Interest rates going up on Thursday?

[FabulousSophie]

The financial markets are 90% certain the Bank of England will finally pull the trigger on its long expected rising cycle in interest rates. If so, will this affect sentiment in an already stagnant property market?

We had the same Scroble! Has been really difficult and in the end we just stopped including self employed income. Obviously no good if that’s all of your income but I certainly feel your pain on this.

@RiddleyW our business is our business, no other income but it's well run and very profitable, the annoying thing is it's our current lender who's messing us around and they can clearly see we have over paid by 10%+ every year, business makes about £50k a year profit, DH is paid over £50k a year, mortgage is less than 60% of the value of the house... and it's just not happening!

Yes they’re ridiculous at the moment the hoops they make you jump through. They also have a weird annoying way of taking bonus into account whereas last time I moved they just added it to my income.

Sophie that's fair enough in your circumstances. Obviously it won't be the case for everyone though.

Whilst the SVR may move with Bank rates, the fixed rates that 90% of people get are determined by swap rates that banks buy in from the market, based on what the market feels will the the environment over the top 5/10 years.

I see that Nationwide mortgage fixed rates are lower now than they were when the base rate was 0.25%. So it it does not follow that higher base rates mean higher mortgage rates.

Anyways most people now take their property off the market, or don’t put in on if the they feel the market is slow ( unless it is a distressed sale), hence the low numbers of property coming onto the market. Which keeps prices propped up.

I personally think the days of making 200k in 5 yrs etc are over. I’m in SW London & there have been some big drops near me & lots taken off the market.

I personally think the days of making 200k in 5 yrs etc are over.

Probably - although it depends how much the house is worth of course. 200k could be a 100% increase or a 1%. The actual numbers are less important.

www.theguardian.com/society/2018/jul/29/housing-renting-mortgages-loans-home-ownership-first-time-buyers

If this sort of thing happens though, those days will be back. I don't support this by the way.

I saw that article riddley... can't see it happening at all... but you never know.

Regarding making 200k or day a percentage like 50% in 5 years... I honestly can never see it. This time I think peak affordability has been reached... brexit is also just around the corner... and very few landlords are buying now.
2008 should have been the correction from prices that were already too high and unaffordable... Low interest rates have blasted past those peaks by up to 100% in some places. If interest rates go up then affordability goes down... and vice versa... but there is no way to go lower so in my eyes it's a one way market now... and could be for years to come

I do agree with you. The 200k mine went up (which is not realised yet - meant to exchange this week but could still go tits up) represents an increase of 63% . I cannot see this type of gain happening again in my lifetime.

I do note however, that when I first bought in late 2006 lots of people were saying it was the top of the market and that flat that I bought for 200k is now worth probably 4 times that. So who knows?

I have a friend who bought for 300k back in 2013 and it's now worth 550k... it's a 3 bed semi in purley.
Only problem is they still earn the same as they did back then so can't actually move to a better house in the same area... would only move for 4 bed detached which start at 700k. How do people find the extra money if the want to upgrade in the same area?

A lot people need help from parent, equity release or inheritance to buy there first home. That’s how they can ‘afford’ to buy despite rising prices and slow wage growth. They are putting down 30% or more in deposit down in the South East, not the 5% of old days.

A lot of people are sitting on very expensive homes, the money just get passed down. Unfortunately that means those without financial help are more likely going to have to rent for longer. Or not move as often, or move to cheaper areas that where they are for a bigger house.

I'm talking about trading up more than ftb... if your salary doesn't increase I don't see how you can move house. The equity is largely irrelevant as the house you are buying will have increased by more over the same period

Thats the issue the ftb flats that were 200-250k are now 500k. The houses that were 500-600k are now 800-900k. People have to keep
getting on the ladder at the bottom rung to continue the cycle but pretty much everywhere has gentrified on paper at least in terms of prices.

A fair few of my neighbours have left London because even with good jobs, thousands of equity they can’t take the next step. The ones that have traded up from a smaller property to a larger property have only managed it with good jobs, equity & then some further inheritance. I only got on the ladder with help.

Pretty much every standard house near me is 1.2-1.5m. For us to afford that we will need further help which is pretty ridiculous.

If only I was 5-10 years older!

if your salary doesn't increase I don't see how you can move house.

You can't - that was always true surely? You spend more (meaning you need to earn more) or you move areas. I've done both in my time. I sold a one bed flat and bought a 3 bed house for the exact same money by moving from zone 1 - 6. I'm now upsizing very locally by doubling my mortgage.

I agree you have always had to earn more to “upsize” unless you get the cash some other way. A 2 bed flat never became a 3 bed house without more money!

I thought most people moved out eg zone 2 to 4 etc in order to upsize?

Yes, either more money or a cheaper location.

That's another one of the issues with the current housing market. In the past people in their 20s bought a starter flat on 1 salary and then upsized or saved when they partnered up. Then once they got the nursery years out the way they had spare money to upsize for secondary school without anyone needing a big promotion.

I have some friends paying out 2.5k on a mortgage & 2k on childcare. tbh I think there is a tipping point where even people who can afford to pay aren’t necessarily happy with spending that or want more for their money.

Problem being that unless you earn 6 figures you can't buy anything in zone 1... very few people in their 20s earn 6 figures

Can 1 6 figure salary buy you anything in zone 2 or 3 without a hefty deposit?

Zone 1 (or, central London ) has never been affordable for a normal salaried person. I grew up there. It’s old money, city money and council estates. Always has been.
Zone 2/3 covers a pretty wide area. Of course you can get a property for less than a six figure salary but depends what you want really. We just sold a 2 bed flat in new cross for £380k. A lot of money but not unobtainable.