Saturday, January 28, 2012

Quick! Buy now before it’s too late!

Buying now cheaper than renting, Halifax says

Buying a house is now much cheaper than renting, mortgage lender Halifax has claimed, in a remarkable turnaround from three years ago when the soaring property market priced out all but the wealthiest buyers. Halifax calculates that the monthly cost of buying the average three-bed home in the UK is now £600, 16% cheaper than the £716 it would cost to rent the same type of property. That contrasts with the peak of the property market in 2008, when a mortgage on the typical home cost around 29% more than renting. The figures come amid claims that first-time buyers are beginning to return to the property market. The biggest barrier for young buyers - the huge deposits required by lenders - is beginning to crumble as more and more 95% mortgages have become available in recent weeks.

Posted by drewster @ 11:24 AM (2026 views)
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10 thoughts on “Quick! Buy now before it’s too late!

  • Maybe so but only because tehhe rent sneeds to follow suit! (and will have to)

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  • Dear Guardian, yes, mortgage is cheap ONLY now, because the BoE base rate is at 0.5%, you moron.

    Have you bothered to explain what happens if the base rate goes back to even if just 2.5%? I guess that’s beyond average Guardian moron’s intelligence?

    Have you bothered to explain that a 2% APR increase from 5% APR would be actually a 40% increase in month payment? I guess that’s beyond average Guardian moron’s intelligence, too?

    Have you bothered to explain that to keep the base rate at 0.5%, BoE has to print money and devalue £, which add to inflation – which reduce your actual income by 4% to 5% a year? I guess that’s beyond average Guardian moron’s intelligence, too?

    Have you bothered to explain that most UK banks redefined household “in default” as min 6 months instead of 3 months to pretend there is no problem? I guess that’s beyond average Guardian moron’s intelligence, too?

    Morons.

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  • Peter 2008, i’m going to suggest that the morons are in fact the banks – “lender Halifax has claimed”.

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  • Telegragh??

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  • “According to research done by Halifax”. Almost linguistically colourful as my misspelling of Telegraph. Dumbed down news/propaganda for dummies?

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  • peter,
    Good analysis, but you’re forgetting to include repayments in your calculations. Let’s say your APR rises from 4% to 6%. Borrowing £150,000 over 25 years on a repayment mortgage (not interest-only), your monthly payment at 4% will be £791 and at 6% will be £966. That’s only a 22% increase.

    If you want protection from rate rises, Norwich & Peterborough Building Society offer a 10-year fixed rate mortgage at 3.99% with 25% deposit and a low £295 fee. On a hypothetical £200,000 property, if you can stump up the £50,000 deposit (a big “if”), you’re paying £791 per month for the first ten years. By the end of the ten year fix, you have an outstanding debt of £107,000. Even if the value of your house fell 21% from £200,000 to £157,000 in that period, you’d still break even. (Yes, I’m ignoring the paltry interest you could have earned on that £50,000 deposit. You could get 4.7% on a five-year locked account from Yorkshire BS, though if you’re a higher rate taxpayer that’s only 2.8%.) And unlike rent, your monthly payments would never rise and you could paint the walls whatever colour you like; and you would never be evicted by a temperamental landlord.

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  • Oops, picture didn’t work.

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  • So what’s stopping HPC’ers from buying?

    Probably because too many of them prefer whingeing rather than actually moving their ar*es and doing and acheiving something.

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  • Mr G – For most FTBs the problem is the large deposits required to access the best deals. You can get 95% loans, but at rates that aren’t competitive with renting. My example above used a 25% deposit; for a £200,000 house (typical in the south outside London) that means £50,000 in savings.

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