Mortgage Rate Rises

[Slam62]

This thread neatly explains how the uk housing market is so massively broken. People that own struggle to pay the mortgage, people that don’t own can’t afford to buy.
Guess what if rates drop people who own will have a bit more money, people who don’t own still won’t be able to buy.

 

[413x]

Somehow I seem to manage without one. Crazy I know.

That's impressive.

I basically do everything through mine.

Emails, shopping, say nav, social arranging, banking,.. Even telephone!

 

[413x]

This thread neatly explains how the uk housing market is so massively broken. People that own struggle to pay the mortgage, people that don’t own can’t afford to buy.
Guess what if rates drop people who own will have a bit more money, people who don’t own still won’t be able to buy.

That's why stagnation would be great.
Fall in real terms. Flat line in pound value

 

[HungryHippos]

This thread neatly explains how the uk housing market is so massively broken. People that own struggle to pay the mortgage, people that don’t own can’t afford to buy.
Guess what if rates drop people who own will have a bit more money, people who don’t own still won’t be able to buy.

The sad truth is that people that can't afford to buy get stitched up even worse than those who have mortgages, the landlord will likely increase your rent to cover the increase in mortgage rates they face, so you're paying even more money not to own a property.

At least if you have an expensive mortgage, you still fully or part own the thing you are paying the mortgage on, and eventually hopefully you get to be mortgage free.

 

[unwashed potato!]

what annoys me is the "oldies" who bought a house for 20k and it is now "worth" 250k but they will not take any drop in price despite making a huge return and not having had a mortage for 30 years.

Don't go forgetting that any of these oldies that are selling are likely to be moving into another slightly smaller property which has also gone from 5k to £190k, so it's not like they see the profit, and then to add to that, they are also likely looking to have any spare cash for a last few good years of their life with holidays etc and or pay for care.

 

[Richie]

In general, I think most of us who have had a mortgage for the last decade or so were/are also aware that the 0.5% rate wasn't going to last forever, so I disagree that it was the only option, people needed to ensure they had enough fat to pay extra should the rates have gone up.

The rises in rates are so much the problem as the speed of the rises that have happened. Coupled with massive CoL increases for the essentials (food, fuel etc), its not hard to see how even the most stress tested finances have come under pressure. Lenders stress test mortgage borrowers to a certain amount and thats all well and good if its solely interest rates that increase to those levels. Once you add in the other things I have just mentioned, it is a perfect storm for even careful people. More so for new homeowners that have bought in the last 2-3 years.

Sorry but 3% is a joke rate. The current rates now are "normal", they are not high, the issue is house prices are too high, they were tuned for artificially low interest rates.

So what do you suggest happens?

Somehow I seem to manage without one. Crazy I know.

I'm guessing you have a computer of some sort to write on here without a smartphone? Not everyone does therefore they need a smartphone to do everyday things like banking, shopping etc. Smartphones arent the issue, expensive Smartphones are the issue. You can get a phone for £200 that will allow you to do banking, shopping etc.

 

[413x]

The rises in rates are so much the problem as the speed of the rises that have happened. Coupled with massive CoL increases for the essentials (food, fuel etc), its not hard to see how even the most stress tested finances have come under pressure. Lenders stress test mortgage borrowers to a certain amount and thats all well and good if its solely interest rates that increase to those levels. Once you add in the other things I have just mentioned, it is a perfect storm for even careful people. More so for new homeowners that have bought in the last 2-3 years.



So what do you suggest happens?




I'm guessing you have a computer of some sort to write on here without a smartphone? Not everyone does therefore they need a smartphone to do everyday things like banking, shopping etc. Smartphones arent the issue, expensive Smartphones are the issue. You can get a phone for £200 that will allow you to do banking, shopping etc.

Agree with all this.

5pc would be fine if not for everything else. Especially essentials like food, utilities, and unescapables like council tax.


They should have raised rates sooner and slower. But the BoE basically let the fed to the work and follow.

 

[Jono8]

The trouble is, everyone that says they want a big housing crash likely doesn't actually want one, due to the wider economic and societal shock it would cause.

I don't think you really want most of the population falling into negative equity/defaulting on their mortgage etc etc

The best thing is a much more measured house price rise, where wages keep up (ie the multiple of average wage to average house price stays largely the same). At the moment it is too high. It would be better to let wages catch up.

Things just need to slow down massively. Prices went silly during/after covid.

 

[Semple]

The sad truth is that people that can't afford to buy get stitched up even worse than those who have mortgages, the landlord will likely increase your rent to cover the increase in mortgage rates they face, so you're paying even more money not to own a property.

At least if you have an expensive mortgage, you still fully or part own the thing you are paying the mortgage on, and eventually hopefully you get to be mortgage free.

It's a sad fact, but I think that's just going to be a way of life from here on out. If you can't afford to buy then you're subjected to a life of rent. I don't see anything happening/changing that will alter that fact. Even if we have a socialist government in for a term or 2, it'll take years of investment and massive house building projects to try and upset the balance.

I think it was a statement by Oldham council I read recently where they said based on current trends it will take them over 100 years to house everyone on their lists (and that's probably assuming the list doesn't continue to grow at a faster rate).

 

[I_M_Weasel]

Agree with all this.

5pc would be fine if not for everything else. Especially essentials like food, utilities, and unescapables like council tax.


They should have raised rates sooner and slower. But the BoE basically let the fed to the work and follow.

I suppose it depends how far you are into the mortgage - 5pc probably doesn't bother you that much if you have a couple of years to go - but much more painful if you are only a couple of years in.

 

[413x]

I suppose it depends how far you are into the mortgage - 5pc probably doesn't bother you that much if you have a couple of years to go - but much more painful if you are only a couple of years in.

Absolutely.
And if you are brand new to mortgage slavery and you're tipped negative, you may end up stuck on svr.

Burn!

 

[Chris344]

There's a lot of pent up demand - lots of people are waiting for mortgage rates to drop which will keep prices where they are give or take 2-5%. There's no huge drop coming, there simply isn't enough supply.

 

[HungryHippos]

Age of mortgage doesn't really matter imo, it's more balance and term that matters, a £300k mortgage costs a lot more than a £100k mortgage does, scales significantly the more balance you have.

 

[fez]

The trouble is, everyone that says they want a big housing crash likely doesn't actually want one, due to the wider economic and societal shock it would cause

Would it though? We bought 5 years ago and the value of our house has risen by ~20%. The fact that there haven't been huge issues with high interest rates and mortgages should tell you that fundamentally most people are not affected by these things. A large proportion of houses are owned outright which either means they have owned them for so long that they paid off the mortgage and even a 50% correction is unlikely to leave them out of pocket. Others are so wealthy that they own the house(s) outright through sheer wealth.

Then when you consider that over the past 5 years house prices have risen by 20%+ in many areas so unless you bought in the past 5 years you could take a 20% hit on current prices and still be ahead.

I genuinely think that if house prices dropped 25-30% there wouldn't be that big an impact beyond houses moving around a lot more. It will never happen because once it dropped 10-15% there would be so much demand for people moving into bigger/better houses that the prices wouldn't drop any further. We would move if prices dropped 10-15% despite mortgage rates being super high.

 

[potatolord]

I've always had the view that unless you plan to sell up, and you can afford the mortgage, house price is irrelevant.

My plan is to stay in this house until I die. At that point, the value is someone else's problem.

 

[Slam62]

I wouldn’t pretend to have a clue about what may happen in the future, I do know that it’s a shocking state of affairs and actually a national disgrace. But looking at our clown show of a parliament, I have no hope for the future.

 

[Jono8]

There's a lot of pent up demand - lots of people are waiting for mortgage rates to drop which will keep prices where they are give or take 2-5%. There's no huge drop coming, there simply isn't enough supply.

Indeed.

I think it will likely just keep plodding along without a great deal of movement for a while. The lack of demand still keeps things high, but the high mortgage rates will naturally keep things in check.

If wages continue to pick up, inflation drops more and the BoE ever start dropping rates then prices will likely start creeping up a decent bit again.

 

[BUDFORCE]

Smartphones arent the issue, expensive Smartphones are the issue. You can get a phone for £200 that will allow you to do banking, shopping etc.

I spent £300 on mine, still going though after 5 and a half years.

 

[413x]

I spent £300 on mine, still going though after 5 and a half years.

Mine cost 500. I always buy refurb. Saves 100s

 

[unwashed potato!]

If wages continue to pick up, inflation drops more and the BoE ever start dropping rates then prices will likely start creeping up a decent bit again

Increasing inflation no? Which the boe don't want so will likely be slower to drop rares whole salaries keep going up I'd have thought