House Prices

[LGBirmingham]

House prices still seem to be rising? Does anyone else think this?

@KievLoverTwo I think we look at the mortgage term very differently.

I don’t consider the lifetime of the mortgage isn’t set in stone from the beginning. An initial 35year term has worked well for us because we’ve funnel most of our disposable income into higher interest savings and our mortgage payment is very low. When our fix is finished, we will remortgage and fix for another set of time and adjust our mortgage accordingly (considering outstanding mortgage, interest rates, salaries etc) so the initial 35year term isn't really a factor.

Oops, sorry just refreshed and seen this. Anxiety and catastrophising brain are b*tches. Sorry to hear.

It's a good strategy if you are disciplined as you seem to be. But we know from hundreds of stories that people get sucked into schemes and never sort themselves out. I mean going Interest Only and then approaching end of term with no repayment method, or becoming "mortgage prisoners" and never taking the action to resolve it. Etc

Thanks for asking. It's part of the deal with pets - saying goodbye. I lost my two lurchers over the last two years - cancer and chronic arthritis. But my Border Collie is still going after a few teeth extracted and an eye wart removed. We didn't insure them as the costs get prohibitive in old age. Just put money away.

This is true. Thank you for pointing this out. DP often has to remind me that a lot of people are not as strict with budgeting as I am.

Trust me. You will be the exception!

I'm genuinely sorry to hear that. You often give really good advice on Mumsnet and are very logical and clear sighted about issues relating to other people. Obviously you are suffering some anxiety in relation to your own decisions but as you say, you recognise it in yourself and that's massive.

I think people reading our posts have to understand that we're all just giving opinions based on our own experiences and perspectives. I certainly don't claim to be any kind of expert and it's possible I don't pay enough attention to WHAT IF THINGS GET REALLY, REALLY BAD.

Anyway, I enjoy reading about all sorts of opinions on this forum. And we agree 100% about Insurance companies!

I was checking around what economists were predicting.

Lloyds, in their last annual accounts, apparently have a base case of 8.1% drop - peak to trough - and then recovering from 2025, but are game planning for drops between 25% to 40% depending on what happens in the economy.

We could say that they are hedging their bets somewhat, or alternatively that they are being sensible and realistic. The truth will probably be something in between those ranges.

My only view is that too much cheap lending will result in tears before bedtime when rates go up, I think it would be pretty desperate to continue to argue against that view being correct now?

"Blind faith in the UK government's ability is likely to lead to disappointment."

It already has, people were happy to keep loading up on the mortgage debt when they were going on about "transitory inflation" etc. The UK government is most definitely not in control of your mortgage rate!

What do you mean by cheap lending?

Probably see graph above

@CrashyTime what do you mean by cheap lending?

You know what I mean surely, the type of lending that led to the massive property bubble and that has now become much more expensive lending.

NW coast also. Total opposite! 🤷‍♀️

Yep. That weekly UK Property Market Stats show (EA perspective) is highlighting a significant difference between North and South. No idea if that will persist.

No I am not familiar with the term. What is the type of lending "cheap lending" that you are referring to?

Right on cue. A balanced-looking article discussing the pros/cons and considerations of 40 year terms. Largely looking at impact on pensions and the people who aren't as disciplined as you.

https://moneyweek.com/personal-finance/40-year-mortgage-risk?utm_term=7DF734AE-2A42-463F-B91C-7374E6AE3B1A&utm_campaign=595BDE43-CFD2-41D5-B4D0-B40A0A00BEBE&utm_medium=email&utm_content=F5AE63AB-5052-49D7-8DC9-D7464824D4AF&utm_source=SmartBrief

Ok. Re House Prices and Cheap Lending, we can read up.

"The elephant in the room here is interest rates. A Bank of England working paper concluded that nearly all of the rise in average house prices relative to incomes between 1985 and 2018 can be seen as a result of “a sustained, dramatic, and consistently unexpected, decline in real interest rates as measured by the yield on medium-term index-linked gilts”[1]. The Bank doesn’t rule out other factors, but concludes that they have had more of a short term impact. It furthermore concludes that: “An unexpected and persistent increase in the medium-term real interest rate of 1 percentage point from its level as at end 2018 could ultimately generate a fall in real house prices (over a period of many years) of just under 20%.”

https://www.schroders.com/en-gb/uk/intermediary/insights/what-174-years-of-data-tell-us-about-house-price-affordability-in-the-uk/

Not your imagination and really tough for lots of people.
I'm sorry to hear about your cats. :(

So it really isn't me going mad then?

GB was right. Still wouldn't put it past Labour to try to prop things up. They are almost as ridiculous as The Tories nowadays.

I think you are the exception rather than the rule.
Most people wanting 35/40 year mortgages will be wanting them because house prices are far too high for them to afford one with a standard 25 year mortgage. If the banks to the decent thing and restrict them to only people with high incomes, careers where significant salary rises are expected, excellent credit ratings, etc, they defeat the purpose of them.
They are a really bad prospect for most people and just serve to get people into lots of debt well into retirement when they may not be able to afford repayments, may mean that people are forced to not put money into pensions, etc. They will be yet another a ticking time bomb caused by governments and banks can kicking.

It just means lending at ridiculously low rates, rates below inflation, as has often been the case in the last few years.

What you have to bear in mind is that a lot of people with quite well to do houses are currently downsizing. This pushes up the overall price for all properties. It doesn’t mean all house prices are rising.

If you have property log you can see for yourself. Look at the sold prices and the number of reductions. Look at how many 300k plus houses have been sold or are for sale. Then look at 200-300k. Then look at <200k.

As well as people selling up because bills are getting more expensive and mortgage costs horrifying, I imagine we are seeing mortgage people free downsizing so the value of their kids inheritance doesn’t take a hit. Some might even be downsizing to help their kids be able to afford their own mortgages.

The data would be far more useful if broken down into subsections. 4 bed detached, 3 bed semi, 2 bed flats, etc. Giving you a overall figure is not especially useful if a dozen properties sold for the first time for over a million pounds in a postcode where the average price is usually 250k.