Two articles in today’s English Daily Mail suggest the growing credit/housing crisis is spreading from the US to GB.
Despite recent reductions in the Bank of England’s interest rate “Now families face £1,300 a year mortgage increase” reports that mortgages are actually rising by substantial amounts. Those coming to the end of fixed-rate and discounted deals are likely to be hit particularly hard. If you find yourself in this situation, shop around carefully for a new deal, taking account of any exit and “arrangement” fees. And if you are finding it difficult to keep up with payments, speak to your lender as soon as possible. Remember, lenders wish to avoid foreclosure as much as borrowers, and will often try to find a way for you to keep your home.
Hoping to profit from falling prices “Why more families are choosing to sell up and rent instead” reports that as many as one in five homeowners planning to move are thinking of pocketing the cash and renting instead in order to buy again at lower prices. There’s nothing wrong with speculating on financial markets, and many a fortune has been made this way, but to do so with the very roof over your head is indeed a high-risk strategy.
In a free market the current price for a good (ie housing) is pretty much its right price. No one can say whether the next move is likely to be up or down. Taking account of realtor fees, legal costs, mortgage fees, moving costs, inspections… not to mention the high costs of private renting in GB, prices would need to fall quite considerably before any significant gains could be made from this strategy. It also means giving up the satisfaction and dignity of ownership. Without claiming precognition, this is one strategy I’d steer well clear of.
