Mortgage Rate Rises

Philtor · 22 Jul 2023 at 01:27

Immune to inflation? lol what a daft statement! Pulled at my heart strings did that.

GordyR · 22 Jul 2023 at 08:45

It seems that the Resolution Foundation is predicting a -25% house price correction peak to trough by the time this is all over:

How far will house prices fall?

This week a think tank predicted that average house prices could fall by 25 per cent over the next five years. The Resolution Foundation said in its report

www.thetimes.co.uk

Maybe I should revise my -20% forecast?

Deleted User 298457 · 22 Jul 2023 at 08:50

GordyR said:
It seems that the Resolution Foundation is predicting a -25% house price correction peak to trough by the time this is all over:

How far will house prices fall?

This week a think tank predicted that average house prices could fall by 25 per cent over the next five years. The Resolution Foundation said in its report

www.thetimes.co.uk

Maybe I should revise my -20% forecast?

This is great for those trying to move up the ladder.

adam cool dude · 22 Jul 2023 at 08:59

Raymond Lin said:
I am on a guitar forum, and the demographic in that forum is probably about 20 years ahead of this one, most of the posters are 50's - 60's. A lot of them are mortgage free, although i cannot say how many voted for Brexit but they are mostly immune to inflation. There is currently a thread about retirement and a few said they retired in their mid 50's. If you do the math, in order to do that you need a solid private pension before the State pension to kick in, no mortgage, and a healthy saving pot that you can easily access, somewhere around half a mil these days.

That is the section of the population that isn't affected by much of the current economic crisis to the same extent. Their savings are going up, probably more than enough to offset the rise in food and energy. With no mortgage, the hit isn't as big as someone who still owe the bank £200k for their house.

My mother retired in her mid 50's due to a hip replacement and she was poor. Struggled for 5 years then her father died and got a load of money. She got state pension just before it went up from 60 so has been living the life of Riley since her mid 50's. She only worked about 10-15 years of her life tops. She was also declared bankrupt in the mid 00's after burning her divorce settlement on clothes and holidays. You don't have to be rich to be in a decentish retirement as a boomer.

I do agree with a low mortgage you do not really feel it. Ours is 500ish a month and even in 3 years time when we come off our rate we will only have around 30k left. Then again just like Boomers we were incredibly lucky to have money in 2010 when the house prices were rock bottom.

Uther · 22 Jul 2023 at 09:13

GordyR said:
It seems that the Resolution Foundation is predicting a -25% house price correction peak to trough by the time this is all over:

How far will house prices fall?

This week a think tank predicted that average house prices could fall by 25 per cent over the next five years. The Resolution Foundation said in its report

www.thetimes.co.uk

Maybe I should revise my -20% forecast?

Doesn't that pretty much put them back to where they were just before covid hit? The last few years of rises have been mental.

GordyR · 22 Jul 2023 at 09:26

Uther said:
Doesn't that pretty much put them back to where they were just before covid hit? The last few years of rises have been mental.

Pretty much yes.

neocon · 22 Jul 2023 at 10:25

So the new build I paid 585k for plus taxes and fees is going to drop 25%. New value somewhere around 450k?

glenimp617 · 22 Jul 2023 at 10:26

I wish it was more than -25%

flea.rider · 22 Jul 2023 at 10:30

GordyR said:
It seems that the Resolution Foundation is predicting a -25% house price correction peak to trough by the time this is all over:

How far will house prices fall?

This week a think tank predicted that average house prices could fall by 25 per cent over the next five years. The Resolution Foundation said in its report

www.thetimes.co.uk

Maybe I should revise my -20% forecast?

you really think this will happen .. maybe -5% in the next 3 yrs thats a big maybe .. if there were houses about that arn't being sold yeah . but anything under 200k is still going within 2 weeks .. even round here nw houses are going up left right and centre some have a sold sign on next day ... it's really only the stupid house prices down your end that are way over priced that will lose ..

LiE · 22 Jul 2023 at 10:30

neocon said:
So the new build I paid 585k for plus taxes and fees is going to drop 25%. New value somewhere around 450k?

Potentially yes. I bought my first home in 2007 just before the housing crash and it took 7 years for it to recover back to what I paid for it. I sold it in 2014 for exactly what I paid. My current house was a project which we grabbed for £200k and it's nearly doubled since, although we have done a fair amount of work.

adam cool dude · 22 Jul 2023 at 10:34

neocon said:
So the new build I paid 585k for plus taxes and fees is going to drop 25%. New value somewhere around 450k?

This happened to a lot of people back in 08. As long as you plan to live in it for ten years then it will be most likely worth the same by then. That is as long as you can keep up with payments and don't end up getting repo'ed with negative equity.

It isn't really as bad as it sounds as if you decide to upgrade later in life the jump will actually most likely be cheaper.

dowie · 22 Jul 2023 at 10:40

GordyR said:
It seems that the Resolution Foundation is predicting a -25% house price correction peak to trough by the time this is all over:
Maybe I should revise my -20% forecast?

Nope, as they mention prices have already fallen 7%, the 25% figure refers to a further fall from current levels and it's not a "trough" necessarily either but rather where they see them settling at in a "new normal" interest rate environment.

neocon · 22 Jul 2023 at 10:42

adam cool dude said:
This happened to a lot of people back in 08. As long as you plan to live in it for ten years then it will be most likely worth the same by then. That is as long as you can keep up with payments and don't end up getting repo'ed with negative equity.

It isn't really as bad as it sounds as if you decide to upgrade later in life the jump will actually most likely be cheaper.

The dumb thing is I paid my mortgage off in 2020 and took out a new one to buy this house, although it's only 80k. Oh well... It is fixed for 4 more years

Uther · 22 Jul 2023 at 10:52

TheOracle said:
I wish it was more than -25%

Should probably be 50% to bring them into anything like reasonable territory but that would wreck a lot of people.

GordyR · 22 Jul 2023 at 11:06

flea.rider said:
you really think this will happen .. maybe -5% in the next 3 yrs thats a big maybe .. if there were houses about that arn't being sold yeah . but anything under 200k is still going within 2 weeks .. even round here nw houses are going up left right and centre some have a sold sign on next day ... it's really only the stupid house prices down your end that are way over priced that will lose ..

Yes I do. That data suggests that we’ve already seen around 5-7%, and in parts of London, much larger drops.

The thing to remember is that we’re talking about averages here. There will be huge regional variations.

CapitalOne · 22 Jul 2023 at 11:10

GordyR said:
Yes I do. That data suggests that we’ve already seen around -4.5%, and in parts of London, much larger drops.

The thing to remember is that we’re talking about averages here. There will be huge regional variations.

Fact - my Nationwide estimate has gone from 1.1 to 950 (I think the 1.1 was about 9 months ago).
my Rightmove estimate from 1.2 to just over 1.0

So I'd say -20% by this time next year is fairly realistic.

Mysterae_ · 22 Jul 2023 at 11:23

The price shrinking/correction of homes will hit a lot of people when it comes to remortgaging when their current term ends. It could move them up a LTV bracket or two; going from 75% to 90% would be particularly costly. Worse still is if they fall in to 91% LTV or above and no bank will give them a mortgage meaning they'll be stuck at the SVR with their current bank until they meet the necessary LTV again.

GordyR · 22 Jul 2023 at 11:30

dowie said:
Nope, as they mention prices have already fallen 7%, the 25% figure refers to a further fall from current levels and it's not a "trough" necessarily either but rather where they see them settling at in a "new normal" interest rate environment.

You’re quite right.

Thanks for the correction, my commentary was written based upon the headline and summary, I’ve since read the detail.

neocon · 22 Jul 2023 at 11:34

Surely it's slightly different to many markets because owners will have a good memory of what they have paid so will be very unwilling to sell at a loss. Only where the property is repossessed or their hand is forced would these reductions be realised.

What's the volume of sales like these days?

CapitalOne · 22 Jul 2023 at 11:37

neocon said:
Surely it's slightly different to many markets because owners will have a good memory of what they have paid so will be very unwilling to sell at a loss. Only where the property is repossessed or their hand is forced would these reductions be realised.

What's the volume of sales like these days?

UK monthly property transactions commentary

www.gov.uk

Mortgage Rate Rises

Deleted User 298457

Deleted User 298457