UK house prices post biggest fall since October 2008 - Halifax data today Weds 7th Dec

[jimmyjammy001]

Just a quick note for anyone looking to buy, in particular first time buyers who run the extreme risk of running into negative equity if buying with a low deposit

UK house prices post biggest fall since October 2008

Also its important to note that "Property prices are up more than £12,000 compared to this time last year, and well above pre-pandemic levels (+£46,403 vs March 2020). "

I suspect there will be bigger falls yet still to come as well

Why do you feel the need to be rude? You can make a point without making snide comments about GCSE maths.
I’m aware it isn’t actually a 12% increase but nevertheless her fixed rate mortgage has become more affordable. Some of the costs you mention do not affect her (such as travel costs since she works from home & energy costs since the supplement she gets from the government covers the increase in energy bills in her 1 bed flat) so there is no way it’s a negative number.

Why post it then? What does it add to the forum? She got a payrise so her mortgage became slightly more affordable. So what?

No it's not rude to point out this is GCSE maths level, it is.

Why are you posting on this forum to bitch about GCSE maths? What does that add to insult people? Nothing.

I'm not bitching about GCSE maths, I'm pointing out you're posting things which someone with GCSE level of understanding of maths can understand are inaccurate. It adds honesty. It's insulting to everyone to come on here and post inaccurate figures, so don't do it.

If she'd have waited another 6 months she'd be in a significantly better position.
Bubble mania is likely to set her back financially 3-10 years. Lets tell it like it is.

If she had waited another 6 months she wouldn’t be in a better position at all because although she might have paid less for her flat, the interest rate she got on her mortgage would be much higher. She locked into a rate at less than 2% in May 2022 for 3 years - that rate is long gone and if she had left it 6 months probably would not be able to afford the same flat due to the much higher amount she would be paying each month in interest.
You don’t know what you’re taking about, you’re just another version of DHB who likes to talk negatively but never has anything useful to suggest as an alternative to home ownership. All you want to do is insult people.

This is only correct if you believe that interest rates are going to come back to historic lows which is unlikely. The mortgage is not fixed for 25 years is it, again GCSE maths.

I would rather a lower house price because it is much easier for the cost of a cheaper home to be eroded by inflation. 25 years is a long time after all.

my MIL paid 7% interest for her london home in 1996 but at the same time she only paid 100k. Even though interest rates fell after the financial crisis, a big part of the mortgage was paid off by that stage so her paying the house off had nothing to do with interest rates.

She would have been able to buy the same kind of flat because all new buyers are subject to the same interest rates. Unless she is buying in an area where first time buyers are dependent on bank of mum and dad/foreign money, there would not be a sea of new buyers who are able to afford the inflated prices on the high mortgage rates. And even in expensive areas, the house prices have been stagnant or decreasing for many years like in Kensington.

No she wouldn't have been able to buy the same flat because she would have failed the affordability test if the monthly payments were hundreds higher because of the higher interest rate.
Plus she bought in London where a lot of young people do use the bank of mum and dad and there is a lot of foreign money.

Ahh bless ... the poster trying to make slurs about GCSE level maths doesn't even understand percentages themselves.

Only a share of income was previously allocated to the mortgage. The remainder was allocated to other categories, such as tax, energy, food, transport - just as you say. If each category is subject to the same degree of inflation as was recognised by the pay award, then the relative size of these categories remains unchanged. Except ... the level of tax doesn't change (unless you are paid just less than a tax threshold and they pay rise moves you into a higher band). And the level of your outstanding mortgage balance or term doesn't change either. So the amount of each paycheck available each month to cover your mortgage actually increases by more than the amount of the pay award. The precise degree to which this happens depends on the relative shares of overall spend by each category. But @Twiglets1 was more correct than you were, @strugglin101

Honestly Mark from what it seems most people on here don't actually understand your posts.

Quick maths showing how 12% salary increase equates to 12% decrease in mortgage.

Just an illustrative mathematical example, no rhetoric.

So she's now in a situation where she can't afford her own flat, and somehow you think that this won't impact her mortgage repayment rate down the line and she's better of being in this position?

Scenario 1 - last year
Salary 50k
unavoidable expenses (food etc.) 20k
Tax 12.5k
Amount left to cover mortgage 17.5k
Actual cost of mortgage 12.5k

Scenario 2 - 12% pay rise, and unavoidable expenses go up 10%
Salary 56k
unavoidable expenses (food etc.) 22k
Tax 14k
Amount left to cover mortgage 20k
Actual cost of mortgage 12.5k

Scenario 1 mortgage cover is 1.4 (17.5k / 12.5k)
Scenario 2 mortgage cover is 1.6 (20k / 12.5k)

Increase in mortgage cover is 14% (1.6 / 1.4)
Increase in mortgage cover is greater than increase in pay rise.

QED.

I see. So you leave out pension contributions altogether, and increased contribution into savings pot, because you haven't factored in inflation into the future costs of everything.

You are having a giraffe mate.

Also @Mark19735 please include mortgage overpayment in line with increased mortgage rates in order to equalise with the increased payments after the 3 year fix.

We're talking about a 12% decrease in mortgage here.

At the end of the day, she’s overpaid.
Overpaying 100k is like having to earn £150 k, but spread out over years as you have to live also.
But it is what it is, over the next 25 years, should work out fine for her. Strugglins point stands, someone buying this year will be tens if not 100 thousand(s) better off.

Agreed.
Perhaps there were other excellent reasons why she particularly wanted to buy in 2021/22 but she will have overpaid compared to end of 2023/24 prices.
My concern wouldn't be her 12% pay rise compared to her 3 years of fixed mortgage but what happens after the 2% rate ends. If she would have failed the affordability test at higher interest rates, what will she do then if rates are still high in a couple of years? I know a lot of people seem to be banking on rates coming down by then but that will probably only happen if The Fed really 'breaks something' and then panics. If that does happen, it's likely that a great many people will be in trouble.

Overpaid? What does that even mean? Compared to what? It seems to suggest that there is a 'correct' price, that you seem to know, but she didn't. What exactly is that price and how is it derived?

There's ten houses just like mine on the street where I live, and every single one of them sold for a different price. Some paid more than others, for sure ... but every single current owner paid exactly what they needed to, to acquire that house at that time.

Stop speculating about what troubles other people may or may not be in just to reinforce your desired narrative about an imminent house price crash. You have no idea how long people have fixed for. You have no idea what LTV they bought at. You have no idea what their income is likely to be in 2, 3, 4 years time. Or interest rates for that matter. It's all speculation, and it is no more certain to come to pass than any other potential scenario. The simple fact is, for nearly all people who have ever bought, in every single previous year going back, 30+ years, buying a house has been great for them. And ten years from now. most people who bought in 2021/22 will be extremely likely to agree that it was good for them too.

So you couldn't do the maths without discounting important things and now you're telling me to give it a rest.
😂

It means she bought at the top of the biggest bubble in history and there are financial repercussions. Don't know why this triggers you so much.

It was the right time for her to buy for personal reasons and she doesn’t regret it at all. As I said before, had she left it 6 months she probably couldn’t have afforded the higher fixed interest rates that were on offer in the later part of 2022.
The good news is that her salary is increasing every year, she has a fantastic career that she is still progressing in. Interest rates are not predicted to be exceptionally high by 2025 when her fixed rate ends. And who knows, maybe she will find a partner by then to help her with the bills. In any case, she is happy with her decision and is living in a much nicer flat than she could find in London for a comparable rent. It’s always a risk to get on the property ladder at any time but also a risk not to get on the property ladder and be renting into old age. Is that what you are doing? I hope you don’t mind me asking a personal question but you seem awfully concerned about my daughter.

I wonder whether you realise that most people buy a house to live in. The relevant factors they base their decisions on are hugely varied, but are always uniquely personal to them - how much they can afford at that point in time, how committed they are to their relationships, what their job prospects are like, and what level of flexibility or stability they want in their lives. And how much they like that house, and how much they needed to offer to make it theirs.

It barely ever revolves around timing the market or winning some imaginary competition with strangers on the internet to pay some amount that meets others' approval.

If someone bought a house that they thought would make them happy back in 2021 - good for them. Why does that trigger you so much? Where does anyone sane get off on joining these forums and screeching 'you paid too much' into the void?

You know there's a forum on an alternative website filled with people of your ilk. Every single one of them would trade places with the average mumsnetter in a heartbeat if they could ... they are all fuming that they weren't smart enough to acquire a house back before "the top of the biggest bubble in history", whereas most of us were ...

Sorry, should have linked my comment above to @strugglin101 (lest the PP mistakenly thought I was referring to them)