Might pull out of house purchase - housing market looking ever more fucked

[Chairman Meow]

Totally false economy I am afraid....

They do not want to admit that these new builds have falsely inflated prices, worse than older properties in the main. So they are luring people in with stupid offers like 'free carpets, surveys, legal costs, etc' which they claim has a value of £X but they get for a LOT less as they can buy in larger quantities than you.

Several developers have buyers but as soon as the survey is done the finance offered is pulled as the lender will not lend 100-125% of market value as they did a year ago.

Yeah, you can only get 92% here. One developer is offering a deal where you move in as a tenant for up to three years, and if you want to buy at the end your three years rent pays for your 8% deposit. That's the kind of deal I might consider, I won't be swayed by a few free carpets.

 

[Chester Copperpot]

Definitely don't go for a new build though.

This ^^^^^^

The over valuation of new build flats has influenced heavily the drop in overall values.

 

[g force]

And the over saturation in cities outside of London has left a lot of people in the shit.

Chris I honestly think you're making the right decision - you've thought long and hard about this and want to make a home.

 

[ScallyWag II]

<snip>
If you buy now and watch the price fall by 25%, then over 5 years it rises 25% you're back where you started. Except that the mortgage you've paid off over 5 years is yours instead of renting and paying someone elses mortgage. You've still got to watch interest rates and make sure you can still afford to keep up the payments.

I'm no expert, but hope that helps.

That's a good point. I bought a flat with my ex in 1990 for approx £70k and sold it 8 years later for £75k. Not much of a profit but when we wanted to move everyone was in the same position. We had 8 years of mortgage paid off and could afford a bigger more expensive place to move to at a then sensible price.

 

[ChrisFilter]

Thanks everyone, feel a lot more confident after reading your replies.

 

[Badgers]

Ground floor Victorian maisonette (i.e. purpose built to be a flat, not a conversion from 1 big house, i.e. better than a conversion, on the whole).

One of the more 'recession proof' buys (if there is such a thing) as these never seem to go out of demand.

A lot of the London Flats have been built with landlords in mind rather than owner occupiers recently. Most of the Victorian flats/houses are sturdy and more desirable....

You could always spend more on a studio apartment in the hideous looking St George Wharf development if you fancied

 

[Badgers]

Yeah, you can only get 92% here. One developer is offering a deal where you move in as a tenant for up to three years, and if you want to buy at the end your three years rent pays for your 8% deposit. That's the kind of deal I might consider, I won't be swayed by a few free carpets.

There is a new scheme coming in (not sure when) which will be called 'rent2buy' or something similar, which works on this principal but with private landlords.

What developers had been doing was offering a large number of units at a big discount to jokers like Inside track who then passed them on to get-rich-quick wannabes on ludicrous finance deals.

 

[rennie]

This thread is making me depressed.

 

[Badgers]

This thread is making me depressed.

Less so than the newspapers though surely?

 

[GarfieldLeChat]

But why? This is what I don't understand.

because any sale of th house would requrie the old mortage to be paid off leaving signifcantly less to put in for the new house... obviously...

 

[zenie]

5.75 is only what they were a year ago anyway isn't it? in fact weren't they 6?

Noooo they're talking about the BOE base rate, which the lenders then use to set things like trakcers. If the base rate goes up then mortgage products follow.

Filter - buy it if you're hearts in it and you know you'll stay years, if you're not sure then don't.

 

[rutabowa]

Noooo they're talking about the BOE base rate, which the lenders then use to set things like trakcers. If the base rate goes up then mortgage products follow.

yes that's what i was talking about, the base rate was definitely 5.75% not long ago cos it keeps falling by 0.25 and now it's 5%...

 

[rutabowa]

because any sale of th house would requrie the old mortage to be paid off leaving signifcantly less to put in for the new house... obviously...

but his point is that the new house you were buying would also cost siginificantly less. so as long as you intend to buy another house in the UK then it's no problem.

 

[Belushi]

It's also worth thinking about how safe your jobs are if we do go into full blown recession before buying a house at the moment.

 

[Chester Copperpot]

yes that's what i was talking about, the base rate was definitely 5.75% not long ago cos it keeps falling by 0.25 and now it's 5%...

Personally I think the only reason they didn't drop to 4.75% last week was they new in the current credit crisis it was unlikely the lenders would pass this onto their customers.

 

[rennie]

Less so than the newspapers though surely?

Combined, I ought to jump off a cliff.

 

[Belushi]

but his point is that the new house you were buying would also cost siginificantly less. so as long as you intend to buy another house in the UK then it's no problem.

Well it could be a problem if you were in negative equity - you still have to pay off the mortgage no matter how much your house has dropped in value.

 

[zenie]

yes that's what i was talking about, the base rate was definitely 5.75% not long ago cos it keeps falling by 0.25 and now it's 5%...

Sorry I thought you were confusing the two. (BBR and SVR's)

This is quite useful to have a look at past rates. 14% in 1990!!!

http://moneyworld.com/bank-base-rates.htm

 

[rutabowa]

Personally I think the only reason they didn't drop to 4.75% last week was they new in the current credit crisis it was unlikely the lenders would pass this onto their customers.

humm it seems pretty sure now they will go up though

 

[rutabowa]

Sorry I thought you were confusing the two. (BBR and SVR's)

This is quite useful to have a look at past rates. 14% in 1990!!!

http://moneyworld.com/bank-base-rates.htm

yes that is very... "interest"ing. oh nooo sorry..

 

[Idaho]

I really can't see them increasing interest rates that much in the next few years. Interest rates are used to dampen down consumer led, credit based inflationary pressures. What we have at the moment is a credit shrinkage and price rises led by commodity shortages. Increasing interest rates will do nothing to change that, only make the situation worse.

 

[Chester Copperpot]

I really can't see them increasing interest rates that much in the next few years. Interest rates are used to dampen down consumer led, credit based inflationary pressures. What we have at the moment is a credit shrinkage and price rises led by commodity shortages. Increasing interest rates will do nothing to change that, only make the situation worse.

Agree with this.

 

[Chester Copperpot]

What year were intrest rate decisions handed over to the Bank of England?

 

[Belushi]

What year were intrest rate decisions handed over to the Bank of England?

97, it was one of Gordons first actions as Chancellor.

 

[Sadken]

This ^^^^^^

The over valuation of new build flats has influenced heavily the drop in overall values.

And the thing is, I'm no financial expert at all but even I could see that coming a mile off. The rate they were going up in every single town or city I've visited in the country over the past few years was totally non-sustainable.

 

[ChrisFilter]

I really can't see them increasing interest rates that much in the next few years. Interest rates are used to dampen down consumer led, credit based inflationary pressures. What we have at the moment is a credit shrinkage and price rises led by commodity shortages. Increasing interest rates will do nothing to change that, only make the situation worse.

They won't go up by much, but they will be going up rather than down over the next year. Stagflation, I believe it's called. Sounds fun

 

[Belushi]

They won't go up by much, but they will be going up rather than down over the next year. Stagflation, I believe it's called. Sounds fun

Yep, last seen in the 1970's.

 

[rutabowa]

97, it was one of Gordons first actions as Chancellor.

who set them before?

 

[Belushi]

who set them before?

The Chancellor, which meant there was always a temptation to change them for political advantage.

 

[ChrisFilter]

Combined, I ought to jump off a cliff.

Why? Do you like where you live? Do you plan on moving in the next 5 years? If not, you've got nothing to worry about at all.

Even if you do move, as everyone says, everything else will have fallen. Listen to the positive comments on here that say I should buy, they're all right