Mortgage Rate Rises

[adam cool dude]

Because all of my earnings will go towards servicing mortgage debt and bills - aside from buying fuel and groceries, there would be no further spending in the economy.

The more people caught with high mortgage rates, the less being spent in the economy (which is exactly the point of BoE raising interest rates in order to reduce spending and reduce inflation).

[Edit] if my mortgage payments increase by £1000/month, that is £1000/month NOT spent into the economy.

The problem is it is all fubar anyway. Using house prices as some sort of Ponzi scheme is just never going to last. It is going to fall apart at some point in the not too distant future. We got lucky and bought just after the financial crash of 08 but my daughter unless she gets a top earning job or marries into money is going to be absolutely screwed.

There needs to be a crash of some sort for the government to re-evaluate what they are doing. Just image if that 200 billion on HS2 had been spent on social housing instead .

 

[Em3bbs]

House prices dropped for the 4th month in a row. Should be the beginning of a housing crash. Sucks if you just bought a house. A friend didn't get into positive equity untill nearly 10 years after the 08 crash. Some people are predicting up to 20pc which even still would only take you back to 2021 levels.

People have been saying this here on this forum for about 20 years, in which time many posters have paid off their mortgages while those still waiting for a sustained house price crash are still renting.

 

[Zefan]

what on earth goes through someones mind to think that this is acceptable to post, unless you're just going out of your way to be a ****.

It's a perfectly accurate statement. If you consider yourself "well off" due to being able to have a comfortable lifestyle, but only if the availability of credit at rock bottom prices continues... I hav sum newz 4 u. I say this as someone who exists within the same (admittedly rather wide) household income bracket that was mentioned, with zero debt outside of mortgage, and would also be in a similar position if rates went bingo bongo bango. I am not "well off", I'm merely (barely) middle class, at least I feel that way. I wouldn't say anyone who's a debt slave is "well off" really. Is it purely a matter of semantics?

 

[adam cool dude]

People have been saying this here on this forum for about 20 years, in which time many posters have paid off their mortgages while those still waiting for a sustained house price crash are still renting.

My house is done in 5 years. When I bought in 10 I got an amazing deal. Would be good if it happened again as if I were buying the same house now I would be mortgaged to the hilt and paying it off until my 60's instead of early 40's with zero debt.

 

[malachi]

People have been saying this here on this forum for about 20 years, in which time many posters have paid off their mortgages while those still waiting for a sustained house price crash are still renting.

Yes, I have been waiting for this so called crash to happen. I think its people living off hope but hope isn't a strategy if you want to buy a house. They will be waiting forever.

 

[bris]

It's not house prices we need to see fall it's spending on the high street, fuel and groceries we need to fall to bring down interest rates.

People need to stop spending and buying only what's needed.

If only it were as simple as telling everyone to stop buying non essentials but we're not made that way, we buy anything we want these days and it's costing us now

My interest only mortgage has gone from £150 to just under £800 in the space of 4 months. I haven't factored in the latest announcement which will add another 100 to it.

Not sure how long this can go on for, I can survive, but takeaways and luxuries will be severely cut, as will subscriptions of which we have loads, Netflix, Amazon Prime broadband etc, although I paid for Prime for the year and I just renewed my sky contract so cant cut that for two years either.

My PS5 subscroption was paid for the year recently which is a blessing as it was the first thing the wife told me to cut, I got a rare win there I can tell you.

 

[jon86]

My interest only mortgage has gone from £150 to just under £800 in the space of 4 months. I haven't factored in the latest announcement which will add another 100 to it.

Wow! A 6x increase in 4/5 months is absolutely crazy. Can you look to move off interest-only to a standard repayment mortgage where you're chipping away at the principal and not just "renting" the house?

 

[platinum87]

It's not house prices we need to see fall it's spending on the high street, fuel and groceries we need to fall to bring down interest rates.

People need to stop spending and buying only what's needed.

If only it were as simple as telling everyone to stop buying non essentials but we're not made that way, we buy anything we want these days and it's costing us now

My interest only mortgage has gone from £150 to just under £800 in the space of 4 months. I haven't factored in the latest announcement which will add another 100 to it.

Not sure how long this can go on for, I can survive, but takeaways and luxuries will be severely cut, as will subscriptions of which we have loads, Netflix, Amazon Prime broadband etc, although I paid for Prime for the year and I just renewed my sky contract so cant cut that for two years either.

My PS5 subscroption was paid for the year recently which is a blessing as it was the first thing the wife told me to cut, I got a rare win there I can tell you.

How do you believe if people bought only essentials, this would help, assuming this did happen, the entire economy would completely collapse.

The reason your mortgage has increased is due to government spending, not public spending, the government spends money it does not have, and pushes up inflation.

As this is a global thing, its not limited to the UK alone, if we however acted properly, what would occur in recent times, is that the £ would become stronger and stronger.

The effect of this is that, there would be deflation, from your perspective, food would be cheaper, goods would be cheaper, energy might be the same.

From our current position, i would look into debt abolition, the alternative would be making cuts to have a surplus in the tune of 200-300billion +

 

[unwashed potato!]

. Sucks if you just bought a house

Is this truly an issue though? Unless you're planning to quickly sell in the next couple years, and even then, the house you'd buy would surely be 20 percent less, what's the issue? Given they would likely be renting instead, and not paying anything off, just chucking the same if not more money away each month to rent. That sucks more imo than buying a house that drops in value x months after you've bought it, but 20 years before you sell it.

I can understand there's a feeling of "if only I'd waited x more months I could have bought for less" that would be a bummer.

The biggest losers are those that are about to sell and not purchase on, for instance, dead grand parents house, as it drops in value before selling, however, they have still won massively from the huge increase in house prices since purchase.

The reason your mortgage has increased is due to government spending, not public spending, the government spends money it does not have, and pushes up inflation.

Interesting. Why is it not related to public spending? I figured this was the exact example of what will sort inflation which is why they've increased interest rates. Force people/Public to have less money to spend, and save more, thus bringing down prices?

 

[potatolord]

My interest only mortgage has gone from £150 to just under £800 in the space of 4 months. I haven't factored in the latest announcement which will add another 100 to it.

Jeez, that is a bonkers rise.

Is there any particular reason you went interest only?

 

[AndyCr15]

The reason your mortgage has increased is due to government spending, not public spending, the government spends money it does not have, and pushes up inflation.

Interesting. Why is it not related to public spending?

I will be the first to admit I don't know about economics or government. Does how much the government have to spend depend on how much the public spends and earns through taxes and such?

 

[Hagar]

I will be the first to admit I don't know about economics or government. Does how much the government have to spend depend on how much the public spends and earns through taxes and such?

At one time, mortgages were allied to the funds held on deposit at a building society or bank. That seems no longer to be the case. In addition we have had at least two horsemen of the apocalypse visit in the last couple of years and all governments have overspent massively. That is not always a problem as governments can raise debt and sell it on the market as bonds. Spending by the public on non essentials has been a tool to reign in inflation, in my experience since Harold Wilson in the nineteen sixties.

 

[ci_newman]

Is this truly an issue though? Unless you're planning to quickly sell in the next couple years, and even then, the house you'd buy would surely be 20 percent less, what's the issue? Given they would likely be renting instead, and not paying anything off, just chucking the same if not more money away each month to rent. That sucks more imo than buying a house that drops in value x months after you've bought it, but 20 years before you sell it.

I can understand there's a feeling of "if only I'd waited x more months I could have bought for less" that would be a bummer.

The biggest losers are those that are about to sell and not purchase on, for instance, dead grand parents house, as it drops in value before selling, however, they have still won massively from the huge increase in house prices since purchase.




Interesting. Why is it not related to public spending? I figured this was the exact example of what will sort inflation which is why they've increased interest rates. Force people/Public to have less money to spend, and save more, thus bringing down prices?

Yes it suck, for first time buyers especially. It will mean your LTV is lower (or maybe even worse) at mortgage renewal time.

It sucks even more if it means you're now in negative equity, because you wont be able to move the mortgage or fix to a lower rate

 

[unwashed potato!]

Yes it suck, for first time buyers especially. It will mean your LTV is lower (or maybe even worse) at mortgage renewal time.

It sucks even more if it means you're now in negative equity, because you wont be able to move the mortgage or fix to a lower rate

Understood thanks.

So negative mortgage means you'd be totally stuck with the same provider come renewal time?

 

[Goodie]

Understood thanks.

So negative mortgage means you'd be totally stuck with the same provider come renewal time?

I'm probably wrong but I thought the only outcome of negative equity was that you're stuck on the variable rate, unable to even re-fix with your current provider.

 

[unwashed potato!]

I'm probably wrong but I thought the only outcome of negative equity was that you're stuck on the variable rate, unable to even re-fix with your current provider.

Wow that's even worse. Really screws over those the most worse off!

 

[413x]

Wow that's even worse. Really screws over those the most worse off!

Yep. Worst case..
Let's say you've saved a deposit (you were 20k up at least)
Maybe this has taken you a decade to save.
You buy your house on a 90ltv
House price drops but 20pc ish

You're now 20k in debt that's 40k loss.
You come out of your 2pc mortgage straight onto 6pc maybe.

Just be of bad timing.
Could easily be a number of people in that position 8n 2 years time if they took a 2 year fix for thier first house recently

 

[sigma]

Yep. Worst case..
Let's say you've saved a deposit (you were 20k up at least)
Maybe this has taken you a decade to save.
You buy your house on a 90ltv
House price drops but 20pc ish

You're now 20k in debt that's 40k loss.
You come out of your 2pc mortgage straight onto 6pc maybe.

Just be of bad timing.
Could easily be a number of people in that position 8n 2 years time if they took a 2 year fix for thier first house recently

Surely it's 20k loss/down not 40k? Appreciate you're 40k worse off compared to where you would be if the price isn't drop but in actual cash terms you lose 20k?

 

[unwashed potato!]

Surely it's 20k loss/down not 40k? Appreciate you're 40k worse off compared to where you would be if the price isn't drop but in actual cash terms you lose 20k?

90ltv is the percentage of loan to value, so 10 percent is the 20k deposit, means the house was bought at 200k, so a 20pc drop, is £40k drop, now it's worth £160k, and you owe £180k.

That's how I took what the user said to mean

 

[413x]

Surely it's 20k loss/down not 40k? Appreciate you're 40k worse off compared to where you would be if the price isn't drop but in actual cash terms you lose 20k?

Yeah it's a 40k swing.
You were 20k up. You're now 20k down. You've lost 40k in a couple of years.

Won't be many who get it that bad. But they're will be some