Nationwide calls time on the Bank of Mum & Dad.

Semple said:
We took on a 5 year fixed, nearly a year ago. If the economy is in dire straights in 4 years time that interest rates are at 10-15%, then i think there will be a lot more going on to worry about.
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I did same same, but in October 2018.

One thing I don't understand is how the government seems to have a huge pile of free cash at the moment to dish out furlough money and things like 50% off dine in food from Monday - Wednesday in a lot of places. This money will get extracted no doubt from (mainly) the high earners over the coming years :mad:
Not saying i'm in a supertax bracket or anything but it does mean as soon as I try and get extra money by working lots of overtime to make overpayments on my mortgage, I get hammered into the ground on tax payments.

It's not exactly a rewarding system for the people that work their nads off... Currently paying for Sharon and her 5 kids to eat at Pret for the first time ever which eventually comes out of my overtime work
 
Guest2 said:
It's not exactly a rewarding system for the people that work their nads off... Currently paying for Sharon and her 5 kids to eat at Pret for the first time ever which eventually comes out of my overtime work
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My local pub is ******* rammed with middle class families Monday to Wednesday. Us included :D

I think the tax will substantially be paid by those who've benefited, tbh. This isn't a benefit to the poor.
 
I think it's really difficult at the moment for the banks to be able to lend large figures to pretty much anyone, so something has to give, and it looks like at the moment it's forcing people to prove they can hack a very negative period over the next few years.

I try to put myself in the place of the bank, and someone comes up to me and says they want to borrow £200k, and they had a £20K gifted deposit and very little of their own, I'd not touch that. If someone came to me and showed they'd been able to save that deposit whilst sensibly managing their finances then that (to me at least) seems like a better bet. Having been through the FTB process this year, I'd say that the banks are not doing enough to ensure a stress test of their customers - if I looked at what they'd let me borrow and then entered historic high interest rates it would pretty much mean I'd be broke.
 
Semple said:
This is where people of your generation are unrealistic/ignorant.

People have to take on 200k+ mortgages these days because that's the average cost of a home. The only way not to take on a 200k mortgage is to to have a huge deposit. It's unlikely most people will be able to save for a huge deposit when rental costs usually exceed what you'd pay for a mortgage.
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Actually, this is an area "people of my generation" are not unrealistic or ignorant at all. Historically interest rates have been between 5 to 17% during the times i have owned different houses. At the moment the Bank of England rate is 0.1%, that is the reason house prices are high. And just so you know, even when i first started on the housing ladder interest rates were 5.6% and i needed a 10% deposit with no "bank of mum and dad" assistance. Yes, house prices were much lower, but i bought my first house on £25 a day income and a monthly mortgage payment of £210.................that was nearly half my income at the time. The only thing that has really changed since then is the low interest rates we have at the moment. My question to you, or anyone is simple, could you afford your mortgage if interest rates were at 6% ? Asking that because the recession/depression that is coming could see interest rates that high or even higher.
 
kitfit1 said:
At the moment the Bank of England rate is 0.1%, that is the reason house prices are high.
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No it absolutely is not. What explains house prices being so high going into the 07-08 crash? Because they were 5% in 06 and went down slowly to 2% in 08. High house prices in this country are because of BTL, investors, and governments insistence that a 'strong' housing market means a good economy. Until it crashes down around them.
 
Scam said:
No it absolutely is not. What explains house prices being so high going into the 07-08 crash? Because they were 5% in 06 and went down slowly to 2% in 08. High house prices in this country are because of BTL, investors, and governments insistence that a 'strong' housing market means a good economy. Until it crashes down around them.
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I don't disagree with that view. But the 08 crash was mainly due to bad debt on mortgages...............you only had to look at large swathes of Detroit, Liverpool, Manchester, Stoke and so on. Peeps wanting to buy at any cost...................and then whole streets of houses up for sale at £1000 after they had been reposessed.
I have no idea why governments seem to think a strong housing market means a good economy..........................a house is your home not some commodity.
 
kitfit1 said:
Actually, this is an area "people of my generation" are not unrealistic or ignorant at all. Historically interest rates have been between 5 to 17% during the times i have owned different houses. At the moment the Bank of England rate is 0.1%, that is the reason house prices are high. And just so you know, even when i first started on the housing ladder interest rates were 5.6% and i needed a 10% deposit with no "bank of mum and dad" assistance. Yes, house prices were much lower, but i bought my first house on £25 a day income and a monthly mortgage payment of £210.................that was nearly half my income at the time. The only thing that has really changed since then is the low interest rates we have at the moment. My question to you, or anyone is simple, could you afford your mortgage if interest rates were at 6% ? Asking that because the recession/depression that is coming could see interest rates that high or even higher.
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Now you wouldn't be allowed a mortgage of half your income
Now there is no where lower for interests rates to go
Now house prices are very very unlikely to see any real term gains.

The fact you could afford those interests rates shows how cheap housing was.

But you have no choice.
I Couldn't get a house round here if interest rates were 8pc and prices same. So what do you do?
You have to take your chance when you can.
And hope interest rates stay low.

You could wait forever for houses to become affordable.

At the rate I'm paying I'll pay for this house at 65 if interest rates stay same.
I'll end up with a 3 bed detached with a small patch of land. My parents are mortgage free at 60 in a house worth 3x mine and wages barely any different.
 
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House prices are high because:

1. Massive government intervention in the market with HTB; and

2. Consistently low new housing starts over the last 15 years. We’ve barely ever got off the ground in terms of housing starts and certainly no double digit growth at all. Affordable housing starts have consistently been at the 5000-6000 a quarter and haven't changed significantly this century.

All the stats for the above are on the MCLG housing statistics page.
 
kitfit1 said:
Actually, this is an area "people of my generation" are not unrealistic or ignorant at all. Historically interest rates have been between 5 to 17% during the times i have owned different houses. At the moment the Bank of England rate is 0.1%, that is the reason house prices are high. And just so you know, even when i first started on the housing ladder interest rates were 5.6% and i needed a 10% deposit with no "bank of mum and dad" assistance. Yes, house prices were much lower, but i bought my first house on £25 a day income and a monthly mortgage payment of £210.................that was nearly half my income at the time. The only thing that has really changed since then is the low interest rates we have at the moment. My question to you, or anyone is simple, could you afford your mortgage if interest rates were at 6% ? Asking that because the recession/depression that is coming could see interest rates that high or even higher.
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As Alex and scam have already pointed out. Being able to afford a property on such a low salary back when you purchased gives you a massive advantage.

Low houses prices = small mortgages

Small mortgages = low monthly payments

Low monthly payments + high interest rates = still affordable mortgage

Compound interest means that even with high interest rates, you'll still reduce your mortgage balance to the point that 15%+ interest doesn't add a huge amount on.

Compound interest on a huge mortgage even with low interest rates doesn't make it any quicker to pay off.

My base mortgage payment is about 960/mth, about 450 of that goes on interest alone.
 
kitfit1 said:
Actually, this is an area "people of my generation" are not unrealistic or ignorant at all. Historically interest rates have been between 5 to 17% during the times i have owned different houses. At the moment the Bank of England rate is 0.1%, that is the reason house prices are high. And just so you know, even when i first started on the housing ladder interest rates were 5.6% and i needed a 10% deposit with no "bank of mum and dad" assistance. Yes, house prices were much lower, but i bought my first house on £25 a day income and a monthly mortgage payment of £210.................that was nearly half my income at the time. The only thing that has really changed since then is the low interest rates we have at the moment. My question to you, or anyone is simple, could you afford your mortgage if interest rates were at 6% ? Asking that because the recession/depression that is coming could see interest rates that high or even higher.
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Interest rates will never get that high. If they did it would leave pretty much most new buyers homeless.

15% interest on a £50k mortgage was bugger all back then. People could afford it.

15% on a £300k mortgage is £45k a year in interest alone.

Which proves to me that interest rates will never increase above 5% ever again. The chances of them hitting 10% or 15% are pure fantasy.
 
Psycho Sonny said:
Interest rates will never get that high. If they did it would leave pretty much most new buyers homeless.

15% interest on a £50k mortgage was bugger all back then. People could afford it.

15% on a £300k mortgage is £45k a year in interest alone.

Which proves to me that interest rates will never increase above 5% ever again. The chances of them hitting 10% or 15% are pure fantasy.
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I think that's total nonsense. Interest rates are not determined by what is or is not affordable for home buyers in the UK- it is totally feasible with a particular economic climate we could see 15% again. The probability of that happening in normal times is tiny, but with brexit and with Covid... who knows... that is exactly what the major banks are feeling, they want more equity from potential buyers, more proof they are financially viable in a turbulent economy .... and they're right to do so. The shock from the Covid situation is likely to ecluipse anything we've seen (including in the high interest rates of the 80's) so now is absolutely the time to increase the due dilligence on borrowers.
 
ultralaser said:
I think that's total nonsense. Interest rates are not determined by what is or is not affordable for home buyers in the UK- it is totally feasible with a particular economic climate we could see 15% again. The probability of that happening in normal times is tiny, but with brexit and with Covid... who knows... that is exactly what the major banks are feeling, they want more equity from potential buyers, more proof they are financially viable in a turbulent economy .... and they're right to do so. The shock from the Covid situation is likely to ecluipse anything we've seen (including in the high interest rates of the 80's) so now is absolutely the time to increase the due dilligence on borrowers.
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I understand what you mean, but for the banks, *Some* money is better than no money. Higher interest rates with the following flood of repossessions will leave people homeless, the banks with less income, and cause a price crash in the market. It's lose lose lose and I think would be an utter last resort.
 
I DON'T fancy boys said:
I understand what you mean, but for the banks, *Some* money is better than no money. Higher interest rates with the following flood of repossessions will leave people homeless, the banks with less income, and cause a price crash in the market. It's lose lose lose and I think would be an utter last resort.
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I agree with this, a high rise in interest rates will only further increase the problems.
 
ultralaser said:
I think that's total nonsense. Interest rates are not determined by what is or is not affordable for home buyers in the UK- it is totally feasible with a particular economic climate we could see 15% again. The probability of that happening in normal times is tiny, but with brexit and with Covid... who knows... that is exactly what the major banks are feeling, they want more equity from potential buyers, more proof they are financially viable in a turbulent economy .... and they're right to do so. The shock from the Covid situation is likely to ecluipse anything we've seen (including in the high interest rates of the 80's) so now is absolutely the time to increase the due dilligence on borrowers.
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It really isn't.

There is no way we will see 15% ever again.

That is pure fantasy. We won't see 10% ever again. The highest I can see it ever being in the worst possible scenario is like 4-7%.

There is no way it can go beyond that.

People talking about 10-15% are in cloud cuckoo land.

I personally don't believe that they will go above 4% in the next 10 years. They will probably stay below 3% for the next 10 years.

There would be riots in the streets if they went high.
 
Scam said:
No it absolutely is not. What explains house prices being so high going into the 07-08 crash? Because they were 5% in 06 and went down slowly to 2% in 08. High house prices in this country are because of BTL, investors, and governments insistence that a 'strong' housing market means a good economy. Until it crashes down around them.
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A ban on BTL and reintroduction of the Fair Rents Act would do wonders for the housing market. Thousands would be able to save and afford their own home

Granted that will be because of thousands of repossesions for failed mortgage repayments but swings and roundabouts ;)
 
Resident said:
A ban on BTL and reintroduction of the Fair Rents Act would do wonders for the housing market. . . .
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What was / is the "Fair Rents Act"?

I agree entirely about Buy To Let but in reality, it is just another form of investment in a free market - where does one stop?
What about private medicine, private dental treatment?
 
stockhausen said:
What was / is the "Fair Rents Act"?

I agree entirely about Buy To Let but in reality, it is just another form of investment in a free market - where does one stop?
What about private medicine, private dental treatment?
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How are they comparable? Most people don't have an option of who they rent from as the majority of housing stock available to them is privately owned.

Flip it around - if there was only private medicine and private dental treatment - what do you think would happen to prices? We need more council houses to increase supply and push rents down.
 
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