Get a reason not to buy, Spin it to become a reason to Buy

independent.ie/lifestyle/property-plus/the-art-of-buying-at-the-market-bottom-2140424.html

Valerie, you’re full of shit.

And that’s me being polite about it.

Smart people will instantly realise that rising mortgage rates would cause prices to fall even further.

Well, as someone waiting, I would not like to buy, loose 10% and have a 10% mortgage increase …

But part of my waiting is not just waiting for prices to fall, but I am also taking into account mortgage rates to max out, or be close to maxing out. And I know I am not the only one of my “waiting to buy” friends …

But, eh, house prices are directly affected by cost of credit. So rising mortgage rates will simply continue to push prices further down.

Besides which, on a variable rate mortgage the person buying at 10% less will still be paying less than the person who buys now?

WTF, how is this even remotely spinnable? It’s outright lying!

Are any of you mortgage experts? Valerie only takes advice from the best.

She gets paid for this shit. What the hell was all that bullshit about the poor EAs who can’t get anyone to trust them?

What she says is conceivably true depending on where rates end up and where prices end up. The banks are somewhat inclined to sacrifice medium term profitability in favour of short term profitability right now so there’s potential to take advantage of that.

However it’s the usual thing where they take something which is true but with a bunch of caveats and then present it as universally true.

The argument that people need to buy now before interest rates rise is the kind of inverse logic that goes beyond stupid

People only “lock” the rate now for a few years max and are still exposed to higher interest rates down the road for the other 25+ years

Further, the Standard Variable Rate in 5 years time, is “predicted” to be 3% higher 5 years from now if you look at Euribor futures

I can’t see house prices racing higher if that materialises

Lets not forget house prices in Ireland started to crack way before the credit crunch hit. The rise in rates into 2007 had already started to cause problems and that was in an era of still easy credit and sub-prime CDO booms

This was discussed at length before here:

Property Prices will fall but finance prices won’t

The conclusion I came too, which as mentioned above is if finance costs go up then prices will have to come down. Also, rising interest rates should also be good for savers and lead to you requiring a much lower LTV when you do get around to buying.

I’ve noticed a trend lately that a lot of “experts” are saying statements like “if you can get the money” as if this is the reason the market has stalled.

Is it that banks aren’t lending stupid amounts of money for shitty houses that clearly aren’t worth it to people who clearly cannot afford that level of debt that is the reason we’ve stalled ?

Could it not be perhaps that the problem is the EA’s and sellers looking for stupid prices for houses that even the banks won’t loan against at those rates are stalling the market ?

Jaysus - the amount of spin we’ve to endure every day here boils my blood - the same crew who screwed us over the last time are still allowed be and still are hell bent on screwing us over ( I include the government in this ).

rant over - sorry :mrgreen:

You’re assuming that nobody allows for any expectation of future interest rate changes when buying a house, that they wait until it actually happens and then react. If this were the case then there should be a sudden drop or increase in price the day the rate changes. That doesn’t happen.

Isn’t the contraction of credit a factor that overwhelms just about any other argument, including this one? There simply is not the money there to support prices as they were or indeed as they are. You could have 100 other indicators suggesting prices should rise and they would all be trumped by a credit drought. Of course, those 100 other factors (IR’s, sentiment, employment, wages, emmogration etc) don’t suggest that at all, only amplifying the tight credit effect.

Fwiw, I am finding this thing about credit to be one of the best ways to explain to doubters why prices will continue to fall. People seem to quite readily grasp that if there was €100 available to lend for mortgages and that drops to €75 then there is simply no physical way prices cannot fall.

Anecdotally on the credit crunch. I had one EA tell me not to bother offering anything less than 95% of asking price on a particular house because, “There is a woman really interested in it and she is just waiting for the financing.” Will higher interest rates make financing more readily available?

the following loan amounts and interest rates all give almost exactly the same repayment (assuming a 20 year loan)

200k 4%
190k 4.6%
180k 5.25%
170k 5.95%

If one goes up the other must come down…

As far as I know the regulator (and he means business now) makes lenders stress test to 2% above their current standard variable rate. Ergo, as their SVR goes up, so their stress test gets harsher for prospective borrowers? And all the major banks have now increased their standard rate (PTSB, AIB, BOI, EBS, KBC)… so draw your own conclusions on what that will do to affordabilty?

So her argument, such as it is, boils down to this–when interest rates go up prices will go down but banks will lend you less, and thus it’s a wash–that about it?

Eh, no I wasn’t. Where did you get that from?