Mortgage Rate Rises

[danlightbulb]

Part of what annoys me about the current talk of interest rates is that many of us warned against this, and that rates were too low for too long and not to assume they were going to stay that way.

Dan has basically inferred in the past he thinks he should pretty much be able to borrow for free. Basically there should be no situation where rates are notably above rock bottom.

When those of us talked about rates going up we were told no way cannot happen it would wreck everyone, and yet here we are.

But its taken 15 years for it to happen. Some people have waited for a housing crash for that long, and then were priced out when it didn't happen. I assume you agree that all a person can do is try and be financially responsible for themselves, not try to time the market?

I agree that interest rates were too low for too long. It has helped drive the crazy house prices we have now. So what could I do, not buy? Rent for life? What was my or any other people's solution to this amazing hindsight?

This is precisely why I advocate stability over time for mortgage/houses/renters on the main home only (and possibly with a threshold so that support is targeted at normal people).

 

[Mercenary Keyboard Warrior]

No?
Over extended would be not being able to afford a nominal difference. 4K isn't A nominal amount of money.

No not really,
being over extended is going beyond a safe or reasonable amount.

Most people will have been stress tested to these interest levels so in effect are not over extended.
They are however well into the painful zone.

Its practically impossible for most people to enter the housing market without a nice lump of risk. How long that risk really applies for comes down to numerous things, such as inflation, pay rises, job security, ease of getting an equivalent job etc etc
For most however its probably 5-15 years before the risk has significantly subsided.

long shot try and do a 3-5 yr interest only if excepted will give you breathing room .. but your going to have to have money in your house ..

Disagree. Interest only is very difficult to get right now.
The best bet is to talk to an IFA to help you find a lender to give a long repayment term, eg renew to 35 years or something. See out the pain then drop it right back down.

 

[Mercenary Keyboard Warrior]

But its taken 15 years for it to happen. Some people have waited for a housing crash for that long, and then were priced out when it didn't happen. I assume you agree that all a person can do is try and be financially responsible for themselves, not try to time the market?

I agree that interest rates were too low for too long. It has helped drive the crazy house prices we have now. So what could I do, not buy? Rent for life? What was my or any other people's solution to this amazing hindsight?

This is precisely why I advocate stability over time for mortgage/houses/renters on the main home only (and possibly with a threshold so that support is targeted at normal people).

Yes of course all a person can do individually is to try to be financially responsible. Individuals views will differ on what that is of course.

Its very much not hindsight, it was very much the experience of those who had seen higher rates, how quickly they can move and how far, it was opened talked about for years on these forums that rates were too low and couldn't stay that low.
We were dismissed time after time with "they can't too many people would be rekt"

I am not saying understanding that higher rates were possible meant you should have taken different action, just that it was relatively inevitable this was coming, it was just a matter of when.

Do you have a backup fund?, at least 3 months for all bills, but ideally 6-12 months. If not then thats what you should be working towards. I know its difficult when you get a house, you want to do all sorts of things, but IMO the first and most important thing to do is get that backup find in place.
I didn't when I was young and when I look back I have to consider myself lucky, I went through difficult times like many did, and it didn't affect me, but had I have lost my job for example (and the first company I worked for went pop after I left) I was simply unprepared for that scenario.
If you have cash funds sitting there for emergencies, then a hard hike in interest rates meets the criteria if there is a significant risk you cannot pay all your bills.

 

[adam cool dude]

No?
Over extended would be not being able to afford a nominal difference. 4K isn't A nominal amount of money.

It really depends on how far you are stretched. When my other half was on maternity both times we lost way more money than that per year because her employer would only pay full wages for the first 3 months, 50% for the next 3 month, 3 months of government and 3 months of nothing. You are talking 15-20k over a two year period.

Most people have holidays a year and 4k would cover that increase. You would just have to make do with days out to the British Seaside like we did whilst on maternity.

 

[Mercenary Keyboard Warrior]

You would just have to make do with days out to the British Seaside

Talk about kicking a man when he is down

 

[Martini1991]

Talk about kicking a man when he is down

I live on the British sea side :s

 

[Mercenary Keyboard Warrior]

I live on the British sea side :s

You have my sympathy

 

[Trifid]

Don't worry, the BoE will further increase rates because people are getting pay rises, below inflation. https://www.bbc.co.uk/news/business-65876822


"
UK wages have risen at their fastest rate in 20 years, excluding the pandemic, raising expectations that UK interest rates will have to rise.

Regular pay excluding bonuses increased by 7.2% in the three months to April, although it still lags behind inflation - the rate at which prices rise.
"

It puts the <5% pay rise the public sector got into perspective too.

 

[Martini1991]

You have my sympathy

Redcar is a lovely place to live.

 

[flea.rider]

I live on the British sea side :s

yep same here .. and i cook for all the ******* that come

 

[EvilRob]

I agree that interest rates were too low for too long. It has helped drive the crazy house prices we have now. So what could I do, not buy? Rent for life? What was my or any other people's solution to this amazing hindsight?

If a rate rise would be so ruinous then you should have taken control of your own risk and hedged against rises rather than letting things just happen to you. Many people do this, paying slightly higher rates to achieve it.

 

[glenimp617]

Don't worry, the BoE will further increase rates because people are getting pay rises, below inflation. https://www.bbc.co.uk/news/business-65876822


"
UK wages have risen at their fastest rate in 20 years, excluding the pandemic, raising expectations that UK interest rates will have to rise.

Regular pay excluding bonuses increased by 7.2% in the three months to April, although it still lags behind inflation - the rate at which prices rise.
"

It puts the <5% pay rise the public sector got into perspective too.

in the last 10 years we've had two 2% payrises lol

 

[danlightbulb]

Don't worry, the BoE will further increase rates because people are getting pay rises, below inflation. https://www.bbc.co.uk/news/business-65876822

It infuriates me that the BoE are so arrogant as to be sending these sorts of messages. Prices are rising, energy is up, housing costs are likely going to be higher, yet the BoE expect people not to ask for or get pay rises to accommodate those things? It beggars belief their incompetence on this issue.

 

[Freakbro]

the nhs getting worse, and people are going to end up poorer when they are older.

To be fair, the former problem is tackling the latter one

 

[Stretch]

It infuriates me that the BoE are so arrogant as to be sending these sorts of messages. Prices are rising, energy is up, housing costs are likely going to be higher, yet the BoE expect people not to ask for or get pay rises to accommodate those things? It beggars belief their incompetence on this issue.

The BoEs objective is to control inflation. They are simply saying that if wages keep rising to meet increasing costs then the cycle will continue.

 

[I_M_Weasel]

It infuriates me that the BoE are so arrogant as to be sending these sorts of messages. Prices are rising, energy is up, housing costs are likely going to be higher, yet the BoE expect people not to ask for or get pay rises to accommodate those things? It beggars belief their incompetence on this issue.

Fuel prices up, Energy up, Food up - and BoE step into help by making your mortgage go up.

I know it's supposed to encourage people to save, but the rates are lower than inflation and after all the price rises no one has anything left to save anyway.

 

[danlightbulb]

The BoEs objective is to control inflation. They are simply saying that if wages keep rising to meet in increasing costs then the cycle will continue.

Well yes I suppose it will. So they need to realise that this way of controlling inflation doesn't work.

They are the perfect example of trying the same thing over and over when it didn't work the first time, in blind faith that it will work next time.

I suppose ultimately rate rises will work, but only by destroying millions of people and most of the economy in the process.

May as well drop the nukes now, that will control inflation too, and save us all this misery.

 

[Freakbro]

Well yes I suppose it will. So they need to realise that this way of controlling inflation doesn't work.

But it does work

They are the perfect example of trying the same thing over and over when it didn't work the first time, in blind faith that it will work next time.

And it has worked in the past

I suppose ultimately rate rises will work,

As you even acknowledge yourself here!

but only by destroying millions of people and most of the economy in the process.

A bit hyperbolic, but yes, no-one said it would work without any pain. It's just in the long run, going into a recession, businesses going bust and people losing their jobs and/or homes is still less pain than letting inflation run rampant and unabated. There's no way out of this where most people aren't going to be worse off and some people lose everything.

May as well drop the nukes now, that will control inflation too, and save us all this misery.

We've been through this many times through history, recovered and boomed again, all without the need for nuclear bombs

 

[Richie]

It puts the <5% pay rise the public sector got into perspective too.

Why? It's generally normal, and accepted, for private sector pay and pay rises to be higher than public sector equivalent just like it's generally normal, and accepted, for public sector benefits to be higher than private sector.

 

[potatolord]

maybe i'm just not woke enough for you and you would be right .. i'm nearly 60 and all i hear is men who are supposed to lead there family's crying like little girls because they made mistakes and can't own up to it or except it
and yes MANY people made bad decisions ? and the housing market isn't broken it's been the same for over 50 yrs .. as i said lost a house 14 yrs ago .. picked myself up got another learnt a lesson .. you make your own burdens so stop crying and get on with it ..

That's a really thoughtless response. Bad things happen to us all, but that doesn't mean you have to be so aggressively unpleasant. I mean "crying like little girls"- really?

I know I say this regularly, but you wouldn't speak like this to people in real life, so why do it here?

The situation now is wildly different to back in our day, or even 10 years ago. House prices as a ratio of earnings are way worse, and any interest rate change affects people more than it did.

Remember how you felt when the worst was happening to you? That's how they feel.