Crazy used prices

[Old Chimer]

Interest rates is the big one. Doesn't take much of a rise for finance (not to mention peoples' mortgages) to spook potential buyers.

[pmg]

I dont read the Express (or any other sensationalistic rag to be honest) - what are their justifications for prices falling in the new year? Given the cause of the prices rises includes lack of supply and chip shortages - which are not likely to end soon - along with disruption to production caused by the pandemic - have you seen what is happening in Germany and the rest of Europe?

I have no need to sell or buy so its of no interest to me personally but I am interested in how the journo (I use that term loosely) justify that pronouncement - which is at odds with most other people....

I'm not a reader or believer of most press stories, but happened to be on a train where as someone had left the paper and the headline caught my eye so had a quick read. They were stating that many automotive experts were predicting a plummet in second hand prices !! one being I believe the founder of "chose my car.com" so they were quoting other named persons predictions. So a little more believable than normal and not an entirely press start a rumour story, but backed by named automotive experts. There words not mine.

Thanks. MY SIL works for a well known dealer group and they are certainly not planning for much better supply next year (although if interest rates rise and prices continue to rise (or surge as the Express would say!) then demand may fall)....

I think there will be some return to normality over a while but cars from 2020 and 2021 will always be from a time of fewer new regs and therefore by default, prices should be protected a little...

In the last few years the increased number of people buying cars on PCP, many of them previously in the S/H rather than the new market, had pre-Covid meant an oversupply of 3 and 4-year-old vehicles. With lockdown, many families reduced their fleet rather than have vehicles not being used. Used vehicles were pictured stored on airfields. The end of lockdown plus greater demand for cars because of public transport risks, meant this excess soon disappeared at a time new car supply fell due to supply chain issues. This lead to the dramatic increase in used prices The shortage of supply has meant the disappearance of discounts returning some who bought new to return to S/H market I see used prices being greater than pre lockdown but not at the level caused by the one-off hike in demand due to ending of lockdown.

[Wing Commander]

Interest rates is the big one. Doesn't take much of a rise for finance (not to mention peoples' mortgages) to spook potential buyers.

The Bank of England certainly hope that interest rate rises will damp down demand, but rising rates may be a slightly blunter instrument now, as there are fewer homeowners with mortgages than there used to be, and the vast majority of mortgage borrowers now have fixed rate deals, rather than variable rates. I heard on the radio today of a new 40 year fixed rate mortgage deal!

[Isleaiw]

Interest rates is the big one. Doesn't take much of a rise for finance (not to mention peoples' mortgages) to spook potential buyers.

The Bank of England certainly hope that interest rate rises will damp down demand, but rising rates may be a slightly blunter instrument now, as there are fewer homeowners with mortgages than there used to be, and the vast majority of mortgage borrowers now have fixed rate deals, rather than variable rates. I heard on the radio today of a new 40 year fixed rate mortgage deal!

Apparently you can get 30 years at 3%..... so clearly the financial institutions arent expecting wholesale increases to last long periods...

(although 3% would double the interest payment on my mortgage!)

[Deleted User 4325]

Jeez, the base rate when I bought my first property was at least 11% and the mortgage more!!!

[Wing Commander]

I remember in the 80s when the mortgage rate was 15.4%. Now many mortgage deals can be had for less than 1%!

[Deleted User 4325]

Yep, my current one is 0.34 above base. The bank keep trying to get me to change it!!!!
PMSL!!!

[BanZ]

I remember in the 80s when the mortgage rate was 15.4%. Now many mortgage deals can be had for less than 1%!

1% of a very big number is a lot more than 15% of a small number though. If mortgage rates today were 15% and you didn’t have a substantial amount of equity you wouldn’t get near buying a house.

[Wing Commander]

Yeah, but house prices are not 15 times higher than they were in the 80s.

[BanZ]

Yeah, but house prices are not 15 times higher than they were in the 80s.

Depends where you live.

Average uk house price 1980 - £23k, 2021 - £250k. In many locations growth has outstripped 15x.

There is also the reality that a 15year mortgage was far more likely in the 1980s contrast that with today where you are seeing many 35year+ mortgages as it’s the only way to make affordability stack up even with low interest rates.