Mortgage rates rise for second time in days

neverdespairgirl

pickles110564 wrote: »

Why?
If the person who bought at the peak and suffers 5 years of NE but has no intention of selling their home and can afford to service the debt, it does not matter.

It certainly does matter.

If you buy a house @ £100k, and stay there 25 years, you are paying back £100k plus all the compound interest.

If you buy the same house 3 years later, @ £80, you have to pay back £20k less in capital and an awful lot less interest to boot.

neverdespairgirl

!!!!!!? wrote: »

The whole 'Dream Home' thing is a bit of a red herring.

Thanks to property !!!!!! programmes, people seem to think that any kind of vaguely nice house in a half decent area is a must-have 'dream home' (it has sash windows / period features / think of the possibilities to stamp your own identity on the house.... blah blah).

I agree, the "dream home" idea is very over-used and over-rated. There are very few places which are genuinely different from the pack; another Victorian semi or nasty new build will always turn up shortly.

WTF?_2

setmefree2 wrote: »

Hi !!!!!!?

All good points. However, you would have to agree that some one who borrowed £100k (say at 6%) last summer is no worse off than somone who buys this year at £90k (a 10% drop) with a rate 1% higher - 7%. I don't think his/her financial situation would be any more insecure in the next few years since the person who bought last summer will be paying £650 pm and the person buying this year is also paying £650 pm for their repayments.


SMF2

The short-term repayments will be similar for both but the person who borrowed less cash is in a better position long term to reduce the term of the mortgage and hence pay less interest and a lot less overall. They are also going to be less troubled by the impact of interest rates, credit restriction etc.

IMO low interest rates just con people into taking on more debt. They look only at monthly repayments (often artificially low due to 2-year fixes) and thus feel able to manage higher debts. That's only true up until the point when market conditions change and they find themselves having problems servicing the debt.

If we were sitting with prices at reasonable levels then there wouldn't be a lot of point holding out for a crash. But given all the available facts to hand we are just past the peak of a bubble and about to see markedly lower prices in the near-term.

setmefree2

neverdespairgirl wrote: »

It certainly does matter.

If you buy a house @ £100k, and stay there 25 years, you are paying back £100k plus all the compound interest.

If you buy the same house 3 years later, @ £80, you have to pay back £20k less in capital and an awful lot less interest to boot.

That is only if interest rates don't rise. See my post #77 as it's too long for me to go through all that again:D

WTF?_2

setmefree2 wrote: »

That is only if interest rates don't rise. See my post #77 as it's too long for me to go through all that again:D

Yeah, but the period of the mortgage is going to be 20/25 years for most people. Rates are gonna go up and down quite a bit over that time. So borrowing big on the grounds that rates are momentarily low making the debt serviceable isn't a good plan.

If you must buy in a period of high price but low rates, then a life-of-mortgage fix would be in order so that at least you keep the benefits of the low rates. Such was the frenzy to get the lowest possible monthly payments that people seem to have spurned that option when they had the chance. I'm pretty sure I saw reports in forums from people who had fixed 20 years at 4% at one stage, a deal that many would jump at now.

setmefree2

!!!!!!? wrote: »

Yeah, but the period of the mortgage is going to be 20/25 years for most people. Rates are gonna go up and down quite a bit over that time. So borrowing big on the grounds that rates are momentarily low making the debt serviceable isn't a good plan.

If you must buy in a period of high price but low rates, then a life-of-mortgage fix would be in order so that at least you keep the benefits of the low rates. Such was the frenzy to get the lowest possible monthly payments that people seem to have spurned that option when they had the chance. I'm pretty sure I saw reports in forums from people who had fixed 20 years at 4% at one stage, a deal that many would jump at now.

We'll have to agree to disagree then;) I think there is more to buying a house than just the cost. You just have to bite the bullet, jump in and get rid of the debt asap IMHO.:D Anyway, I'm off to watch Man United. Can't believe Sven's been sacked._pale_:footie:

All my days, did that thread about "ct" get pulled! Feel bad now.