The big mortgage lenders are met with the chancellor today to discuss measures. This interest rate hike is disastrous for the housing market, loans are much higher now than in the 80’s so comparing percentages doesn’t really stack up. It’s about the ratio of income to mortgage payments and at high interest (>6%) it will be untenable for a lot of people, particularly first time buyers or those who have bought in the last few years on higher LTVs. The BoE base rate rises aren’t just governed by inflation, they have to strike a balance in rises to avoid a recession. It’s all so up in the air as it’s changing daily but I live in hope that the outcome won’t be as severe as we all think and that some sort of correction is on the way!
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
meeting the wrong people its the bank of england that has increased the rates multiple times, Truss wont back track again now
It will be a measure to help people with mortgages not an adjustment to lending in general.
Yup, I took advantage of the sweet prices available a couple of years after that and in only a few years the property had nearly doubled in value. It's kinda stagnated since then, perhaps even dropped a little, but I'm now on circa 25% LTV so plenty of slack there if prices do drop.
I'd really like to see some bigger drops outside of London as they had bigger rises during covid, could buy a house mortgage free in plenty of parts of the company with the equity in the current place, if prices drop significantly and they drop harder outside the capital then even though I notionally lose a bit on my property I'll actually be in a better position than I'd have been otherwise if I'd say moved during Covid.
though obvs that means some pain for others and in the words of Brad Pitt's character in the Big Short: "just don't ****ing dance".
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Soldato
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20% is probably about right, just due to lack or liquidity in the market. Happens every so often really, used to be every 11 years! I am sure you’ll ride it out, don’t move, don’t borrow more, don’t try and game it. The fact this situation was so unforeseen by the government though tells you everything you need to know about their level of competency.
Well, rates hit 10% then long-term things become affordable. This was always expected since 2007, want a competitive eco-economy then rates need to rise. There is a good chance we are reaching the peak affordability of property not many areas left to get buyers, share ownership a big scam.
Obviously government intervention of some sort could change everything at any time, but if the current trajectory continues, then I think that a fairly significant correction is highly likely.
I think that the estimates of up to 20% are not at all unreasonable given the current data.
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Soldato
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I work in “financial services” and it’s amazing how many people I know at work who “don’t eat their own lunch”. I was talking to someone on my level and someone senior, both on variable rate (I mean, what? have you learnt nothing??). The senior one was saying in the summer he was looking to move because “why not chuck another 500(k) on the mortgage to get a better place - glad I didn’t”. I love him and all but Jesus 
Reminds me. In 2008 I was working in the credit crunch clean up (moving SIVs on book if you are interested) and one of the treasury traders (supposedly the most reliable and dull city jobs) got caught out because he’d taken out a 10k credit card and tried to arbitrage it by putting the 10k into a 10% kaupting saving account (iceland ahem) and lost the cash. Nuts. He could afford it but what a dick.
Reminds me. In 2008 I was working in the credit crunch clean up (moving SIVs on book if you are interested) and one of the treasury traders (supposedly the most reliable and dull city jobs) got caught out because he’d taken out a 10k credit card and tried to arbitrage it by putting the 10k into a 10% kaupting saving account (iceland ahem) and lost the cash. Nuts. He could afford it but what a dick.
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10-20pc seems to be the consensus.
Most estimates for "things" like this seem to be Conservative so I'm going with 20pc ish
Silver lining? Tories will be out for years.
They absolutely will not be able to wriggle out of this one. From what I gather this is fairly isolated to the UK for now.
Most estimates for "things" like this seem to be Conservative so I'm going with 20pc ish
Silver lining? Tories will be out for years.
They absolutely will not be able to wriggle out of this one. From what I gather this is fairly isolated to the UK for now.
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Nope. We are actually late to the party. Its easy to just think it's only the UK facing this doom but it really is not.
The global property bubble bursts
After a two-year long worldwide boom in house prices fuelled by ultra-low interest rates, central bankers are tightening monetary policy and the global property bubble is starting to deflate.
moneyweek.com
Soldato
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It's literally plastered across the internet that it is not only the UK. How have you missed that?
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Out of interest, when did you complete your degree and what did you study?
I did mine 20 years ago but I've seen nothing reliable to suggest that they've genuinely become any easier since.
I do however hear a lot of sweeping statements by people without them, who love to tell me how easy they think they are.
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Associate
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I remember reading that Canada and Australia have been experiencing property price falls. Certainly not limited to the UK anyway.
Soldato
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Maybe he took advantage of the essays for cash situation. Would make it a bit easier
Personally I have a semi theory based on how I have seen education since I left school. Leaving secondary late 80s and 6th form end of the 80s, and seeing how my cousins (approx 10 years younger) were 100% schooled differently highlighted to me that basically there was zero coaching on passing exams as I went through secondary into 6th form. 80s comprehensive education FTL (/ wave Liz)
IE it was down to the individual to make use of or not, study guides etc. I didn't apart from Chemistry and looking back I vastly outperformed in that (my worst subject) compared to all my other exams.
My cousins entered exam period far more prepared, which IMO means more passed and hence the "they got easier" many would quote.
I think as that generation passed through, better prepared and more versed in passing exams they appeared to make courses easier from 6th form to uni even.
To my annoyance I never got the "pass the exam" as opposed to the thoroughly know your subject twist until very close to the end of my professional exams. It suddenly twigged why the pretty poor knowledge individuals who went on lots of revisions courses etc could pass the exams and yet in the real world demonstrate a distinct lack of knowledge.
It was then I really switched my views to everything should be open book, you need to know the subject widely in order to be able to go and pickup the specific details in order to answer more detailed questions this way, rather than being able to rote learn a load of bullet points which you could tweak to answer a question.
I know degrees aren't at this level towards the end, but many exams still are as they cant make them last a week.
Caporegime
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I am in the same situation. We are around 30% LTV ourselves so pretty much impossible to go into negative equity but in two years time it would be good to move to our "final" house. Most houses have increased a lot in recent years due to WFH and people moving out of London for the countryside. My town went up 18.6% which was the 13th biggest in the country. If we can get ~50k reduction back to pre-covid levels that would be grand
