Mortgage Rate Rises

squerble said:
Just out of curiosity, what would you roughly define as "mortgaged up to the hilt"? I'm constantly trying to gauge what our situation is since we finally got in our house a few months ago (probably at peak price!).
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Generally speaking, 4.5x - 5x household income. It gives very little breathing room for increased interest rates or changes in personal circumstances.

For some of us though, if we want to actually own a home its a gamble we have to take (us millenials in particular).
 
squerble said:
Just out of curiosity, what would you roughly define as "mortgaged up to the hilt"? I'm constantly trying to gauge what our situation is since we finally got in our house a few months ago (probably at peak price!).
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Of course this is only my view rather than anything others would say - but I'd class it as any situation where the mortgage is big enough to eclipse all other household bills combined (for us that'd be about £700 per month) and is a sizeable chunk of income.
It's hard to gauge and a personal thing I guess - as I was typing I realised I struggled to actually put it into words! :D

Most of their incomes are fairly average, and a move from the ~2% they're locked in at to 5% or so will be of huge detriment, leaving several in the red at the end of each month.
While I'm not in the least bit judgmental, I know of several families that have the flash Audi cars (yes, more than one!) along with several iPhone contracts yet are literally scraping by.
It'd be quite easy for them to adjust to these harder times, but when mentioning this to a couple of them in the pub they're completely unwilling to downgrade cars / phones / other things that could easily be cut back.
 
ci_newman said:
Generally speaking, 4.5x - 5x household income. It gives very little breathing room for increased interest rates or changes in personal circumstances.

For some of us though, if we want to actually own a home its a gamble we have to take (us millenials in particular).
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Even in my Northern town I had to literally scrape every penny together for a deposit and really stretch my finances to get a reasonable deal.
It worked out in the end, but it could easily have been an absolute nightmare.
 
Our mortgage is about 2x household income but I would wager that we are very much on the low end of the scale. If we were 4x and in our current position we wouldn't be happy. Our mortgage would have a base of ~1800/month and if things don't get much better we would be looking at a base of around £2500k/month when we remortgaged. Thats a lot to find along with everything else after tax.

The sad truth is that as time goes by, people are either having to earn way more to afford the same house or they are simply mortgaging themselves up to their eyeballs.

The disparity between those getting into the housing market and those that have owned property for a few years is just growing and its awful.
 
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75-70pc ltv (current house estimate)
2.9x gross salary mortgage debt

Its OK with our mortgage fix. But if I was paying current market rate (5.5pc)with a projected fall off up to 30pc it soon starts looking scary.

And if the falls hit at high level, and the rates go up, and they coincide. They you could easily be looking at being a mortgage prisoner even in this.

Yes, that's a (hopefully) worst case. But it demonstrates how a whole tranche of people may be stuffed in a year or twos time.

And SVR isn't going to be 4pc like it was. Its going to be 7+ pc.
 
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413x said:
Agree with point 2.

Anyine fixing for more than 2 years at 6pc plus is probably onto a loser.

Its a hard choice though. But I would be on a tracker now if I was forced to remortgage
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It's impossible to predict though. Nobody should be mocked in 1 years time for taking out a 2 year mortgage at 6% if rates go down to 4%. They might go up to 10%. I think this is the point some are making in this thread.... to be kind. Not saying you aren't. Just that 99.9% of the British Mortgage Paying public are not financial experts and make the best decisions they can based on time and situation. :)

ci_newman said:
Generally speaking, 4.5x - 5x household income. It gives very little breathing room for increased interest rates or changes in personal circumstances.

For some of us though, if we want to actually own a home its a gamble we have to take (us millenials in particular).
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HACO said:
Lots of people borrowed at the maximum multiple (4.5-5x), often on 95% LTV. This is going to be brutal for them.
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Yeah. In 2025 when re renew, I'm very well aware that rates may be at a level where we'll lose our home. But when we bought back in 2020 having rented for 18 years, if I didn't get on then, when would I? You can always find argument to put it off and every time you do, prices go up even more and you'll just never do it. Buying a house maxing yourself out is not necessarily reckless. We're all just trying to live the best possible life. It's a choice between buying or not buying. We don't get to buy and have a good, easy deal. It's buy and get wrecked or rent and get wrecked and also never own a house. So many try to buy. Can't really blame people for that.
 
jaybee said:
It's impossible to predict though. Nobody should be mocked in 1 years time for taking out a 2 year mortgage at 6% if rates go down to 4%. They might go up to 10%. I think this is the point some are making in this thread.... to be kind. Not saying you aren't. Just that 99.9% of the British Mortgage Paying public are not financial experts and make the best decisions they can based on time and situation. :)






Yeah. In 2025 when re renew, I'm very well aware that rates may be at a level where we'll lose our home. But when we bought back in 2020 having rented for 18 years, if I didn't get on then, when would I? You can always find argument to put it off and every time you do, prices go up even more and you'll just never do it. Buying a house maxing yourself out is not necessarily reckless. We're all just trying to live the best possible life. It's a choice between buying or not buying. We don't get to buy and have a good, easy deal. It's buy and get wrecked or rent and get wrecked and also never own a house. So many try to buy. Can't really blame people for that.
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I've said same.

People calling out others for over extending.
But mortgage advisors and banks encourage it.
Is particularly prevalent in the older "back in my day" lot.

My Mortgage advisor said "you can borrow this much".

But you don't really get any advice. You see people with maxed out mortgages doing well. It's complex stuff. And waaay beyond the average person. Even experts are only predicting.


So yes I agree. No one knows how bad its going to get. Or how long. Damned if you do damned of you don't. Buying a house is always going to be a huge risk. And some just get unlucky. Bad timing that's all.

There was no hint of this coming before covid. Not to this extent. No one could know Ukraine was going to kick off.
 
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jaybee said:
Yeah. In 2025 when re renew, I'm very well aware that rates may be at a level where we'll lose our home. But when we bought back in 2020 having rented for 18 years, if I didn't get on then, when would I? You can always find argument to put it off and every time you do, prices go up even more and you'll just never do it. Buying a house maxing yourself out is not necessarily reckless. We're all just trying to live the best possible life. It's a choice between buying or not buying. We don't get to buy and have a good, easy deal. It's buy and get wrecked or rent and get wrecked and also never own a house.
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I'd argue it is indeed reckless to max yourself out when prices are at all time highs and interest rates are at all time lows. Interest rates weren't going to go down any further, and any uptick means massively increased costs. I'd agree renting is also get wrecked, but the only alternative to renting isn't to push yourself to the absolute maximum. Buying somewhere cheaper with some headroom for future increased costs was always more reasonable.

So many try to buy. Can't really blame people for that.
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People aren't to blame, it's poor government policy for decades that has lead us here.
 
Got a meeting with Halifax in a few minutes to see what they can offer to fix us at (half of our mortgage ends in July 2023)... What you guys reckoning a 5 year product swap 60% LTV is gonna be nearer 7% than 6% :cry:?
 
Our 5 year fix 2.14% is up in Feb. I'm not planning to rush into a long term fix, but fully expect to be seeing 5%+ in the short term. I'll probably move to a tracker or 2 year fix.

For us we have been overpaying a bit throughout the fix so our monthly payments won't change, just a lot of the usual overpayment will swallowed up by the interest increase.

I do feel for those in the south coming out of a fix with big mortgages.
 
HACO said:
I'd argue it is indeed reckless to max yourself out when prices are at all time highs and interest rates are at all time lows. Interest rates weren't going to go down any further, and any uptick means massively increased costs. I'd agree renting is also get wrecked, but the only alternative to renting isn't to push yourself to the absolute maximum. Buying somewhere cheaper with some headroom for future increased costs was always more reasonable.



People aren't to blame, it's poor government policy for decades that has lead us here.
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Prices are always at the all time high though, unless you bought at very specific temporary periods such as post 2007/2008 "crash". If you wait around for another "crash" you'll never get on the ladder. The general rule in the UK which has generally stood the test of time is that you simply buy as soon as you can. Even taking into account temporary blips, things have only ever gone up. Nobody can predict if/when an actual crash will happen. According to our government, never, since they like to artificially prop it up at any opportunity.
 
kevman said:
Should get close to 5.5 at that LTV no?
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Doubt it, the home mover rate is 5.74% online now. When I called a week ago it was 3.93% online, but I was told that the rate which a product switcher could have was 4.5%. I'm basing today's prediction of 6.3ish on assumption that as the mover rate has gone up to 5.74%, that delta of 0.57% remains for switchers.
 
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