First time buyers unite

[FlyingSoap]

What does everyone think to the rates? We are having another conversation tonight about it but in all likelihood we will be stopping viewings. I don’t want to saddle us into eyewateringly high repayments, when our rent is half the price of what a mortgage would be. Have a deposit sitting in savings but just keeping a watchful eye, as would hate to lose it to negative equity. Wish it was easier for everyone! What is everyone else thinking?

You are right to wait, let the price falls filter through whilst you keep saving. Rates will go down again after the value of homes reset. You would be mad to buy now and overpaying hugely.

If I were younger and pre-kids I would do that. But now we are having to pay rent on a family home and are older than average FTBs we will keep looking. If we can find a longterm home at a reasonable price will still buy, assuming we pass affordability.

We just committed and didn’t see the point in waiting for a fail that may or may not happen. We wanted to buy a home and a base, not an investment. We also had a 5% deposit.

HOWEVER, we don’t plan on a family so if we end up staying in this house for a very long time, so be it- we were able to afford a house sufficient for our needs in an area we love so we are not reliant on jumping the ladder and would only need to sell in drastic circumstances. We didn’t set out to buy a “forever home” but it COULD be if we needed it to be.

For us chosing our long term home and no longer renting outweighed the economics. We intend to be home owners for the rest of our lives and currently only in early 30s so intend to ride our market conditions. We were offered a reasonable rate fixed for 5 years that we believe we will be able to start overpaying within the next six months (spare cash currently being spend on work on the house!). If we end up in negative equity we will simply have to pay the SVR to ride it out but hopefully a few years of overpaying will reduce this risk.

In same situation. Still been viewing and offering but the market here is a nightmare, everything still going for well over asking and we can't compete particularly with interest rates as they are. We are still looking though as getting old and I can't see any massive shift in the market in the city I'm in or in interest rates for a long time. Feeling really fed up with it now.

It’s rubbish. Sending hugs

Thank you, I think that too. Little bit unsure about having our first DC here as everyone has always drummed it into us that we must buy our home before that… but know the deposit we saved isn’t going anywhere and we’ll hopefully only need one day of childcare a week anyway plus subsidised hours should’ve come in by the time they’re old enough to need it. Fact is this is a lovely area to be in and why would we buy an identical house and shell away hundreds of pounds on interest that we will never see again… when those hundreds of pounds could be better in our savings account or buffering any reduced income I have whilst in maternity leave etc. for us it’s a no brainer at the moment to stay here, even if on paper that doesn’t always sound best

We have a great rental property with the LL least likely to need the money to sell up, and she's really proactive with helping me keep the house and garden in good order; she just sends people round to do stuff that needs fixing or things I can't quite manage on my own because of my disability.

We would have been paying £650 a month more than our rent for the house we didn't end up buying, the equity per year versus the interest rate was absolutely pathetic due to it needing to be a 33 year term, and everything on the market is dire.

We're stepping back for 18, 22 months, however long it takes. Build up savings, earn some interest, build the deposit higher, wait until actually nice properties start coming back on the market again, and with any lucky, they'll be at more realistic prices.

Sick of seeing folks overpricing their houses by 20-30%. People need to start getting real.

Exactly this. That’s a lot more! And honestly you could use that 650 a month in so many better ways, especially when you think that’s not the only extra cost to your purse of buying, there’s all the hidden repair and maintenance fees too. It feels like such the gamble doesn’t it. Added on to the fact it would be silly to look for a starter home given prices might fall and you could be stuck if you need to move, and let’s be honest, who can afford their forever home as a first purchase anyway? It’s truly a minefield. I’m glad you also have a good rental - they do exist don’t they!

In the market we're looking to FTB in (S London, houses 700k - 1m) nothing is shifting - there's a mexican standoff between sellers, who want to get what their house was worth last year, and people like me who want to pay what it will be worth next year. The only places I've seen sell have been really special or unusually good value.

We are not in a hurry. But I don't know if prices are going to drop nominally, in which case we should wait, or they'll stay where they are and be inflated away, in which case we will be OK with a huge mortgage. It shouldn't be such a casino.

Hold fire at least 6 months, more likely 18 months.
Keep saving!
Do not believe the people saying ‘negative equity doesn’t matter if you don’t sell’ because it does.
If you overpay 50k, your pay back an extra 100k in mortgage repayments, so have to go out and earn an extra 150k in pre tax salary to do it.
My maths is out I know, but the gist is correct.

I'm not a first time buyer, but I'm united with you. My memory isn't so short that I've forgotten the toll that trying to get on the property is.

You time could be on it's way. I think a lot od buy to let landlords will be throwing the towel in and moving their money into savings accounts. All your circumstances will be individual and house prices local, v
but generally speaking tides are turning in your favour and I am glad...even at my expense.

We have already been saving for two years, so when we come to buy, it will be our forever home as our first home. We have considered houses at a third of the price we were going to buy at as a 'it will do for now', but they were all tiny, with basically yards, and would have made us thoroughly miserable and made my disability far worse.

Buying twice within under five years and losing that one time only FTBs stamp duty relief would have turned out to be a false economy anyway. Not to mention the stress of moving twice.

Plus, this is our view. A fifteen foot yard in comparison - well - I can't bring myself to do it.

Wow. That is a GORGEOUS view 😍

Thank you

Added to that, when your fixed rate ends, if you're in negative equity, no other mortgage lender will lend to you, so you are stuck on your mortgage lender's SVR. Let's do some sums on that.

Let's say I bought at 465k house in May last year when I was offered a 2.77% 2 year fixed rate:

25 years
2041 pcm
(5% deposit, 23,500)

Now, let's say I took a 2 year fixed rate term and am in negative equity come May 2024:

23 years
403,179 outstanding
3199 pcm

That's on an average SVR of about 8%, per current rates:

https://www.landc.co.uk/mortgages/svr-watch/

But, we're actually expecting interest rates to rise by another 1% this year. Let's assume lenders try to absorb some of that and increase SVRs by 0.5%, taking us to an SVR rate of 8.5%:

23 years
403,179 outstanding
3330 pcm

That is a 63% increase in monthly mortgage payments, for which you get no choice, unless you've put yourself in a financial position whereby you have been massively overpaying to avoid negative equity.

So, yeah. Negative equity absolutely matters.

We are buying. Our landlord is awful, so many problems with our rental, and barely any other rentals coming up and they go so fast, plus we have a dog. Have a feeling we will either be kicked out soon or a massive rent hike.
Our mortgage will be £150 more a month than our rent, and we've fixed so aren't too concerned as that is affordable for us and we can afford to overpay a few hundred every month. Buying a 3 bed house in an area we really like with a nice garden, so we can easily stay for 5-10 years.
We are just plowing ahead and not trying to time the market. Just glad we fixed in a rate a few months ago before the further hikes that then happened!

It’s been probably 10 years since we contemplating buying. For the first 8/9 it was out of the question financially, and also due to not knowing where to live. We still don’t know where to live, but if we secure decent jobs somewhere, then we should be able to. Decided to not have children, which really lifted the stress-burden of buying ASAP. We’ve probably got a record amount in our Cash HTB LISAs, a sort of fairly embarrassing amount.

That was good timing! All the best with the move x

We had our offer accepted on a house a week ago. We only have 5% deposit too. We had our first DC when I was 20 (32 now) so don't want to wait any longer. We live in an extremely cheap area of the country so can afford to buy a house we could stay in forever. Plus the mortgage is £2 cheaper than our rent!

Oh that’s fantastic! Congratulations!

Inflation doesn't erode personal debt unless you have pay rises in line with or above inflation
If rent is cheaper than buying then it makes sense to stay renting to see how it all shakes out
There is a Mexican stand off atm, but if rates stay where they are for a prolonged period then people physically can't afford the old high prices so they will have to fall back to affordable levels

Thank you, we were looking last year just before the rates went up and decided to stop viewings and wait. About a month ago changed our minds and just decided to go for it and hope for the best. What will be, will be.

I think it depends. If you can find somewhere you like, you can afford it comfortably, you’re planning to stay for 5 years and you get a good buy then I think I would still go for it. If you get 10-20k knocked off the asking price then this will compensate for quite a bit of the interest rate rise and they will start to fall eventually.

Remember once rates go down and more people feel confident to buy then there’s going to be a huge rush of people wanting to move who’ve been putting it off, so good houses in popular places will be difficult to get at a reasonable price.

But will rates fall eventually? The averages, long term, are about 6%.

Rates will, or house prices will, otherwise nobody will buy. BoE predict 3.5 in 2025. That’s miles better than nkw