Mortgage Rate Rises

fez said:
If prices dropped 20% we would probably jump ship and get the next house we want and suffer the few years of pain. It would save us a few hundred thousand so worth it.

I imagine it will be more like 10% and a lot of people like ourselves who would like to move up the ladder will just stay put.
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When you say it saves you thousands, do you mean like:

You have a house worth 400k.
You want to buy a house worth 500k.
Difference is 100k you have to borrow.

Prices fall 20%:
You have a house worth 320k.
You want to buy a house worth 400k.
Difference is 80k you have to borrow.

So you save 20k? That kind of thousands? In the grand scheme of things, is it that big a deal to influence decisions over the course of a long term?
 
jaybee said:
When you say it saves you thousands, do you mean like:

You have a house worth 400k.
You want to buy a house worth 500k.
Difference is 100k you have to borrow.

Prices fall 20%:
You have a house worth 320k.
You want to buy a house worth 400k.
Difference is 80k you have to borrow.

So you save 20k? That kind of thousands? In the grand scheme of things, is it that big a deal to influence decisions over the course of a long term?
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20k is quite a lot!

We pay 500 a month off our capital. That's 40 months of savings!
 
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jaybee said:
When you say it saves you thousands, do you mean like:

You have a house worth 400k.
You want to buy a house worth 500k.
Difference is 100k you have to borrow.

Prices fall 20%:
You have a house worth 320k.
You want to buy a house worth 400k.
Difference is 80k you have to borrow.

So you save 20k? That kind of thousands? In the grand scheme of things, is it that big a deal to influence decisions over the course of a long term?
Click to expand...
That's only assumed that you paid all of your 400k mortgage
 
GordyR said:
I actually wouldn't be surprised, that when the land registry data catches up, it turns out that we've already seen a 10% reduction in transactions prices that are happening now; and I definitely think there's a lot worse to come as people's fixes end over the next 12 months.

The retracing of the Covid boom (around 20%) has been my rough guess for a while now; I haven't seen anything to make me change my mind on that, but there's definitely significant room for error either side.

35% is without a doubt at the upper end of all the models i've seen so far, but they've definitely been shifting upwards over the last few weeks, and given that we're at what appears to be a fairly significant economic turning point, it's not completely out of the realms of possibility; even if the idea does seem so unlike what we've been used to.



Personally, I don't think that's going to happen in the kind of numbers that many seem to think it will.

Once the data catches up and the popular narrative turns to one of falling prices, people become extremely fearful of trying to catch a falling knife.

It's possible of course, but i'm not convinced by the narrative that cash buyers are going to completely prop up the market; I think that in those circles we'll start seeing a lot of people talk about waiting for the bottom, and by the time they know that it's in, they're too late.



I think that's the point though, we're talking about an asset that has only appreciated in the way it has over the last few years, due to the availability of extremely cheap debt and a very specific set of policy related circumstances; all of which have now come to an end.

As such, I don't think it's wise to use past price action history as an indicator of future performance. When the entire landscape seems to be shifting, all bets are off; there's just too many unknowns.
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Got a couple of data points. To my left (depending which way I face my house of course but go with it) is a different house type to me.
It sold last year (around March actually) but fell through a few months later. It sold for around £300k. Its now recently sold again STCC at £270k.
Its sat empty all that time, it was rented out to US service but the landlord (who I know) wanted to crystalise the gain. Hes been selling one house a year.

To my right is a house identical to mine that thats been dropped around 5% over 2 months and as of today its not sold.
It was tenanted until around 3 weeks, but with vacant possession they have still dropped the price considerably.

We live in a high rental area, many were bought off plan by investors as there was a shortage of property close to the two US air bases. (Technically RAF bases but been in US hands since WW2 basically).
Whilst I cant remember every house that I have seen for rent I have an inkling that a high percentage of the recently sold or current for sale are ex or current rentals from remembering seeing this properties up for let before.

Whether its significant or not, and whether its just a blip I am not sure. But there seems to be an increasing rate of B2L landlords selling up. I wonder now if the tax changes from a couple of years ago have more than taken the shine off the market and many more will now exit.

There definitely seems to be slower turnaround my way and i think B2L landlords selling up are more willing to drop prices to crystalise a gain of say 100% now, rather than risk a long drop in prices.

My suspicion is its thrown the supply and demand equation out a bit. With too much supply right now. Builders stopping or slowing building may soften that impact somewhat.

I could see 20% drop vs peak. Maybe 30%.
But like has happened in the past, generally the bottom is short lived with a half decent bounce back before the slow but constant price rises start again.
 
jaybee said:
When you say it saves you thousands, do you mean like:

You have a house worth 400k.
You want to buy a house worth 500k.
Difference is 100k you have to borrow.

Prices fall 20%:
You have a house worth 320k.
You want to buy a house worth 400k.
Difference is 80k you have to borrow.

So you save 20k? That kind of thousands? In the grand scheme of things, is it that big a deal to influence decisions over the course of a long term?
Click to expand...

Few hundred thousand although I clearly hadn't considered that our house would also drop that much so perhaps just £100k. Add in the stamp duty and...oh god, we basically save about £50.

Our house is worth about £550k and the house we would be looking at is probably £800k - £1m. A 20% drop in the market would see us save about £100k once you took the drop in value of our house into account although it might not fall quite as much because its in a good area and "affordable" for the area.
 
BBC pm Panier Gordon head Simon ? - projection of expected price drop over next 2 years 14% (4% so far) and incorporating inflation drop will be effectively 30%
 
Mercenary Keyboard Warrior said:
Got a couple of data points.... *snip*
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Very interesting post MKW, thanks for sharing.

Your experience seems to be pretty much in the line with most of the other anecdotal stories i've been hearing about recently.

It definitely feels like over the last few weeks there's been a bit of a capitulation in terms of reality setting in for some sellers. Just looking around at the number of houses with repeated, monthly reductions, having chased the market down 15-30% over the last 6-9 months is eye watering. If some of these people had priced more sensibly in the first place, they'd have sold a lot sooner and for far more than they'll now end up getting.

Regardless, from what I've seen, the data definitely supports your suggestion that there's been a significant increase rate of B2L landlords, selling up and adding to supply, just as demand is cooling.

Mercenary Keyboard Warrior said:
I could see 20% drop vs peak. Maybe 30%.
But like has happened in the past, generally the bottom is short lived with a half decent bounce back before the slow but constant price rises start again.
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Quite right, and with data taking so long to feed through, by the time we know where the bottom is, we'll be 6-9 months down the line at least; and well and truly into the price recovery in nominal terms.
 
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GordyR said:
Very interesting post MKW, thanks for sharing.

Your experience seems to be pretty much in the line with most of the other anecdotal stories i've been hearing about recently.

It definitely feels like over the last few weeks there's been a bit of a capitulation in terms of reality setting in for some sellers. Just looking around at the number of houses with repeated, monthly reductions, having chased the market down 15-30% over the last 6-9 months is eye watering. If some of these people had priced more sensibly in the first place, they'd have sold a lot sooner and for far more than they'll now end up getting.

Regardless, from what I've seen, the data definitely supports your suggestion that there's been a significant increase rate of B2L landlords, selling up and adding to supply, just as demand is cooling.



Quite right, and with data taking so long to feed through, by the time we know where the bottom is, we'll be 6-9 months down the line at least; and well and truly into the price recovery in nominal terms.
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I think it's very much area dependent... I'm seeing some reductions but they were overpriced (IMO) to begin with, needing a lot of work but priced like they don't need work etc.

I'm glad I bought where I am, it's only a 2 bed, but its in a nice area of town with good transport links and ammeneties, and the neighbours are nice which is a huge plus which cannot be understated.

I could have got a 3 bed semi with a garage and a bigger garden in the 'bad' area of town for simmilar money, but then you've got all the scroats and noisy anti social neghbours that comes with that.

Location, location, location, as they say.
 
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