interest rates and house prices London

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With the expected announcement that interest rates will go up again today - what will that mean for house prices especially somewhere like London. We've only just bought our place but might need to move again so feeling quite worried now both that prices are going up all around us together with interest rates. Surely for a lot of people their mortgage will become a lot more expensive if both continue to rise

Eventually we'll have a recession and job losses, so people won't be able to afford the repayments so there will be forced sales, prices will drop and then confidence will drop so prices will drop more. People that don't have to sell won't, they'll stay where they are.

The question is: When? I expected it from 2000, then the 'crash' of 2008 that wasn't a crash in London. This is the hard question - and in the meantime rents are so high that mortgages are often cheaper.

How soon do you think you'll need to move?

Yes, I expect prices will come down because banks also won't lend as much when they start stress testing to new levels.

We aren't in the UK but our IR were lifted this week too, which brings the inevitable chatter about how high will they go 👀

We are planning on moving the end of this year. We will sell for less than we might have earlier this year. But we will likely buy around $200k cheaper also.

I'm actually a bit thankful we were delayed as having a huge mortgage locked into low IR for only 2/3 years would be terrifying for me.

We were going to upsize a couple of years ago, then covid, then brick here at all. I'm really glad we didn't now. Our house is too small but we can cope.

We lost you house when I was a kid in the 90s, I'd hate to have the insecurity of that for mine. I remember being on holiday and all my parents were doing was worrying about the interest rates.

I expect house prices to stagnate or fall a bit. What's keeping them up at the moment is so few houses coming to market

I’ve just read the Bank of England say the interest rates might rise to 10% this year-that’s scary.

I think they said inflation, not interest rates

Yes, definitely inflation rather than interest rates!

Yes, I think that inflation is pretty much at 10% but realistically how high can interest go without people losing their homes. Even small changes in interest rates can really add up in London where houses go for upwards 800k.

Interest rates have just gone up 0.25% to 1%, the highest since 2009.

www.bbc.co.uk/news/business-61319867

I am SO angry with the vendor who pulled out of my purchase just over 2 months ago. Strung me along for 7 months, then decided she didn't want to move after all.

Because of her I wasn't able to move as planned, and although in theory I'm in the process of buying a different house now (which is also dragging on), this one isn't a forever home like the last one was, if you see what I mean, but it costs more!

Also I expect the new house will likely complete (if it does) in the next couple of months, meaning my mortgage product will likely be withdrawn.

I could scream with frustration, and am so so cross. Sorry, I needed a place to vent!!!

Prices are still going up in my corner of London. Saw a 3 bed, admittedly in a nice area (but not that nice) come on yesterday for £1.1m. Well outside my budget.

When it comes to house prices it's just as likely to be the opposite of what you'd expect, as what is logical.
I'd guess prices will stagnate, and I think the pool of couples who have £1million+ in equity/mortgage to spend on an average terrace/semi in London is very close to running dry so who knows what might happen there.

i think it's quite hard to predict, London growth has been quite slow over the last few yrs anyway. My area slowed since Brexit so I think there already was an affordability issue. Everyone I know who moved during the SD pause was stuck on the ladder.

Lots have small mortgages & lots have fixed though.

I guess for BTL it may be difficult as they tend to be on interest only & often have small margins

I’ve just read the Bank of England say the interest rates might rise to 10% this year-that’s scary.

That's wrong, then there would be problems!

I expect prices to start coming down due to the higher interest rates and the rising cost of essentials. The banks will become less willing to lend because of these factors. I sense that there is a change in confidence both amongst individuals and businesses. A change in affordability and sentiment will cause prices to drop in many areas and I would certainly expect London to be one of them.

@Starseeking - is it impossible for you to wait a bit?

@Shinyandnew1 - seriously?! Maybe take your unhelpful scare-mongering elsewhere 🙄

Phew, I thought that sounded terrifying!!

@rainingsnoring I've been living with family for the best part of a year following a relationship breakdown, while trying to buy a place. With 2DC under 6, us all being on top of each other got old quickly. I also have a logistical nightmare coming once DC2 starts at a different school to DC1 in September due to additional needs, plus a new micromanaging, demanding boss, who has made my lovely job extremely stressful recently.

Theoretically though, there's no pressure on me to move as such, and it's great we have that family backup. I fleetingly thought about renting a place, but the thought of spending £30k a year on rent for goodness knows how long really doesn't appeal.

I've commissioned a second valuation on the property I'm supposed to be buying, and if it comes back less than the agreed price, I'll just pull out and have to wait. There's nothing reasonable on the market anyway.

Good luck @Starseeking buying & selling is awful

@Starseeking - that sounds like a less than ideal situation and I'm sorry about your relationship breakdown. Fortunate to have the family support, as you say. I would be really wary of over paying at present as it's very likely that things will start to fall and probably continue to do so in London as costs get even higher.

Thank you @rainingsnoring.

When I had the first downvaluation of this house a few weeks ago, I was panicking thinking I had to keep hold of purchasing this property no matter what, given everything is going up and up.

Following the latest interest rate rise (this is the third interest rate rise since I've been trying to buy a new house, having sold the last one about a year ago), I'm definitely more circumspect, and hoping the valuation does come back lower than what I've agreed with the vendors so I either get it for less or walk away.

Good luck. It must be really stressful as a single parent when everything hinges on your one wage.
Sometimes these things happen for the best.

Absolut@pixie5121, that is similar to my thinking. Renting a place for me and my 2DC will cost about £2,500 per month in the area I want to buy in. My new mortgage will be £2,000 per month.

In a year of renting, I'll have spent £30,000, and nothing to show for it at the end.

In a year of paying a mortgage I'll have spent £24,000, possibly paid £12,000 capital (or whatever the number would be), AND I'd have an appreciating asset.

If you can afford get a mortgage, buying does feel like the right thing to do.

*Absolutely