is now a good time to buy a house?
Discussion
hello there. basically i have been sizing up the market for quite some time and saving avidly. i have been waiting for the much talked about 'crash' and have witnessed a slight correction in prices to make things more affordable for me.
what i am worried about is that i will buy a house now not far off its 2007 peak and then be hit with the up and coming interest rate hike. the telegraph was talking about a possibility of an interest rate of 14% in 2 years and the daily mail about 8%. i worked out my mortgage repayments on this and they would absolutely ruin me.
i have made an offer on a house and am 2 days fom getting the answer and i was 100% but am now getting cold feet with this revelation of future high interest rates and the crash of 1990 happening again.
if i buy when the market crashes, if it does then the credit will be expensive (mortgage) but the house won't be. but if i buy now and the house is expensive and then the credit becomes expensive i have been caught out on both accounts and i don't think i could financially sustain that level of payment.
i am by no means an expert on this and am worried i am going to make a life ruining choice that will haunt me for a long time to come.
what i am worried about is that i will buy a house now not far off its 2007 peak and then be hit with the up and coming interest rate hike. the telegraph was talking about a possibility of an interest rate of 14% in 2 years and the daily mail about 8%. i worked out my mortgage repayments on this and they would absolutely ruin me.
i have made an offer on a house and am 2 days fom getting the answer and i was 100% but am now getting cold feet with this revelation of future high interest rates and the crash of 1990 happening again.
if i buy when the market crashes, if it does then the credit will be expensive (mortgage) but the house won't be. but if i buy now and the house is expensive and then the credit becomes expensive i have been caught out on both accounts and i don't think i could financially sustain that level of payment.
i am by no means an expert on this and am worried i am going to make a life ruining choice that will haunt me for a long time to come.
If anyone truly knew the answers to those questions, then they would be extremely rich.
My thoughts are that house prices still have some way to fall, at least in real terms - they are still largely unaffordable to first-time buyers unless they have a huge deposit and older people have more and more tendency to spend their money rather than leave it as inheritance.
I also think it's inevitable that interest rates rise substantially at some point and that there's a good chance that they'll hit double figures.
My thoughts are that house prices still have some way to fall, at least in real terms - they are still largely unaffordable to first-time buyers unless they have a huge deposit and older people have more and more tendency to spend their money rather than leave it as inheritance.
I also think it's inevitable that interest rates rise substantially at some point and that there's a good chance that they'll hit double figures.
There's a lot of doom-mongering in the media. Some justified, some not.
However the question of when to buy a house is the $64,000 dollar one.
Look at the house you're buying. Are you buying a bigger house that you'll live in for some years? If so, I wouldn't worry too much about a price crash as price crashes only affect those selling.
If you're worried about interest rates, get a long fixed rate mortgage which should, in theory, ride out interest rate hikes. Don't forget you'll maybe be on more money in a few years aswell.
It's a calculated risk. Lots of people on here happily rent to avoid all risk and gleefully sit back come recession-time knowing that they don't have negative equity. These people also don't have a large asset like a house.
Remember just a few weeks ago, the BoE was saying that interest rates will stay the same well into 2011.
But remember also that some would say prices are unsustainably high!
Look at what you can afford on a medium term basis and decide whether you want to risk it. Don't basis your judgement on an article in the Mail or Telegraph.
However the question of when to buy a house is the $64,000 dollar one.
Look at the house you're buying. Are you buying a bigger house that you'll live in for some years? If so, I wouldn't worry too much about a price crash as price crashes only affect those selling.
If you're worried about interest rates, get a long fixed rate mortgage which should, in theory, ride out interest rate hikes. Don't forget you'll maybe be on more money in a few years aswell.
It's a calculated risk. Lots of people on here happily rent to avoid all risk and gleefully sit back come recession-time knowing that they don't have negative equity. These people also don't have a large asset like a house.
Remember just a few weeks ago, the BoE was saying that interest rates will stay the same well into 2011.
But remember also that some would say prices are unsustainably high!
Look at what you can afford on a medium term basis and decide whether you want to risk it. Don't basis your judgement on an article in the Mail or Telegraph.
Edited by Muzzer on Tuesday 24th August 14:22
got a 25 percent deposit and am not looking to sell, well ever really but if the interest rates go up to mental levels it will ruin me. might let the whols situation calm down and see what the government does to make housing more affordable (probably nothing).
i know house prices could keep climbing but its a price i'll have to pay i think for my lack of balls in this arena.
why does buying a house have to be so hard and why are the values so mental. i know the baby boomers have had it great but we are all f
ked now and its st.
i know house prices could keep climbing but its a price i'll have to pay i think for my lack of balls in this arena.
why does buying a house have to be so hard and why are the values so mental. i know the baby boomers have had it great but we are all f
ked now and its st. pimping said:
got a 25 percent deposit and am not looking to sell, well ever really but if the interest rates go up to mental levels it will ruin me. might let the whols situation calm down and see what the government does to make housing more affordable (probably nothing).
i know house prices could keep climbing but its a price i'll have to pay i think for my lack of balls in this arena.
why does buying a house have to be so hard and why are the values so mental. i know the baby boomers have had it great but we are all fked now and its st.
Buy something for a price that means you will be able to cope with higher interest rates, say 7 or 8% in a couple of years' time.i know house prices could keep climbing but its a price i'll have to pay i think for my lack of balls in this arena.
why does buying a house have to be so hard and why are the values so mental. i know the baby boomers have had it great but we are all f
ked now and its st. Daft to stretch to being able to just afford a property at current rates when the rates are at the lowest they can go.
just do it, but make sure you are comfortable with the mortgage etc
long term average mortgage rate is c5% so make sure if you get a deal below that that you over pay.
if mortgage rates hit 14% the whole system will be in a mess. as a big chunck of the population will not beable to afford mortgage, and no one will want to buy.....so doubt it'll happen
Custard
long term average mortgage rate is c5% so make sure if you get a deal below that that you over pay.
if mortgage rates hit 14% the whole system will be in a mess. as a big chunck of the population will not beable to afford mortgage, and no one will want to buy.....so doubt it'll happen
Custard
If its an investment - nah probably not a great time, unless its a steal. If its for you and you are planning to stay for a number of years, why the hell not? Yeah, prices go up as well as down. But if you are repaying a mortgage, you are paying off a loan and hence one step futher to owning the damn thing!
Houses are selling and good ones are making good money. There does seem to be some movement and as far as I can see, my local estate agents are not on the street destitute! So its looking to be OK at the moment. But at the moment interest rates are likely to go up so now is as cheap as it is likely to be for the next few years. Now, if that still represents a good buy, I am not sure - but the right house for the right person is always a good buy, even in the worst market.
Houses are selling and good ones are making good money. There does seem to be some movement and as far as I can see, my local estate agents are not on the street destitute! So its looking to be OK at the moment. But at the moment interest rates are likely to go up so now is as cheap as it is likely to be for the next few years. Now, if that still represents a good buy, I am not sure - but the right house for the right person is always a good buy, even in the worst market.
We have almost finished paying for the family home and fancied moving but could not face the daft stamp duty above £500,000 so in the end we have had a loft conversion done and bought a small bungalow down the coast, any savings were doing bugger all in the bank so I thought sod it and bought something else, if nothing else it might help the kids later on with a foot on the ladder, my view is put money in bricks...
spouting XYZ based on the historical trend over ABC.... yeah right! 
Makes sense to work out what the worst case scenario is and plan accordingly. We couldn't afford our current mortgage if rates go up to double figures so fixed for five years, if you can't afford the fixed rates available to you, then maybe you can't afford a house without taking on an unacceptable level of risk?
Also, should interest rates rise sharply there will be a lot more people unable to meet their payments which could (depending on how aggressive the banks are allowed to be) mean more property coming onto the market and depressing prices, i.e. a better time for you to buy.
The other key thing to remember is to ignore talk of averages, they are national so never directly applicable to your local market. My advice would be to learn the area you're looking at buying in and try to understand how it might respond to an interest rate rise or slash in government spending, this will be largely be driven by the demographics of that area.
Also, should interest rates rise sharply there will be a lot more people unable to meet their payments which could (depending on how aggressive the banks are allowed to be) mean more property coming onto the market and depressing prices, i.e. a better time for you to buy.
The other key thing to remember is to ignore talk of averages, they are national so never directly applicable to your local market. My advice would be to learn the area you're looking at buying in and try to understand how it might respond to an interest rate rise or slash in government spending, this will be largely be driven by the demographics of that area.
Roger Woods said:
We have almost finished paying for the family home and fancied moving but could not face the daft stamp duty above £500,000 so in the end we have had a loft conversion done and bought a small bungalow down the coast, any savings were doing bugger all in the bank so I thought sod it and bought something else, if nothing else it might help the kids later on with a foot on the ladder, my view is put money in bricks...
My neighbour opposite did the same thing. Had a sizable inheritence and so finished off her house and then bought one around the corner for long-term rental etc. Now has an income (not huge, but is something), gone part time and seems to spend most of her time shopping - which is fair enough if you are into that type of thing. Her reasoning was that medium to long term the return will be better - might not be huge, but potentially better than in the bank.jshell said:
Never a bad time to buy a decent home.....just don't think of it as an investment, rather it's saving you rent.
The most sensible piece of advice on here. Look at it as a home, and not an investment. Can you afford the payments and can you afford to do what you want to do to it over the coming months / years?chris_w said:
Makes sense to work out what the worst case scenario is and plan accordingly.
And how do you do that? Considering most of the financial services industry almost went bang a couple of years ago because of an inability to do that I don't think an individual has much of a chance.The BOE won't be able to keep interest rates at 0.5% if inflation keeps rising.
I have been preaching doom since the bubble burst (only to see prices rise over the past year), but I cannot believe prices will stabilise at their current level given how overvalued they still are in historical terms.
But if you are looking to live somewhere long term it doesn't matter as much. Someone who bought in 1990 was still doing very well 15 years later.
I have been preaching doom since the bubble burst (only to see prices rise over the past year), but I cannot believe prices will stabilise at their current level given how overvalued they still are in historical terms.
But if you are looking to live somewhere long term it doesn't matter as much. Someone who bought in 1990 was still doing very well 15 years later.
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