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?

I know friends are paying more in rent for smaller houses than our (pretty eyewatering) mortgage costs in the SE.It seems unjust but then the world is not a fair place.

I would sit tight and review in 6 months time

I really wouldn't buy right now.

Property prices are starting to fall and given the financial backdrop, they probably have a long way to go yet.

You don't want to buy at the top of the market and be under water with your mortgage.

People will encourage you to buy because they still subscribe to bricks and mortar being the best investment that will always go up. But it's important to remember they won't be paying your bills and potentially stuck in negative equity.

If I were you I'd wait another 6 months and reassess the situation. You have nothing to lose by waiting a bit longer to see how things develop.

Yep I agree 100%

Interests rates are still very, very low, compared to my first mortgage in Sept 1989. We were paying nearly 13% and that was a good rate, many were upto nearly 15%

And house prices vs salaries ratios are?

There is zero chance of 13% interest rates with today’s house prices

I agree the days of 2% etc are gone but the impact of 5/6% still has to play out on house prices. Many are still to come off low fixes.

Can you rent a similar property for less than your mortgage would be? Do you want to live in your own home or someone elses? Are you buying in a good area? And will you recognise a 'better' time to buy? What are you waiting for, certainty? These are some of the questions I asked myself.
But mostly it was could I afford the purchase.

House prices don"t control interest rates! The bond market doesn"t care how much value comes off your home, it just prices debt to current economic conditions like risk etc.

Yes, long way down for prices from here, why get a massive debt now and risk higher interest rates in the future?

But what was the house value on which you were paying 13%? I bet it had a 1 in front, not a 3 or a 4.

In 1989, a mediocre 3 bed semi was not £450,000+ it was more like £90-£120,000 - hardly a fair comparison.

I’d do it if the numbers work. Go in with eyes open and enough headroom in your budget for rates to go up to 7%. Model what happens at 10% - do you lose your home or could you get a lodger for the spare room etc.

Dh and I bought when we had a sense the market couldn’t possibly keep on rising (we are both in finance) - in 2007! Rent was killing us. We worked 60 weeks and took a lodger to make our first home affordable. We took a low interest five year fix so that it would “feel like rent” every month. Then, financial crisis happened, we held on through negative equity and emerged just fine. We sold for a modest profit, moved to a family home and never looked back.

The key is NOT to overstretch yourself- always consider “what if” - get Microsoft copilot to model the scenarios for your budget!

By the way we also agonised over the right moment to buy - but we were sick of paying off our private landlords second home mortgage! Happy to move to an area we could afford to stop lining his greedy pocket.

Our hand is forced by our daughter’s reception place. We don’t want to stay in this area (small newbuild home which we’ve outgrown, no local shop and parking is terrible) so if we don’t go now we’ll be trapped here as finding in year places for two children would be a nightmare.

Plus we’ve found a lovely forever home that we don’t want to lose out on. Mortgage rates are indeed scary but I don’t see it getting any better any time soon.

My god I never knew that - to click on the word! Thank you!!

We’ve always bought depending on our own personal situation with a weather eye on the wider picture. Are our jobs secure? Are we planning on staying put for at least five years? Are we expecting major life changes in that time (new baby/childcare bills ending/kids leaving home)? Do we have enough wriggle room? And then crack on.

I was on the house price crash forums back in the 2000s and I swear there are still people there banging on about how there will be a crash any day now… meanwhile we’re in our second house and have a huge chunk of equity.

It’s a buyer’s market so you should be able to get a good deal.

https://www.which.co.uk/news/article/mortgage-rates-are-on-the-rise-does-a-tracker-make-sense-if-you-are-remortgaging-aC4dj4j8xYtn

@TheBirdintheCaveyou are right to think this. My son is in yr 9, worst time to move but we have to. Its been a nightmare tied to areas for school, luckily we found 1 outside the council area but obv we dont have to adhere to admission criteria so he can attend the same school as long as we can get him there. Saying that trying to work out public transport in a semi rural area has also been fun. Do the move now. Its been a nightmare.

The mortgage debt load was lighter back in 2007 though?