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Original poster

Mark Carney Brexit house price warning

205 replies

BlueKittens · 14/09/2018 09:43

Is now a really bad time to sell/buy a house?

We’ve recently put our house on the market to move to a larger house in the same area. Basically because I’m unexpectedly pregnant with our second child. We could hang on in our current home but we’d be a bit squashed because DH works from home. We have seen a great property nearby which we’d need to take out a slightly bigger mortgage to buy (but we have good LTV). We live in one of the fastest moving housing markets in the country (comparatively- it feels quite slow recently!). House prices are high. House has been on over a week and have had 9 viewings. No offers yet but have second viewings booked in.

Thoughts please! I don’t mind if the comments are directly related to our situation or just general chit chat around Brexit and house prices.

OP posts:
leghairdontcare · 14/09/2018 09:47

I had a mild panic about this as we are looking to move to a property valued about double ours so it's certainly a jump. However, if we buy it then we'll be there long enough to ride out any drop in value.

We're not in a fast moving area though, we've had 1 viewing in a week. So I am worried about finding a buyer for ours.

Original poster
BlueKittens · 14/09/2018 09:50

I know, it’s so worrying isn’t it! So difficult to know what to do. No FTB in their right mind would buy a house before Brexit- I wouldn’t! I do think if you’re planning to stay in a house longer term you can ride out any price drop. However, it’s really important that we don’t overpay for the next property.

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wowfudge · 14/09/2018 09:59

Really - no FTB would buy before Brexit? There's a lot of uncertainty but interest rates are low and you could fix for 5 years or more. As long as you aren't looking to turn a profit and sell within a couple of years then it's unlikely to be a bad move. Plus with fewer people buying there could be an opportunity there if sellers are finding their houses are sitting on the market when they need to sell.

10degreestostarboard · 14/09/2018 10:02

Interest rates are low and Brexit won't fundamentally change the laws of supply and demand: there are still too few places to live (in areas of high employment) for the numbers who want to live there.

This is more political scaremongering squarely aimed at 'middle england' and the equity that may be sat on

AnalyticalChick · 14/09/2018 10:03

If prices did fall, it would be great news for priced-out first time buyers and second steppers!

Original poster
BlueKittens · 14/09/2018 10:04

Good point wowfudge about FTB, I was thinking how gutted you’d be seeing your investment drop by 35% after a few months as a FTB when you could have waited to buy for less

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Original poster
BlueKittens · 14/09/2018 10:06

The problem with supply and demand is that a lot of people can’t get mortgages who could afford them (the very people who are paying extortionate rents which are much higher than mortgage payments)

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lemonsandlimes123 · 14/09/2018 10:06

It's is not a house price warning, it is not a forecast or prediction. It was merely one of many scenarios that the BofE have 'gamed out'. They are not saying that this is what they think will or even might happen. Irresponsible reporting IMO

cloudtree · 14/09/2018 10:08

Can you still afford the mortgage if interest rates are 6-8% rather than the crazily low levels they are at currently? If so and you won't need to move again for a good few years then fine, go ahead.

If you are stretching yourselves and would struggle with an interest rate increase then it is a crazy time. There are warnings coming from all angles at the moment. Wait a few months and see what happens. Its ridiculous that randoms on MN think they know more about the economy than the Governor of the Bank of England. People generally have their own agenda when it comes to house prices (where confidence is everything).

3boysNeedABiggerKitchen · 14/09/2018 10:08

We have completed on our sale, are lodging with family and due to exchange in the next few days. Having serious 2nd thoughts and considering pulling out. A 35% drop would be very painful indeed

Original poster
BlueKittens · 14/09/2018 10:09

I am wondering what effect it will have on our potential buyers though. Will they run for the Hills now? Or put in crazy low offers. Personally our house is not overpriced when I look at comparable houses on the market so I was hoping for something close to asking price. Not so sure now.

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AnalyticalChick · 14/09/2018 10:10

@BlueKittens How do you know people couldn't get mortgages? If prices fall, they would actually need much smaller mortgages, and smaller mortgages are much less risky for everyone concerned.

wowfudge · 14/09/2018 10:10

Tbh, if you are buying a house to live in and aren't looking to turn a quick profit then it doesn't really matter about the value shorter term because these things tend to go in cycles. Property has always increased in value over the medium to longer term. If you can afford your mortgage and to have a reasonable standard of living that's what's important imo.

MouseMartin · 14/09/2018 10:10

Lower house prices would benefit most people and I like it when things cost me less money.

cloudtree · 14/09/2018 10:12

3boys that is exactly what happened to us when we last moved. We sold and the warnings started coming in about price falls.

We pulled out of our purchase, stuck our deposit in a high interest account (back in the days when such things existed) and moved into rented for a year. In the meantime the house which had been priced way way out of our league didn't sell. Prices dropped and they sold to us for 25% less than their original asking price.

AnalyticalChick · 14/09/2018 10:14

@cloudtree That is exactly the kind of good news story that should make people happy and hopeful.

ToBeClear · 14/09/2018 10:19

It terrifies me as we're about to complete on our purchase...we'll be in it for at least 15 years but a 30% drop is more than 100k for us! Problem is will any other houses go up for sale? I've a feeling most people will stay put unless their jobs go - which is a possibility. Then what if interest rates rise too - though if the B of E is trying to keep money churning that may be unlikely...aargh freakin hate Brexit! I am normally risk averse but I truly think these are potential scenarios - he was trying to give MPs a kick up the arse yesterday for sure.

ToBeClear · 14/09/2018 10:20

mousemartin how can lower house prices benefit those with mortgages!? SO many people will be underwater!

AnalyticalChick · 14/09/2018 10:21

@ToBeClear You have an opportunity here to potentially save £100k. That's a lot of money to save. Stop worrying and look on the bright side!

cloudtree · 14/09/2018 10:21

Well yes chick, depending on your perspective.

It was fortuitous timing (and the fact that I spend a lot of time following what is going on). We sold at the very top and bought at the very bottom. It nearly ended in tears at one point when we had our equity in limbo when I pulled it out of an icelandic bank literally just before the bank crashed and didn't know where it was for three days (luckily it eventually landed in our UK bank account).

However it is clearly not a good news story really, we were just lucky. Most people can hopefully sit tight and not move house if the prices drop and they find themselves in negative equity. In that case it is all really irrelevant since prices are only relevant when you are moving. However there will be some who are forced through changes in circumstances to move - divorce, job losses etc and for those people it is disastrous. Plus there are also then those who have stretched themselves too much and can't afford interest rate increases and find themselves repossessed.

We have used this unusually long period of low interest rates to our advantage and have massively overpaid on our mortgage and are now mortgage free. But previously I always assumed that interest rates would go back up to their long term norm which is circa 5/6% just so that I knew we could afford it if and when that happened.

cloudtree · 14/09/2018 10:23

I think Tobeclear is saying she is completing now, before any drops. Which means that although she still has the same new house, she feels like she has lost money.

3boysNeedABiggerKitchen · 14/09/2018 10:23

Cloudtree I'm glad it worked out for you, it is just such a risk and rental rates are huge.

To all those saying it is great news, it really isn't. Even a 10% drop would bring many outside the affordability when they come to remortgage, huge amounts of negative equity. Very difficult for many who saved hard to afford their own home. There will be winners and losers as there always are.

wowfudge · 14/09/2018 10:24

Mark Carney is making a worst case scenario prediction: it doesn't mean it will happen.

AnalyticalChick · 14/09/2018 10:25

@cloudtree If the opportunity opened up for me to potentially save £100k or buy a better house, I would be thanking my lucky stars!

cloudtree · 14/09/2018 10:26

It isn't a good news story at all IMO. It will be terrible for the economy and the only people who stand to gain are those first time buyers who are currently priced out.

However 3boys in your very unusual situation where you have sold but not yet excahnged on your purchase (same situation as we were in) it could work to your advantage)