Would you buy a house in London in 2023?

[Teaandtoast2022]

With interest rates so high, would you take the plunge or would you wait until things get better?

Fixed interest rates are already falling. It would depend how long you expected to live in that property, if longer term I don’t see the risk. If 2 years and a low LTV then I would be more careful

Thank you so much for your response @Bringonsummer19

Is it true that the bank interest rate is currently 3.5 percent and prior to pandemic/war in Ukraine/ cost of living it was 0.2 percent?

This would be our forever home, hopefully.

0.2% you must have a large amount of equity to have qualified for that rate. If forever home then I would go for it rather than take a risk that your cash is de valued vs rise in property rates.

10 years ago 3% was normal or even low. We’ve just had a decade of very low rates (which we have normalised)

Right I see it’s useful to know that that was the case 10 years ago.

So, I’m sorry I’m very new to this, we’ve just been a cog in the chain saving and saving. If interest rates do go higher in the next year, as property prices fall. Does that mean you’d just be having a really unaffordable mortgage? Does paying less for your property really compensate for that?

I hope that makes sense.

Also, would you mind explaining cash de valued vs rise in property rates?

If you have a low value of equity in your house and property prices fall (because interest rates increase which increased the reluctant of people to buy (tries up demand)) then you run the risk that you fall into negative equity which means you can’t sell your home unless you can afford to pay the deficits with your bank.

if property prices fall but you still have enough equity, well it’s not ideal but you could still sell with equity in the hope that the next house you are buying has also fallen.

if interest prices rise but property values fall then you’ll have to look at the calculations.