mr. George, no American President has ever claimed to have landed on the moon in 1969. :P

As an aside we had to ban a gentleman (read awesome crazy conspiracy nutjob) from a public library I used to work in for anotating our entire moonlanding section with comments like "the lights wrong" and "if you look closely you can see that rock in the corner has a prop department stamp on it". Barmy. Also had to regularly field questions on why our stuff on the Mayans, the hollow earth etc were in the bat sht mental section and not the history or science ones. I quite miss those interactions now...