Mortgage Rate Rises

[potatolord]

And I simply do not think that's true whatsoever. None of the available data I've seen points to that being a reasonable conclusion.

Spokespeople for lenders, brokers and agents, always say the same things during market corrections. If I were a cynic I would say that they perpetuate this narrative very deliberately, but in truth I just think that with anything remotely economics related, very few journalists are equipped to understand the data they're looking at, then alone interpret and report on it accurately.

An increase in the number of transactions at the higher end of the market will result in an increase in the average selling price for that month, even if house prices are falling across the board.

The old joke about Bill Gates getting into a lift springs to mind.

You would not believe how many people struggle with averages, and the difference between mean and median...

 

[a1ex2001]

The reality is what's probably best for the country is just some stability. So a decade of 3-4% interest rates and similar low single digit house price rises, making homes, homes again and not expecting them to be money printers.

This would be best all round but can't happen without building and that is something we as a country have consistently failed to do for 50 years or more and I can't see anything changing that anytime soon.

 

[Sythe79]

This would be best all round but can't happen without building and that is something we as a country have consistently failed to do for 50 years or more and I can't see anything changing that anytime soon.

Of course, I don't think it will happen someone somewhere will screw it up. It's just hoping for <2% interest rates again or some massive house price crash is just asking for worse.

 

[413x]

The old joke about Bill Gates getting into a lift springs to mind.

You would not believe how many people struggle with averages, and the difference between mean and median...

Stop being so mean. Can't expect everyone to knows what mean means.

 

[a1ex2001]

Of course, I don't think it will happen someone somewhere will screw it up. It's just hoping for <2% interest rates again or some massive house price crash is just asking for worse.

Agree when we bought our first house nearly 20 years ago people were waiting for the big crash and it’s still not arrived! I actually hope interest rates don’t land up sun 2% again as that would require a nasty recession or similar which will be even more miserable for people.

 

[unwashed potato!]

The best 2 year fixed I'm seeing with those details os 5.09% with Virgin money: https://www.moneysavingexpert.com/m...oductNoFee=false&noEarlyRepaymentCharge=false

thanks.
i'm a little lost as to why the repayment at the link you've shared is higher than our repayment while the rate is lower on your link?

 

[HungryHippos]

Agree when we bought our first house nearly 20 years ago people were waiting for the big crash and it’s still not arrived

I mean there was a pretty good one in 2008 wasn't there? That was 15 years ago. Since then only up really.

 

[unwashed potato!]

the thing is, waiting for a crash before purchasing, only really works if you live relatively rent free, at home with parents.

renting for £1500 per month for 2 years, will cost more than just purchasing a house that you may have been able to buy say £30k cheaper had you waited.

 

[Mercenary Keyboard Warrior]

Waiting for a crash can be high risk anyway since generally when there is a crash there will be a restriction in regards lending in that they tend to tighten the criteria right up at that point

If your a cash buyer you may win big however.

 

[413x]

the thing is, waiting for a crash before purchasing, only really works if you live relatively rent free, at home with parents.

renting for £1500 per month for 2 years, will cost more than just purchasing a house that you may have been able to buy say £30k cheaper had you waited.

This is often missed.
We were paying 550 a month before to landlord.

Now we are paying 330 to the bank and 570 to ourselves.

And that 330 gets a detached house where the 550 got a grotty hole.

If that was Equivalent I suspect it would be more like 1000-1500 vs 330.

700ppm difference over a year is about 8k.

So even if house prices were dropping 5pc.its still better to buy.


Very over simplified but I think it follows.

 

[a1ex2001]

I mean there was a pretty good one in 2008 wasn't there? That was 15 years ago. Since then only up really.

There wasn't much of one at all in 2008 in an awful lot of areas prices round me simply stopped rising for a couple of years nobody was selling houses at a loss!

 

[unwashed potato!]

This is often missed.
We were paying 550 a month before to landlord.

Now we are paying 330 to the bank and 570 to ourselves.

And that 330 gets a detached house where the 550 got a grotty hole.

If that was Equivalent I suspect it would be more like 1000-1500 vs 330.

700ppm difference over a year is about 8k.

So even if house prices were dropping 5pc.its still better to buy.


Very over simplified but I think it follows.

yeah and to add to that, rent only ever goes up, so in 2 years time you could be paying another £200 extra in rent, while your mortgage would have reduced by 2 years of payments and typically i'd have thought when you renew a mortgage you expect to be paying less than the last time.

i feel like the only time to wait to purchase a house should a crash be coming, is when you're literally ready to sign and purchase, but news comes out of a crash coming within days/weeks. This idea of waiting in hope of a crash at some point is almost always going to be a bad decision.

 

[a1ex2001]

This is often missed.
We were paying 550 a month before to landlord.

Now we are paying 330 to the bank and 570 to ourselves.

And that 330 gets a detached house where the 550 got a grotty hole.

If that was Equivalent I suspect it would be more like 1000-1500 vs 330.

700ppm difference over a year is about 8k.

So even if house prices were dropping 5pc.its still better to buy.


Very over simplified but I think it follows.

Simple but true, unless the 'big crash' is only a very short wait away then you are better of buying particularly if buying a good house in a good area as they are invariably less effected by drops in the market as demand is more likely to remain keeping prices higher.

 

[Chris344]

thanks.
i'm a little lost as to why the repayment at the link you've shared is higher than our repayment while the rate is lower on your link?

Are you sure your HSBC offer is correct? Looking at a basic Google mortgage calculator; £250k @ 5.09% over 21 years is showing at £1,617 which is in-line with the link I posted. Check the term length on your offer is indeed 21 years. A 23 year term is more around £1539 which is in-line with what you posted.

 

[a1ex2001]

Waiting for a crash can be high risk anyway since generally when there is a crash there will be a restriction in regards lending in that they tend to tighten the criteria right up at that point

If your a cash buyer you may win big however.

or grow old and die!

 

[413x]

yeah and to add to that, rent only ever goes up, so in 2 years time you could be paying another £200 extra in rent, while your mortgage would have reduced by 2 years of payments and typically i'd have thought when you renew a mortgage you expect to be paying less than the last time.

i feel like the only time to wait to purchase a house should a crash be coming, is when you're literally ready to sign and purchase, but news comes out of a crash coming within days/weeks. This idea of waiting in hope of a crash at some point is almost always going to be a bad decision.

You've got to be really sure.
I still go back to covid. If I hadn't been so far along buying I'd have pulled out and looked a right ***.

It was late 2019 and searches were done. I was talking to my boss saying "this covid thing is going to be bad." to which I heard "it'll be gone in a month".

At this point it was entering Italy.

I was so sure covid was going to destroy it all. And it probably would have without furlough etc.

But if I had have held off the house we got for 260 now 340 (probably more like 300-320 as rightmove lags) would be out of reach. If it wasn't for so much invested by that point I would have pulled out.

And as you say, that 330 of interest is dropping by a pound or 2 a month as time goes on.

Renting now? That same grotty hole would be 700+

 

[Richie]

I'd be happy in 2027 if rates are 3.5-4pc at this rate

However I'd also be happy if the rates were still 5 but prices had come down as I want to move before then

My deal runs out in late 2027 as well currently at 3.5% so I am actually hoping it is 3.5% or less. Granted its only £40/month more to go to 4% and I will hopefully had some good wage increases in that time but I'd rather my payments didnt go up after the £150/month increase at the end of last year when I renewed.

 

[413x]

My deal runs out in late 2027 as well currently at 3.5% so I am actually hoping it is 3.5% or less. Granted its only £40/month more to go to 4% and I will hopefully had some good wage increases in that time but I'd rather my payments didnt go up after the £150/month increase at the end of last year when I renewed.

Mines 1.93. So pretty sure I'm going to be boned. I want to drop from 23 year term (which will be 19) in 2027 to 15 years. But if rates aren't around 3pc by then it won't happen.

 

[t2na]

We were paying 550 a month before to landlord.

Now we are paying 330 to the bank and 570 to ourselves.

This is a really nice way of looking at it - and I know there are lots of different views on it but it's definitely a nice way to consider it.

 

[GordyR]

My view is that trying to actually time the market is a mugs game. By the time we know that the bottom is in, we'll have missed it; because you need to have been viewing at least 6-9 months earlier.

If you need to move, then move; whatever the market conditions. Just do as much research as you can and let the data inform whatever offers you're making.

In the current market, that means ensuring that you don't overpay. There's still an awful lot of over-optimistic sellers out there who haven't accepted that things are very different to 12 months ago. As such, there's a lot of very overpriced properties on the market that realistically should be asking at least 15% less than they are if they want to attract any kind of interest whatsoever.

If you have the means to pay asking on a property you're interested in right now, it could be very easy to make a mistake. But then again, if you're in it for the long term and you can comfortably afford the property you're looking at, then it doesn't really matter all that much, you'll be fine riding out whatever the next 12-18 months have in store.

On another note, I really don't like the term crash. It implys that during a correction we should expect to wake up one day to see large percentages suddenly wiped off of house prices, but that's not how it works; they decline gradually over 2-3 years and it's never in a straight line.