Selling / purchasing property following todays news...

[itsmschanandlerbong]

So I'm struggling to wrap my head around if we're doing the right thing, or if it's a horses for courses kind of thing.

We bought a house around 5 years ago for 135k, currently we have 115k left of the mortgage. We have just put the house on the market, valued at 190k. We are looking to move to a bigger house, possibly around 230k but release some of the equity to pay some debt, buy new furniture and decorate the house.

Are we mad selling the house and moving to a more expensive house with these interest rates rising? I read that house prices will likely fall, but surely that will be good for us if we're wanting to buy a more expensive house than we currently live in. Or will it take some time for this to happen and we're then effectively paying well more than what will end up being market value for the house we move into?

Now is not the best time to upsize imo, unless you can find a massive bargain or a seller so motivated that they are prepared to knock off tens of thousands. House prices have fallen somewhat already (alleged to be 12-15% since last summer's peak) but there's a lot more to come.

However, for the next year or more, it's not going to be an easy time to sell. So many people are anticipating big falls that everyone wants a bargain.

Do you think you would be able to cope with selling your house NOW (possibly by underpricing it a bit, hopefully create a lot of interest, which may even get you full asking price) and move into a rental for a year, 18 months? Because that is when the value of your upsize house is likely to be at its lowest.

So you sell at 180 but possibly end up buying as low as 176 because its value has fallen 20%.

The BoE have said that if their base rate hits 6%, house prices will fall in value by 31%. We have three more rate reviews this year, we are already at 5%, it wouldn't surprise me if it goes to 5.5 in August, 6.0 in October then 6.25 in December.

>>The BoE have said that if their base rate hits 6%, house prices will fall in value by 31%.

do you have a source for this?

31% if interest rates rise 1%??

Every house regardless of area, size? I do wish people would stop scare mongering.

I will try to track down the numbers referred to, it was in a video.

They are apparently also predicting unemployment will reach 8.5% if that happens because businesses will be affected so much by their own loans.

Anyway, it's hearsay til I get the source. So pls bear with me.

No, I will ask for one, it's a pretty scary prospect.

I googled and googlenewsed it, could find nothing from a quick look.
sounds like an odd thing for them to say.
and 31 per cent is very precise.

https://www.bankofengland.co.uk/stress-testing/2022/key-elements-of-the-2022-stress-test#:~:text=In%20the%20UK%2C%20Bank%20Rate,purpose%20of%20the%20stress%20test.

If house prices fall, that will affect the one you're selling.

If you have debt, you're soon going to be paying higher interest on it so paying it down should be a priority.
NOT, extending your mortgage debt to pay for decoration and furniture.

very very quick scan, but have the idea that it is talking about a scenario/stress test involving more than a 6 per cent base rate.

and it does say:

"it is not a set of events that is expected, or likely, to materialise."

No, that's not what the BOE said. You have misunderstood what bank "stresstesting" is; read the article more carefully and it will tell you.

We have just put in an offer on a house, top of our budget and absolutely know this is a shit time to buy but we've already sold and now living with family so have no choice.

As there aren't many people selling here, the buyers are paying whatever they have to to get the house!

I don't regret selling, but by God it's been a pain in the hole.

If you desperately need to, then push on, but I'd probably stay put and see how it plays out for 6 or so months.

Do you actually need or do you just want a bigger house.

Many moons ago DH and I made the decision not to go for a bigger house. At the time all our friends went for bigger houses. We have spent 20 years having very nice holidays and no money worries. I know it’s a different time but look as to why you are considering moving.

In these uncertain times I wouldn’t sell or buy unless I really had to a relocation for work for example or triplets!

Very wise!

We did similar and now have no mortgage in our forties.

Houses have been rising in value for decades. It can't go on forever and the interest rate rises will (imo) cause a significant drop.

I’m at this life stage now and your comment makes me feel so validated.

Weve just bought a 3 bed semi based on affordability of one of our incomes all my friends are upsizing to 4-5 bed houses and mortgaging themselves to the hilt. They think we’re mad but I don’t get why we’d need all that space. We’re going to start TTC in the new year but who knows if we’ll be lucky enough and even then I don’t want a houseful, I’d rather have a smaller house and less kids with more nice holidays.

We moved last December but the offer/acceptance went through just before the Trouss mini budget. We probably paid top of the market for ours and I don't regret it for a second, I still feel like I'm on holiday every day in our new house😃.

I would like to upsize from a 2 bed to 3 bed flat and would preferably like to spend as little as possible on this. Flat is on the market but thinking of just waiting it out so prices go down.

I can have a baby in this two bed flat as the pets I have in the second room would have reached max lifespan in 2-3 years and baby would only need its room in 2-3 years (9 months incubation and 1 year in my room and I am not going to fall pregnant instantly considering I have not used artificial contraception for around 8 years). But I really would like a third bedroom in the long term but really don't see myself needing a house! I like my holidays and am planning on having only one child, my mortgage now is £285k and will go down to £265k by next year with overpayments (combined income £120k) so 2X combined income is something I am comfortable with... When we first got our mortgage 4 years ago, we borrowed 4.5 times combined income cos we were in our 20s and had no choice in London, but we managed to overpay (due to being relatively young with no commitments) ane increase pay but as I enter my 30s, my priority is to have less debt, stay in my area but still somehow get a bit more space without overstretching. I am hoping the next few years would be my opportunity because previously it seemed like a tall order.

Isn't it cheaper to upsize in a falling market..I get not going for bigger than you need but for families who need to and can, surely it's a godsend.

Find a house you like and can afford. If it's a good area and a good house - i.e. well maintained, sensibly extended if it's been extended, etc then buy it. Fix the interest rate for a few years so you know what you'll be paying on the mortgage. Prioritise somewhere to live over other things for a while.

Imho people who didn't do the calculations and figure out if they could afford interest rate rises were not very sensible. Interest rates had been very low for a very long time. They were only going to go up. Even now the rate rises won't have a rapid effect on inflation because so many are on fixed rate deals.

Interest rates were around 8% when I bought my first house. After an initial fixed rate period they started coming down meaning the SVR was better than a fix and my mortgage repayments reduced. What we need now are better rates for savers to encourage people to save instead of spend if they can.

The rental market is really contracting at the moment as lots of small landlords are leaving due to the forthcoming changes to no fault evictions, the EOC requirements and more expensive rental mortgages.

Don't sell and move into rented unless you can get a HA house or similar - privately renting is only likely to get more expensive as the small landlords sell up.

We've had the same thing from friends. But get this - it's just DH and me in a 4-bed detached house! We have SO much space.

When we moved in 5 years ago, each person who we told about the house asked if we were planning to add an extension! Erm, no, what more space could we possibly need?!

Then I met a friend for a drink a year or two ago and she asked if we'd move. I said no, this is all we'll ever need. Her words: "Spend a bit more time with me and I'll get some ambition into you"!

People are nuts!

My son is looking for a house at the moment and has mortgage guaranteed for about 5.1%. Do you think it's a good time for him to buy? Should they offer lower than the asking price?

Someone more knowledgeable than me will hopefully come along to offer some insight.

But my two pence worth...

I've always said no matter the market conditions, you're better off getting on the property ladder and making a start on paying down a mortgage.

However, for the first time, I think I'd hold fire if I were looking to buy now.

It's currently such a high rate to be locked into and rates might be a bit more sensible again in 18 months time.

And if they aren't going to come down, I'd wait another year for house prices to drop even further, so I could buy at the bottom and at least make the most of a bad situation.

He needs to watch moving home with Charlie on YouTube

It is cheaper to upsize in a falling market. The savings you can make on the more expensive property are potentially bigger then the amount you lose on the cheaper property. BUT interest rates are high at the moment, this may offset any advantage unless people are cash buyers.

For @itsmschanandlerbong it may be better to wait a few months to see if interest rates start to fall, especially if they are considering locking into a fixed rate mortgage. There seems no urgency to upsize & house prices are not likely to start rising again for quite a while.

But I guess prices would be lowest when the interest rates are peaking. Would it not be viable to buy a property you can afford on that high interest rate and then pay the high interest rate for a few years. When interest rates fall, you will still pay less overall as the principal amount is lower.