Mortgage Rate Rises

matt100 said:
It depends how you put it, plenty of people have rocked up in this thread to say they'd been sensible. The implication is that others have not been which may be true but it's not for captain hindsight to say.

Like the whole thing about borrowing to the max, some will borrow to the max because they want to get the biggest house, some will borrow to the max because there's literally no other option if they want to buy a house in a place that works for them.

It's impossible to tell but you can spot the people who are an issue miles away with the moralising tone that people in difficulty should have known better or done something differently.
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And if you just follow the basics maths - not overstretching is not the right thing to do unless you are near death/planning on plodding for the rest of your career. Houses go up in value, salaries increase. The cost to buy today is significantly less than the cost to buy tomorrow.
 
matt100 said:
It depends how you put it, plenty of people have rocked up in this thread to say they'd been sensible. The implication is that others have not been which may be true but it's not for captain hindsight to say.

Like the whole thing about borrowing to the max, some will borrow to the max because they want to get the biggest house, some will borrow to the max because there's literally no other option if they want to buy a house in a place that works for them.

It's impossible to tell but you can spot the people who are an issue miles away with the moralising tone that people in difficulty should have known better or done something differently.
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I don't think borrowing close to your max affordability is in hindsight a risk, it was and still is a big risk. Even if interest rates are low, there's a number of personal circumstances that could put you in trouble if your loaning close to your max.
 
MikeTheNative said:
I don't think borrowing close to your max affordability is in hindsight a risk, it was and still is a big risk. Even if interest rates are low, there's a number of personal circumstances that could put you in trouble if your loaning close to your max.
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So what do you do if the max is what it costs?
 
Classic Blue Theme said:
And if you just follow the basics maths - not overstretching is not the right thing to do unless you are near death/planning on plodding for the rest of your career. Houses go up in value, salaries increase. The cost to buy today is significantly less than the cost to buy tomorrow.
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Completely disagree with this. If people want to do that then fine. The house my and wife have is plenty enough for us. We could have afforded a bigger one but what is the point? It's only the two of us.
 
Classic Blue Theme said:
And if you just follow the basics maths - not overstretching is not the right thing to do unless you are near death/planning on plodding for the rest of your career. Houses go up in value, salaries increase. The cost to buy today is significantly less than the cost to buy tomorrow.
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I disagree although I know your thinking is very much in line with the majority of people I know.

I've never overstretched because I am risk averse. However I have also never had to so how can I know why those who have would.

"Houses go up in value". They may or may not continue to do so. Same with "cost to buy tomorrow" part; it could be completely wrong but you and I don't know that. Past performance is not an indicator...

And for the salaries bit, yours and others may keep going up and congrats if so. Mine's pretty stable as it's an odd industry and the balance is quite nice for me (a plodder if you like). My wife also earns significantly less than when we met 15 years ago and is still in the same job, albeit more specialised / qualified now, (3 days per week due to 2 children). Even if she was full time her income would be much less allowing for inflation - lol NHS.

Unfortunately your mindset and circumstances are part of why you borrowed so much and it looks like a perfect storm. I hope you can get it sorted as can anyone else with this on the horizon.
 
I see it from both sides.

Borrowing the max is a risk. Sometimes it's required.
But Sometimes it's a choice.
It was a choice for me. I could have been risk adverse and got a cheap flat. And it would have been a terrible decision.

I wouldn't expect a hand out to save me from this decision. But also wouldn't want to be belittled for it.

But then I don't really care what people on Internet say. I mean, if you cared about that and it hurt your feelings, Internet forums etc are probably not the place for you.


You just have to be comfortable with your decision, and the ramifications that come with it.



I expect this is one of those few times (ie inflation issue) people who didn't borrow the max can look smug. However most likely it wasn't the best decision. And they probably know it, as thier friend down the road who did borrow the max is sitting on a lot more wealth.

But if its the right decision for them, that's what matters.
 
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413x said:
I see it from both sides.

Borrowing the max is a risk. Sometimes it's required.
But Sometimes it's a choice.
It was a choice for me. I could have been risk adverse and got a cheap flat. And it would have been a terrible decision.

I wouldn't expect a hand out to save me from this decision. But also wouldn't want to be belittled for it.

But then I don't really care what people on Internet say. I mean, if you cared about that and it hurt your feelings, Internet forums etc are probably not the place for you.


You just have to be comfortable with your decision, and the ramifications that come with it.



I expect this is one of those few times (ie inflation issue) people who didn't borrow the max can look smug. However most likely it wasn't the best decision. And they probably know it, as thier friend down the road who did borrow the max is sitting on a lot more wealth.

But if its the right decision for them, that's what matters.
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If you'd bought the flat you could have launched your kayak from the first floor window after the waters rise. Win win :).
 
413x said:
I see it from both sides.

Borrowing the max is a risk. Sometimes it's required.
But Sometimes it's a choice.
It was a choice for me. I could have been risk adverse and got a cheap flat. And it would have been a terrible decision.

I wouldn't expect a hand out to save me from this decision. But also wouldn't want to be belittled for it.

But then I don't really care what people on Internet say. I mean, if you cared about that and it hurt your feelings, Internet forums etc are probably not the place for you.


You just have to be comfortable with your decision, and the ramifications that come with it.



I expect this is one of those few times (ie inflation issue) people who didn't borrow the max can look smug. However most likely it wasn't the best decision. And they probably know it, as thier friend down the road who did borrow the max is sitting on a lot more wealth.

But if its the right decision for them, that's what matters.
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It depends on what you call max though.

We bought the biggest house we could get whilst still maintaining a 25% deposit. We could have chosen to go lower but then the rates would have been a lot worse. This was in 2010 when 4-5% was still common place so a 25% deposit gave us a decent 3% rate for our first mortgage.

Saying that just getting on the ladder at all is better than throwing away money on rent paying off someone else's mortgage.
 
adam cool dude said:
It depends on what you call max though.

We bought the biggest house we could get whilst still maintaining a 25% deposit. We could have chosen to go lower but then the rates would have been a lot worse. This was in 2010 when 4-5% was still common place so a 25% deposit gave us a decent 3% rate for our first mortgage.

Saying that just getting on the ladder at all is better than throwing away money on rent paying off someone else's mortgage.
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Max

Using absolutely every penny the bank will loan you.

We did!

It got to the point of waiting for a detached house to fall into the bracket. Savings were outpacing house price growths and we were on the cusp of getting detached as our first house. Felt silly to compromise being so close.
 
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MikeTheNative said:
Completely disagree with this. If people want to do that then fine. The house my and wife have is plenty enough for us. We could have afforded a bigger one but what is the point? It's only the two of us.
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That's all fine for yourself, but what about people that wanted to buy 'the same house' but could only obtain it if they went towards the top end of their budgets?

It's not necessarily the case that people are overreaching to buy a 'fat castle', some people are just buying a reasonably sized, non-fancy house and it was stretching them to do so. In some cases, it might be that or nothing. Ignoring the usual herp derp suggestion of moving into the middle nowhere, absolutely nowhere near your job, of course :p

I'd wager that many people do this with their first purchase. A reasonable house in a desirable location is probably going to be a better long term investment than a poo house in a poo location. And certainty more sensible than continue to rent and watch more and more houses become unaffordable, in a situation where house prices increase faster than you can save.
 
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MikeTheNative said:
You take the risk?
Not sure your point. Even without interest rate hindsight borrowing your max affordability is risky, that's why they will not loan you anymore at the time.
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My point related to the rest of the discussion is the tone.

Any borrowing is a risk, they specifically say things like "your house may be at risk etc etc".

The pejorative aspect comes from folks making out that everyone has a choice, if the choice is rent at something close to the cost of the mortgage you can get but the required mortgage is at the max of your borrowing then I suggest you have little choice given this is somewhere to live and not a discretionary purchase.

Like you can't choose not to live somewhere.
 
Even though house prices are crazy in the UK I think the affordability checks that the banks carry out need tightening. The "max" that they were offering us when we moved was leaning towards irresponsible lending.
 
Last of the 4% rates disappearing from the mortgage price comparison finders. At Mid 5 to 6 percent rates I wouldn't like to fix for more than 2-3 years
 
Those talking about rising sea levels in the future affecting house prices; what do you propose is a safe amount above sea level then in the UK for the next X number of years? Surely this is not something we have to worry about in our lifetimes? A quick google suggests a couple of cm at worst annually in some specific areas? I would have thought this is only likely to affect the most extreme edge cases in coastal or specific low lying areas in the East Midlands?
 
Scary times.. Just looking at what it would cost me if I needed to go now and I'd be going up from 2.39% to about 6% and thats on sub 70% LTV (assuming it stays that way) and roughly £1000 a month more.

Which thank god I could afford but it's stressing me out a bit, I can't imagine how many must be feeling.

Having been at full stretch back in 2008 I know full well what it feels like to be staring down the barrel and it's horrible and it's easy to get there just living life not being mental.

To add colour to the debate we have pretty much exactly 2 years left and when done we were planning to borrow more and go to a detached with a bigger garden, we would still have been well inside the max we could be loaned but even that plan is now toast, if we're back in a world of 5-6%+ (which before a boomer turns up lets remind ourselves is much the same as 10%+ way back when) we'll need to really pull the numbers down.

Which I guess is the source of any impending stagnation/drop. Which I wholeheartedly embrace, the idea of a £750k semi like where we are now is obscene.
 
jaybee said:
Those talking about rising sea levels in the future affecting house prices; what do you propose is a safe amount above sea level then in the UK for the next X number of years? Surely this is not something we have to worry about in our lifetimes? A quick google suggests a couple of cm at worst annually in some specific areas? I would have thought this is only likely to affect the most extreme edge cases in coastal or specific low lying areas in the East Midlands?
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I was aiming for at least 20m above current sea level as a minimum when we got our place last year as I despise moving house.

10m sounds like a lot, but I've lived in a couple places that were only 5m to 10m above and had some epic flooding.

Ended up being 120m above though with the place we actually chose (only a couple of miles from the sea too!)
 
jaybee said:
Those talking about rising sea levels in the future affecting house prices; what do you propose is a safe amount above sea level then in the UK for the next X number of years? Surely this is not something we have to worry about in our lifetimes? A quick google suggests a couple of cm at worst annually in some specific areas? I would have thought this is only likely to affect the most extreme edge cases in coastal or specific low lying areas in the East Midlands?
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dOnT oVeRsTrEtCh; i.e. buy a boat is the only safe and mediocre existence permitted.
 
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