Nationwide House Price Index Jan 2014

[OwlHoot]

I've been looking at places in Devon and Cornwall, and they seem to have crept up a bit since 2007 (although no doubt many properties on Zoopla and RightMove are overpriced).

But I think vendors in the price range I've been looking at (£500K - £600K) are caught between two stools: Locals, who would gladly pay can't afford it; but these days richer people in the south east, who can afford a nice second family property or a retirement place, would rather buy in France or Spain.

[NorthWestPerm2Contr]

I've been looking at places in Devon and Cornwall, and they seem to have crept up a bit since 2007 (although no doubt many properties on Zoopla and RightMove are overpriced).

But I think vendors in the price range I've been looking at (£500K - £600K) are caught between two stools: Locals, who would gladly pay can't afford it; but these days richer people in the south east, who can afford a nice second family property or a retirement place, would rather buy in France or Spain.

One thing I wonder is how long the London market can continue to sustain the current prices. We know that cash buyers are the majority of the buyers in central London - so what happens when those guys pull their investments and put it elsewhere? On the other hand London is an important capital so maybe the population will move further and further out leaving only the super rich in the centre?

[d000hg]

But most of these mortgages are short-term fixes. What will happen when the rates rise, as they inevitably will?

How many years have we been saying that for

Note that since the rates first plunged to 1% and then .5%, the rate you actually pay has slowly increased. This applies to fixed rates too - if the bank thinks the rate won't rise, your fixed rate will be very close to a tracker rate. If they think rates are likely to rise, you pay more for your fixed rate.

Rates aren't suddenly going to jump from .5 -> 5%.

[NorthWestPerm2Contr]

How many years have we been saying that for

Note that since the rates first plunged to 1% and then .5%, the rate you actually pay has slowly increased. This applies to fixed rates too - if the bank thinks the rate won't rise, your fixed rate will be very close to a tracker rate. If they think rates are likely to rise, you pay more for your fixed rate.

Rates aren't suddenly going to jump from .5 -> 5%.

True say. Currently paying 3.69% as a FTB. Hoping to remortgage to something a lot better in the summer.

[Martin@AS Financial]

One thing I wonder is how long the London market can continue to sustain the current prices. We know that cash buyers are the majority of the buyers in central London - so what happens when those guys pull their investments and put it elsewhere? On the other hand London is an important capital so maybe the population will move further and further out leaving only the super rich in the centre?

It's already happening.

Competition for prime central London property is beyond ridiculous. I had a client last week who in order to get their offer accepted had to go to £80,000 over the asking price. They were up against 14 other buyers.

[NorthWestPerm2Contr]

It's already happening.

Competition for prime central London property is beyond ridiculous. I had a client last week who in order to get their offer accepted had to go to £80,000 over the asking price. They were up against 14 other buyers.

So will the investors ever pull the plug? Surely it will get to a stage where return will be limited and then they will go and put their money elsewhere resulting in all hell breaking lose on the UK property market....

[Halo Jones]

Mortgage Advice

Well this seems the place for this:

Ok so this is all new to me: we got our 1st mortgage on a 4yr fixed term (we went via an advisor as I know nothing about the subject)

Now our 4 years are up, I want to get another fixed mortgage (I know I am paying more than having it on a variable agreement but I rate the stability more than the possible saving)

So my questions are:

Is it best just to go to an advisor & get him to sort it out or do I just contact Nationwide & go with what they have?

I also believe that the LTV ratio will have gone down due to house prices increasing in my area: how do I go about getting a valuation? I don’t want to go to an estate agent & pretend to be looking at selling (A: it’s lying, B: I CBA with all the phone calls after)

Sorry if they are novice questions but real estate is not my forte

Thanks in advance

[Martin@AS Financial]

Well this seems the place for this:

Ok so this is all new to me: we got our 1st mortgage on a 4yr fixed term (we went via an advisor as I know nothing about the subject)

Now our 4 years are up, I want to get another fixed mortgage (I know I am paying more than having it on a variable agreement but I rate the stability more than the possible saving)

So my questions are:

Is it best just to go to an advisor & get him to sort it out or do I just contact Nationwide & go with what they have?

I also believe that the LTV ratio will have gone down due to house prices increasing in my area: how do I go about getting a valuation? I don’t want to go to an estate agent & pretend to be looking at selling (A: it’s lying, B: I CBA with all the phone calls after)

Sorry if they are novice questions but real estate is not my forte

Thanks in advance

Hi Halo

I would start by seeing what Nationwide can offer you and then comparing it to the rest of the market. Remortgages are handled by banks in exactly the same way purchases are in that any new bank will carry out a survey on your property to ensure that it is good security to lend on.

A solicitor will also be involved as they will have to carry out local authority searches as well as writing to the management company to check things like the balance of the sinking fund. If you decide to leave Nationwide, many lenders today offer a free survey and also free legal work. I would advise that you take advantage of the free survey but instruct your own solcitor as the free ones tend to be beyond awful.

The most important thing to do though is to look beyond the headline rate and look at the total cost of borrowing. For example HSBC currently have a 1.49% 2 yr fixed rate which carries a £2000 arrangement fee. Depending on your loan size this could either save you thousands or completely front load the real rate.

Hope that helps.

[Martin@AS Financial]

So will the investors ever pull the plug? Surely it will get to a stage where return will be limited and then they will go and put their money elsewhere resulting in all hell breaking lose on the UK property market....

Investors both domestic and from overseas do play a big part in the London property market but they are not the only driving force behind this boom.

FTB's are back in the market due to the availability of 95% mortgages

People who currently own are remortgaging their residential homes into BTL's, releasing equity and buying their new home

Bonuses are back in a big way which are being used as a deposit to buy

Confidence in job security is on the up in London


The underlying issue though is that there is simply not enough property to go around those who want to buy.

[Kanye]

Investors both domestic and from overseas do play a big part in the London property market but they are not the only driving force behind this boom.

FTB's are back in the market due to the availability of 95% mortgages

People who currently own are remortgaging their residential homes into BTL's, releasing equity and buying their new home

Bonuses are back in a big way which are being used as a deposit to buy

Confidence in job security is on the up in London


The underlying issue though is that there is simply not enough property to go around those who want to buy.

People must be taking on insane amounts of debt in London.

A £500k mortgage is approaching £3k per month. It's sustainable if the bonuses or the highly paid contracts continue to roll in, but that is a very risky assumption over a 25 year term.

With potential interest rate rises, dips in the market, changes in life circumstances, some people must be really sailing close to the wind - and then leveraging it up even further for a dabble in BTL!

Even if you can do it, who wants to service a monster mortgage for 25 years.

This is all quite depressing for someone in the top 0.5% of UK earners who is burdened with half a brain.