Reply to: 60% LTV

[rogerfederer]

They will only crash if unemployment and falling wages persist so that banks need to (continue to) restrict lending for safety. The housing market is basically on ice for the foreseeable future. Any correction happens at the margins and won't be known until the market is no longer on ice. I hope they go down, because they are over-inflated, and they will probably follow other asset classes down to some degree, but they aren't currently being traded like other asset classes, so they're a special case. I think Nomura are predicting a 13% decline by this time next year, which is pretty minimal given the growth in recent years (and the relative performance of other assets).

Given how long this is going to go on for, I think it's obvious that the amount of people out of work - keeping in mind that the hospitality and insecure work makes up a sizeable proportion of the economy - is going to have a major impact on house prices, number of people moving, renters downgrading or moving back in with family.

Fear sentiment among consumers means they won't be splurging cash any time soon, although I'm told that people with insecure work histories were still picking up BMWs from the local BMW garage up until last Wednesday; idiots.

Regarding mortgages: I would fix for two years. With the QE required I don't see mortgage rates going up for a long, long time.

[TheCyclingProgrammer]

That shouldn't be a problem with house prices going up at 1.7% last year and whatever for the 2 years before. I'd be putting a new price at the top end of the market value (but still realistic) to be well within personally. If we do hit a recession and prices drop you want it dropping for a higher value in case it causes LTV issues in the future.

We need a valuation of £369k which is an increase of £9k over the previous valuation which is about 1.025% increase in three years. That’s just a conservative estimate though, broker is going to submit £375k which lies somewhere between the last bank valuation and middle of the Zoopla estimate although I only take that as a very rough guide.

No plans to move though and we would have paid around £30k in capital over that time so even if prices drop I’m not too worried about staying below the 60% threshold when the time comes.

[jamesbrown]

House prices will crash like the stock market in the months ahead.

They will only crash if unemployment and falling wages persist so that banks need to (continue to) restrict lending for safety. The housing market is basically on ice for the foreseeable future. Any correction happens at the margins and won't be known until the market is no longer on ice. I hope they go down, because they are over-inflated, and they will probably follow other asset classes down to some degree, but they aren't currently being traded like other asset classes, so they're a special case. I think Nomura are predicting a 13% decline by this time next year, which is pretty minimal given the growth in recent years (and the relative performance of other assets).

[scooterscot]

Serious question - our mortgage fixed rate ends in June. I was leaning towards a 3 year fix again but our broker recommended a 5 or 2 year fix as he said the rates were more competitive.

He’s found me a 5 year fix of 1.44% at 60% LTV - can obviously get better rates on a 2 year fix but it seems like a 5 year deal would be a sensible option right now, am I right?

5-year is a steal. Grab with both hands, but maybe not for the reasons you think... fixing your monthly payments.

House prices will crash like the stock market in the months ahead. As a result, cheaper housing will become available. On paper you'll be paying more per month in years four / five on your fixed rate compared to someone on a higher rate for the same house just because of a collapse in housing prices.

Therefore if you think you'll be moving in five years from now, think again.

[northernladuk]

Yup, I'm thinking the same. It has a £995 booking fee but worth it, broker isn't charging a fee either. I'll need 60%LTV to get it which would require a valuation of £10k more than when it was last valued 3 years ago, touch wood we can get it.

That shouldn't be a problem with house prices going up at 1.7% last year and whatever for the 2 years before. I'd be putting a new price at the top end of the market value (but still realistic) to be well within personally. If we do hit a recession and prices drop you want it dropping for a higher value in case it causes LTV issues in the future.

[TheCyclingProgrammer]

Or, can you risk pulling funds out of yourCo to make a lump sum against your mortagage (assuming you don't incur fees for that)?

Could do if necessary, though I'm hoping there's been sufficient growth in three years to get us over the line.

[ladymuck]

Yup, I'm thinking the same. It has a £995 booking fee but worth it, broker isn't charging a fee either. I'll need 60%LTV to get it which would require a valuation of £10k more than when it was last valued 3 years ago, touch wood we can get it.

Or, can you risk pulling funds out of yourCo to make a lump sum against your mortagage (assuming you don't incur fees for that)?

[TheCyclingProgrammer]

I'm just about to sign my year 5 fixed rate. There is only one way it can go from 1.44% IMO. The more competitive rates save me 20 quid a month so Its a no brainer to me.

Yup, I'm thinking the same. It has a £995 booking fee but worth it, broker isn't charging a fee either. I'll need 60%LTV to get it which would require a valuation of £10k more than when it was last valued 3 years ago, touch wood we can get it.

[BrilloPad]

I'm just about to pay mine off. Before my Mrs spends my inheritance!

How many pairs of shoes can you buy for the worth of a house?
I suspose she is going to find out....

[Zigenare]

I'm just about to sign my year 5 fixed rate. There is only one way it can go from 1.44% IMO. The more competitive rates save me 20 quid a month so Its a no brainer to me.

I'm just about to pay mine off. Before my Mrs spends my inheritance!

[northernladuk]

Serious question - our mortgage fixed rate ends in June. I was leaning towards a 3 year fix again but our broker recommended a 5 or 2 year fix as he said the rates were more competitive.

He’s found me a 5 year fix of 1.44% at 60% LTV - can obviously get better rates on a 2 year fix but it seems like a 5 year deal would be a sensible option right now, am I right?

I'm just about to sign my year 5 fixed rate. There is only one way it can go from 1.44% IMO. The more competitive rates save me 20 quid a month so Its a no brainer to me.

[TheCyclingProgrammer]

Serious question - our mortgage fixed rate ends in June. I was leaning towards a 3 year fix again but our broker recommended a 5 or 2 year fix as he said the rates were more competitive.

He’s found me a 5 year fix of 1.44% at 60% LTV - can obviously get better rates on a 2 year fix but it seems like a 5 year deal would be a sensible option right now, am I right?

[ravenshaw]

Forgot to mention, stabling for 3 horses.

Which is what the rest of us would call a '3 car garage'...

[Mordac]

Forgot to mention, stabling for 3 horses.

Which is what the rest of us would call a '3 car garage'...

[scooterscot]

Halifax? I thought they went bust.

This time next year Rodder's.