Mortgage rates rising — would you buy now or sit tight?

[BeQuaintLion]

Just wondering how others who are currently looking to buy are feeling with all the news about mortgage rates going up and potentially rising further.

Are you still going ahead, waiting it out to see if interest rates drop, or hoping house prices might come down?

I’m on the brink of buying, deposit saved up etc, and now I’m really not sure what to do. It’s taken a lot of hard work to get to this point but it feels like a particularly bad time to be taking the plunge.

I know nobody has a crystal ball and there’s
probably never a perfect time, but I keep going between wanting to get on with it and wondering whether I should hold off for a bit.

Anyone else in the same boat? What are you doing?

It’s a good time to buy and you can negotiate. Houses aren’t achieving their sales price. Just work out you can afford in monthly payments on the higher interest rates and that’ll dictate budget for house prices. A good tip is to look at the sold prices of houses in your local area, work out the price per sq mtr and use that when considering your offers below asking price.

I would be tempted to hang on until after the budget. Who knows what will happen

If you hang on to buy until prices are low/not rising/ interest rates are “low” and various other conditions to be right, you simply would never buy. I think there were a few years where this was actually true and now people seem to want to hold out for it to happen again. In truth that was an anomaly and unlikely to happen again.

Presuming you want to buy to get a long term home, not because you want to sell and move on in a few years and are expecting to make money, get a mortgage that you can afford and start paying it off!

Liz Truss happened in the middle of our purchase and people pulled out of sales thinking it would settle down again. Our rate went up by 2% and we seriously considered pulling out and hoping they’d go back down but 4 years on, we’re so glad we didn’t- rates have only gone up since! We lengthened the term slightly to make the new rate more affordable but made a commitment that for every month we could afford it, we’d overpay as is the term was the original one we’d planned. We didn’t manage it for the first 9 months or so as we needed to spend more than expected on the house, but have been able to ever since, which will make the inevitable next rise a bit more comfortable.

However, in the current circumstances I think I’d only fix for 2 years, not 5 in the hope that they would come down a bit!

.

Sounds like you have made your mind up anyway. Poor seller - I hate flaky buyers.

Why was this house a money pit?

I would wait until after the bond market crisis, should be a few good bargains then.

If I were going to live in a property for 10+ years and it wasn’t a flat, I’d buy now. Maybe I’m wrong.
I feel because there’s fewer buyers, they have more choice. Mortgage rates will not go down significantly, and new budget will not make things better.

If you can afford the deposit then yes def, when i first got on the ladder rates were 8%. It was expensive at the time but as the yrs roll by the LTV increases and you can negoiate lower rates. You will forget tbe painful times. When rates in future drop lock in for 10yr period. My last mortgage I locked for 10yrs at 2%. Was a good call when you think of the rates now. If you can over pay even 10 quid a month it soon builds up and shaves loads off the interest. Plus house prices are dropping so you will get more for your money. Get a chunk off the house price and keep a chunk of cash liquid for a buffer. Rates will def be going up in jan and then who knows when they will drop could be yrs. Life is for living, bite the bullet and move on. You find when rate drops house prices go sky high so there is never a sweet spot.

The OP hasn't said that she (or he) has yet found a property, let alone begun the conveyancing process, so there was no need for this comment.

Op has edited her last post. If you click on the word edited you can see what she originally wrote.

I'd buy. Every single month that you pay rent you spend £1000 that you'll never see again but if that £1000 was being spent on a mortgage, £500 of that would be paying off your equity.

What’s happening with prices really depends where you are in the country and what sort of property you are buying. In many areas prices are down but they may have further to fall, and interest rates may well go higher.

If you want to buy, you plan to live there for a decent period and you’re avoiding new builds, plus you’re not stretching yourself to the absolute max, then I would say buy. A house is your home, not primarily a financial investment, so don’t put things on hold trying to time the. Market. But be aware of all the issues and don’t feel rushed into anything or pushed to pay more than you feel comfortable with. It’s a buyer’s market.

Genuinely its not going to change. I am in the industry and expect mortgage rates to settle/maintain at 5-6% long term. We will not be at 2-3% anytime soon. I would rather buy my house and pay the equity down than rent if i could.

With Labour at the steering wheel, the economy is going to get worse.

Can you afford to buy now and pay the mortgage payments for the foreseeable future? Do you have a crystal ball?

If your answers are yes to first question and no to second I would buy now.

Payments covering 50% equity from day one, LOL, not a chance, the early stages are pure debt payments, you have to look at the purchase price of the house plus all the debt interest you will pay, and in this market probably forget about wage rises and accept that the interest rate on your mortgage debt will go up over time, then compare this to rental costs over the same period, and also remember that if rents and house prices crash you still pay back the original amount if you have a mortgage debt on your house. You can leave a rental but you can"t leave a big mortgage debt.

Oh for sure, the EU is starting to unravel now, they are just stuck in the headlights, all they can do to try to fend off the bond markets is start cutting welfare, of course they won"t do that because they believe in the Magic Money Tree Forever.

I bought in 2020 when everyone was saying it was a terrible time to buy, market was about to crash, better to wait it out blah blah blah. In reality, there hasn’t been a better time to buy since. Locked into a low rate and have now paid off over a third of the mortgage. I’m SO glad that I didn’t wait.

Best time to buy is as soon as you are able to imo. Especially if renting.

I’m going to sit tight until this ridiculous shit labour government is voted out

As long as you are comfortable with overpaying and not getting back what you paid that is great if it is what you want.

Yeah sure, so I could have kept renting for another 6 years, paid tens of thousands in rent, and have nothing to show for it? No thanks.

Rents have rocketed, and if I was still renting, I would be paying £600 a month more than my mortgage now, and have no asset. As it is, I will have cleared the mortgage in less than 10 years.

Buying is always worth it. Pay your own mortgage, not someone else’s.

Doubt many parts of the country are more to rent than mortgage now TBH, where was this that the rent was £600 more? Mortgage approvals are at historic lows so I don"t think most people agree with you about buying now.

Same boat here - deposit saved, viewing most weekends, so I understand the wobble completely. The way I've settled it in my own head: you can't time interest rates, you can only control the payment. So the question I ask on every house now isn't "is this a good time to buy" but "could I still pay this mortgage comfortably if rates were 1% higher when I came to remortgage". If the answer is yes, the timing anxiety goes away, because you can survive whatever the next few years do.

The other thing that helped: the seller on the other side of your offer is reading the same scary headlines you are. Nervous markets cut both ways - it's no coincidence buyers are negotiating harder discounts right now than they have for years. In a strange way the same news that's putting you off is exactly what's giving you room on the price.

If it's a ten-year home, the rate you start at matters much less than the price you agree and staying power through the first fix. Fix for long enough to feel safe, keep the payment boring, and let the headlines do what they like.

I think it always feels like you've missed out on the 'good times' when you get on the property ladder. I remember feeling like we'd missed out on the property price boom when we first bought. Unless you buy badly, or intend to sell again soon, you will normally make money and be able to move up the ladder.
Low interest rates were an anomaly and unlikely to return any time soon.