Interest rates increased

413x · 5 May 2022 at 17:07

danlightbulb said:
Doesn't make sense at all. If your mom's house falls in value, so will the cheaper houses outside of London that she wants to downsize to.

With £320k equity your mom is in a great position overall, just ride this out and see what happens.

On a point of principle - part of the root cause of the housing issue is everyone relying on house price inflation to fund their lives. Its a travesty that we've been sucked into this eternal slavery to debt via the housing market.

Couldn't agree more.
Imagine if your mortgage was half what it was all way through.
Could be mortgage free in less than half the time. And not feel a slave to paying off your debt.

robfosters · 5 May 2022 at 17:10

danlightbulb said:
Doesn't make sense at all. If your mom's house falls in value, so will the cheaper houses outside of London that she wants to downsize to.

With £320k equity your mom is in a great position overall, just ride this out and see what happens.

On a point of principle - part of the root cause of the housing issue is everyone relying on house price inflation to fund their lives. Its a travesty that we've been sucked into this eternal slavery to debt via the housing market.

I agree on your point in principle, but we must be careful not to demonise people over this. Sometimes it feels like people on here view homeowners wanting their property value to increase as selfish greedy rich fat cats, whereas the vast majority are just good normal folk looking to secure their future.

omnomnom · 5 May 2022 at 17:16

LabR@t said:
Once rates return to historical norms people will be screwed. 1% is very low

Historically people werent paying 250k for a semi detached in Huddersfield tho...

glenimp617 · 5 May 2022 at 17:21

Typical our fixed rate comes to an end next year. God knows what I'll end up paying then.

This will be the last time though, I'm hell bent on paying it off. The economy is against me doing so though with everything going up and up.

The country wants/needs people to be in heavy debt.

LabR@t · 5 May 2022 at 17:21

omnomnom said:
Historically people werent paying 250k for a semi detached in Huddersfield tho...

Average salary was under 20k.
Moot point

It was £18840 in 2000
£31285 in 2021

LabR@t · 5 May 2022 at 17:23

Couldn't care less what my house costs, if they all drop or raise its irrelevant

Mercenary Keyboard Warrior · 5 May 2022 at 17:23

robfosters said:
I agree on your point in principle, but we must be careful not to demonise people over this. Sometimes it feels like people on here view homeowners wanting their property value to increase as selfish greedy rich fat cats, whereas the vast majority are just good normal folk looking to secure their future.

Totally, many will have taken alternate choices to put themselves into that position.
Some will be luck.

All that most of us want to do is have a comfortable fulfilling life.
People will have different motivations but in general your right.

It does feel like there is a group here who feel we should solve the nations ills, yet they never seem to offer any idea of a solution.
Just rage against those actually succeeding in getting somewhere

CapitalOne · 5 May 2022 at 17:29

This is not advice at all but…

If you are worried about you fix ending and you think rates are going up and up for a reasonable time then it may be possible to refix now with your current lender for 1k or so which you can even add to the principle in some cases. I say this to those really concerned about the impacts of rates at say 2 or 3 pc and above.

jordan47354 · 5 May 2022 at 17:30

Still nowhere near enough with inflation at 7%.

BinnsY · 5 May 2022 at 17:36

LabR@t said:
Average salary was under 20k.
Moot point

It was £18840 in 2000
£31285 in 2021

This proves the point though. Average salary has only increased by 70% in those 21 years.

The average house price in 2000 was £84,500, in 2021 it was £250,000, a 191% increase.

Slam62 · 5 May 2022 at 17:53

1% is still ridiculously low, what do people expect, interest free?

LeMson · 5 May 2022 at 17:54

jordan47354 said:
Still nowhere near enough with inflation at 7%.

And the rest... :/

Puzzled · 5 May 2022 at 18:03

At least we won't have to worry about filling all those job vacancies, with business costs going up and people spending less due to cost of living we are going to see many businesses struggling to survive.

Destination · 5 May 2022 at 18:24

krooton said:
Effect of raising interest rates - Economics Help

Explaining the effect of increased interest rates on households, firms and the wider economy - Higher rates tend to reduce demand, economic growth and inflation. Good news for savers, bad news for borrowers.

www.economicshelp.org

Essentially the idea is to reduce people spending, and thus demand, which theoretically reduces prices that are demand/supply based.

Problem is with things that have constant demand, like standard cost of living items like food, electricity, etc.

Precisely, the standard method of poor inflation control works for non-essential luxury items. Stick rates up, businesses geta bit nervous, those with loans get nervous, slow down their spending, and thus slow down inflation, unfortunately, when prices are rising and people can't consume less, such as food, heating, light and water, then bunging up interest rates will simply squeeze further, might slow down the housing boom, but not overly likely to.

dlockers · 5 May 2022 at 18:25

Uther said:
It's a great plan to bring down demand. As long as everyone stops buying food or even thinks about turning the heating on.

Fool proof then :cool:

potatolord · 5 May 2022 at 18:36

413x said:
My parents sit on what I believe to be 700k mortgage free (could be 1 . They are miserable (money / inheritance / land issues) and in poor health with a ridiculous house for thier age. We (us kids) told them again and again to sell up. Live somewhere small and cheap for half. Have all the money extra to do whatever with. But they can't give it up. They are committed. Like someone who can't sell a stock. They are burning thier last years unhappy.
People rarely do the sensible thing. They literally could have sold at the peak!

My auntie is similar. She's elderly and alone and in an expensive house that is costing her a fortune to maintain.

She knows she should move to a bungalow or flat, but stays for sentimental reasons

lemonkettaz · 5 May 2022 at 18:47

Actually going through a house move now, still at early stages.

All this worries me slightly.

My hay day in my life now has been pretty much financial crash, deficit, cut backs, brexit and covid. All financial doom and gloom...

Each generation is supposed to prosper more isn't it... maybe I don't know I'm born because I never took part in D Day.

A little uneducated whinge I know, but for me and my partner, 2 full time workers earning modest salaries... life is supposed to be easier, now we are worrying about fuel, energy and mortgage costs.

And we don't have car finances, Netflix or sky subscriptions either.

LabR@t · 5 May 2022 at 18:48

With inflation so high any money in the bank gets you less and less each week.

Spend it now or invest it

Uther · 5 May 2022 at 18:50

lemonkettaz said:
Each generation is supposed to prosper more isn't it...

Who told you that? We're on the decline, I doubt things will get any better any time soon.

LabR@t · 5 May 2022 at 19:07

Uther said:
Who told you that? We're on the decline, I doubt things will get any better any time soon.

Occilating decline..... How many times until we reach cliff edge?