Hi all,im looking for some advice.I have just finished uni and have landed a good job.I was told i could borrow upto £130000 (not that id want to),I recently had a call from my mortgage adviser who told me due to the financial climate i can only have £99000 unless my parents would sign for my mortgage,naturally im not keen on this idea.What worries me is in the space of 4 weeks i have been told i can borrow 31000 less than first told.So is it a good time to buy.:help:

Basically, no.
Do a bit of research into the credit crash which may be looming over us... Banks may want around a 25% deposit for a house, hence the less amount that you can borrow.

I agree with twinkle - I think prices are very likely to come down, a bit at least if not alot as the whole economy struggles to remain stable.

I would hold off, use your new pay packet to save hard for a deposit (even if 100% mortgages do come back in a year or so its always better to have a deposit and some savings behind you) and keep an eye on the market for a while.

Banks are looking for 5%-10% deposits. If you have this then now is as good a time as any to buy. In fact you could land yourself a good deal at the minute. House prices are not going to fall substantially or they would have already.

It all depends how long you intend to stay in a certain place.

If you buy a house now and live in it for 25 years - then it doesn't really matter too much whether prices go up or down in the short/medium term. However given that you are just out of uni I doubt you are looking for such a long term proporty.

Obviously no one want to pay over the odds for a house - and the current situation would suggest that prices are staying almost static and that there is a large stockpile of house on the market remaining unsold. This does mean that there may be some wiggle room in pricing and you could negoatiate the price down.

Personally - I would rent for 6 months or so. Get an understanding of what happening with the economy, local housing markets in areas you are looking to live. Also - give your job time to bed down - make sure that this is something you want to do. It's easier to up-sticks in a rental than as an owner..

Banks are looking for 5%-10% deposits. If you have this then now is as good a time as any to buy. In fact you could land yourself a good deal at the minute. House prices are not going to fall substantially or they would have already.

I don think it fiollows that because something has not happened it wont happen!

I work in the financial services and property seems to have dropped as low as it is going to. Recent forecasts predict holding steady, perhaps dropping another 1% or so before starting to rise slowly again next year- much slower than recent years. Might be worth looking around for houses that have been listed for quite a while and offering below the asking price to bring it nearer to your budget.

However, given recent guidelines from the government, changes to tax and capital gains the financial markets are not at their most stable, banks are looking for a little more security. As mentioned above if you have a large deposit, steady income and provision to pay that income in the event of something happening to the main wage earner (life insurance and/or accident/sickness/unemployment cover) , now is not a bad time at all.

Quick caveat: this does not constitute financial advice- advice can only be given after looking at your particular circumstances. Markets may fall as well as rise and no guarantees are given for any particular circumstance.

Despite all the nay-sayers the bare simple truth is that the very best investment that you can ever make is in the bricks and mortar that you live in. House prices have never, ever dropped and there is no real reason to believe that they will now. Why? Well think about it. Why would you sell your house for less than you paid for it?

If house prices really do drop then there will be a hell of a lot more to worry about than the value of the house that you are living in and paying the mortgage on.

I really do wonder why people just believe the headlines instead of doing a bit of simple thinking.

If you want to show off at dinner parties then worry about house prices. But, if you want to put a roof over your head and secure your future get it bought now and enjoy it. Nobody will take it off you, nobody will reposess you, nobody will give a hoot as long as you pay the monthlies, and in 25 years time it will have nicely risen above inflation.

Despite all the nay-sayers the bare simple truth is that the very best investment that you can ever make is in the bricks and mortar that you live in.


Not for short term though - a house is mostly definatley a meduim to long term investment (5 years +). Given the amount of fee attached to mortgages nowadays - then selling after a few years will probably not get you anywhere..


House prices have never, ever dropped and there is no real reason to believe that they will now. Why? Well think about it. Why would you sell your house for less than you paid for it?


I'm kinda guessing that I've read this wrong? According to the nationwide average house prices inflation was negative for 14 months from Q2 1990 to Q3 1992. I guess this means that the value of houses somewhere went down...

Plus - during this time I guess that people had to sell their houses for one reason or another (divorce, moving job, unable to afford mortgage, etc) - in these situations you might have no option but to accept less than you paid for it

But, if you want to put a roof over your head and secure your future get it bought now and enjoy it. Nobody will take it off you, nobody will reposess you, nobody will give a hoot as long as you pay the monthlies, and in 25 years time it will have nicely risen above inflation.

Yep - at the end of the day if you need a roof and intend on living in that house for a while, then a mortgage is the way to go if you can afford it. However in the OPs case - then perhaps waiting a little while (6 months) might be a good idea - certainly to build up some reserves/deposit/cash to pay fees. I don't think house prices are going to move up by any significant amount in that time..

Not for short term though - a house is mostly definatley a meduim to long term investment (5 years +). Given the amount of fee attached to mortgages nowadays - then selling after a few years will probably not get you anywhere..
I often ponder on where the modern phenomenon of houses being about annual profit rather than a roof over you head came from.

This idea is also used as a crutch by people who take delight in talking down a market. It is silly, immature and shows a total lack of understanding of people or finance. That's why journalists love it so much :)

I often ponder on where the modern phenomenon of houses being about annual profit rather than a roof over you head came from.

This idea is also used as a crutch by people who take delight in talking down a market. It is silly, immature and shows a total lack of understanding of people or finance. That's why journalists love it so much :)

It has come from people being greedy and seeing property as a way to make a quick buck. Those days have been and gone but i agree that property should be seen as a long term investment and also as your home.

I often ponder on where the modern phenomenon of houses being about annual profit rather than a roof over you head came from.

For me - the whole "ownership" thing started in the 80s when council houses were sold off. The shift went from rental to buying and this has progressed. Even you referred to it as an investment rather than a home :P

Now that added fee's are so high (solicitor/stamp/motgage booking/redemption lock-ins) then you need to be on a house for a while before you have actually broken even.

I'm buying a house at the moment and have all the sum's done to show the break even points for various deals against interest rate and most are 2 years+. Add in the extra fees and pushes you into 5+. This is excluding any increase in prices (which no one should rely on - but seems to have been the way of the past 8-10 year)

With the market as "instable" as it is right now, surely those who can afford to buy and afford to move should continue to do so. We all have parts to play in this "credit crunch".

The problem as far as I see it has been caused by people over stretching themselves and a willingness from lenders to allow Britain to slip into being a nation that lives on credit.

Scaremongering will only worsen the situation. .

If you are looking for a home, as opposed to an investment, and can afford to put a deposit down I would go for it.

If you have a deposit, can afford the repayments, find someone to give you a mortgage and need a home rather than an investment, then why not?

Its quite a few ifs though!

They are the same if's that have always been there now that the silly nonsense of 125% mortgages has been sorted. :)

Thanks for all your help and advice.I forgot to mention that i dont have a deposit as i've just finsihed uni.The mortgage advisor im dealing with says he can get me a deal where the mortgage company provide the deposit if that makes sense.

...Why would you sell your house for less than you paid for it?...

Bizarre logic.

Lets take a hypothetical street with 7 identical houses. No1 is bought in 2001 for £110k, No2 is bought in 2002 for £120k, No3 is bought in 2003 for £130k and so on until No7 is bought in 2007 for £170k.

Now in 2008, No1's owners are trying to sell their house but can only get £140k for it. They make a 30k profit but house prices are undoubtably falling, do you agree?

The people who have lost out are those that bought 5,6 and 7 because they are paying off a loan that is far bigger than the value of their house. This is not a position anyone wants to be in.

As for whether house prices will go down significantly, who knows? I certainly wouldn't be taking big risks in the current economic climate.

Even by your analysis my logic is perfectly sound. :)

I would say go for it, if you can afford it. Prices may go down a little short term, but as long as you stay there more than about 2 years I can't see why you wouldn't buy now - its very hard to predict the bottom of a cycle...no point torturing yourself with thinking you could wait 3 months and get 2% more off the price. One thing you will have now is time to make a decision. I was buying in 2002, and I can only describe it as a nightmare....10 couples all viewing a house at the same time, sealed bids, houses being sold before you got a chance to view...and all the time, the prices were going up each month. You'll have none of that now. People are not going to give their house away, but you will have time to view a number, negotiate hard and be in the driving seat. Its a buyers market for sure....I just happen to be selling at the moment :(

I would say go for it, if you can afford it. Prices may go down a little short term, but as long as you stay there more than about 2 years I can't see why you wouldn't buy now - its very hard to predict the bottom of a cycle...no point torturing yourself with thinking you could wait 3 months and get 2% more off the price. One thing you will have now is time to make a decision. I was buying in 2002, and I can only describe it as a nightmare....10 couples all viewing a house at the same time, sealed bids, houses being sold before you got a chance to view...and all the time, the prices were going up each month. You'll have none of that now. People are not going to give their house away, but you will have time to view a number, negotiate hard and be in the driving seat. Its a buyers market for sure....I just happen to be selling at the moment :(

I think this is quite a wise post.

Above all I would say don't rush into anything, make sure you can afford any agreement you get into, even if rates go up etc. Make sure you are not paying out so much in mortgage that you will have no life with your new found earnings.

Just be certain and then i'm sure 9 times out of 10 you will be happy.

House prices have never, ever dropped and there is no real reason to believe that they will now

Yes, over the long term (50+years) house prices rise on average 4-5% per year.

However, after 10 years of 10%+ annual price rises, what has to happen to prices to get them back to the 4-5% long term average?

Prices can fall in the short term and that can be 4-5 years as in the early 90's.

To say house prices have never, ever dropped is a very brave (and misleading) statement.

I would, but be sure of the area, and definately buy a house, not a new built 'designer luxury apartment' i.e. flat as if there is a crash these will be hit first. We have friends who 'invested' in 2 of these sort of flats in Manchester, only to find out they can't resell them..

We bought a starter terrace in Hillsborough and did well - they still seem to be holding their value well... would buy there again.

Thanks for all your advice.I've been strongly advised to wait for 6 months,save some money and see how the market looks then.

If you have a mortgage in place on a good rate, I would definately buy now. The market is not going to dramatically drop. There is uncertainty but there are many sellers out there who will take a large drop in asking price just to sell. It is a buyers market. In 6 months things might have recovered and these sellers will not accept these drops and will hold out for more.

We are going to get a slight correction in prices but not a property crash. As people have said, we have not got 15% interest rates etc.

We are going to get a slight correction in prices but not a property crash. As people have said, we have not got 15% interest rates etc.

The problem, IMO from reading the paper's this weekend, is not the Bank of England's interest rate, but the rates at which the banks all lend to another- there is the lack of confidence.

The Abbey has now withdrawn it's 100% mortgage- lenders are starting to want bigger deposits.

When remortgaging, I was looking at tracker deals but opted for a fixed rate due to this uncertainty.

I dont have a mortgage in place and my mortgage adviser can only get me £99000 as it stands,2 months ago i could have had £130000.I was told that all lenders are doing away with 100% mortgages and it would be in my best interests to wait 6 months as there will be no growth in the housing market for at least the next 3 years.

Then, IMO you are being advised incorrectly. If you have to save then you have little choice, but I wouldn't rely on "no growth" for three years.

I'd have a shrewd guess that that wasn't a strictly accurate representation of the advice given. No-one, apart from maybe Mystic Meg, would claim to be able to predict the state of the market in 3 years time.

no growth in the housing market for at least the next 3 years.

My advisor advised me against tracker mortgages as this year, the base rate is predicted to go down, but next year... who knows.

At the end of the day, there are not enough houses being built to meet demand. Developers will become more nervous about new-builds. Investors will be very nervous about city centre flats (how many are currently in construction in Sheffield, hmm??), but actual family houses will be still be in demand.

Once the mortgage market calms down a bit, hopefully, people who need to move will do so and this will help to improve things.

Buying a property is probably not a bad idea. It is getting the mortgage that is the problem.

Interest rates. The UK has rates that are substantially higher than both Europe and the USA. Do you think that they will go up substantially? I reckon on at least another half point off by the autumn.

Otherwise I'd agree entirely with what you say, though some of it is location sensitive as not all places are in the same boat regarding the amount and type of current and future stock.

I don't think they will go back up this year. The Federal Reserve has approached their problems differently- but then this sub-prime is far, far worse there (whole streets with empty properties). The Fed. Reserve has dropped their rates to try and prevent further problems. The Gov't there are looking at rescue packages for homeowners.

The Gov't here are trying to stabilise the situation, I think. Trouble is, with oil prices going up and really starting to affect food prices, as well as petrol, there are going to be big problems with inflation. The way in which inflation is reported really makes me cross. Everyone's bills are going up and the Gov't are still reporting it as low! So, if the Gov't are not careful, with the twin problems of inflation and housing slow down, these 2 things could cause problems.

Under the current set-up in the UK, the only way that interest rates can come down is if inflation comes down. I don't see any evidence of this, rather the reverse. Unless of course the chancellor revises the target for inflation upwards. I wonder if he will, it doesn't seem likely at the moment.

I'd have a shrewd guess that that wasn't a strictly accurate representation of the advice given. No-one, apart from maybe Mystic Meg, would claim to be able to predict the state of the market in 3 years time.

Thats what i was told,i have nothing to gain from telling fibs.

Thats what i was told,i have nothing to gain from telling fibs.

Not accusing you of fibbing, just not relating was was said word for word. Did he/she say the market will be flat for three years? Or did they say it could/might be flat for three years?

If your mortgage advisor really did say that they knew what the state of the market will be in three years time, I apologise for doubting you and would recommend you to take their fortune telling ability with a pinch of salt.

No body knows for certain what will happen in the next year or two. Everbody is just second guessing, however you can look at the facts and figures do a little research and make up your own mind on the whole situation. Personally i think now is as good a time as any to get on the ladder if you are certain you can afford the repayments. If you have any doubts dont do it you will just become another repossession figure to add to the list.

With all the negative hype around the current housing situation,Im defo stopping put for the time been and putting my new found wealth to good use i.e saving as much as possible.If all is to be believed,there are bargains to be had.Im not tigh with money but to me it makes sense not to rush in and pay over the odds,even S6 might drop in price.I live in hope.

Interest rates. The UK has rates that are substantially higher than both Europe and the USA. Do you think that they will go up substantially? I reckon on at least another half point off by the autumn.

Otherwise I'd agree entirely with what you say, though some of it is location sensitive as not all places are in the same boat regarding the amount and type of current and future stock.

I reckon interest rates will be 4% by the end of this year.

I reckon that they will be less than that.

BOE base rate, or mortgage rates?

Base rate of course but I wouldn't bank against bank rates being sub 4%.

Base rate of course but I wouldn't bank against bank rates being sub 4%.


Got to admire your optimism Tony. I do think you are under estimating the gravity of the situation though, and think you are more likely to see a one legged kitten burrying a turd on a frozen pond than seeing <4% mortgage rates before the years out.

One would think inflation may yet have a part to play also, regardless of what the ONS claim it is running at.

Whatever the differing opinions on housing are, it fair to say we have entered a period of economic strangeness not seen since the south sea bubble went POP.

I didn't say that they would, I just said that I wouldn't bet against it. :)

You make a good point about the wider economic issues and yes it certainly is an odd time.