Mortgage Rate Rises

jaybee said:
It's a no brainer. Why are we not doing this more though? The top 0.1% would not even notice a change to life style if their tax went up 50%+. They'd still have the same life style.

EDIT: I meant top 0.1% not 1%
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They would take the hour to talk to their accountant and say "how do I avoid paying as much tax on what I earn as possible" and we might end up with less tax. The 0.1% are not taking salaries in a lot of cases as well. There is a reason the wealthiest of society pay a pitiful tax rate on their wealth. Its not actually salary they are receiving.

The only way you would bring in considerable amounts is a direct "wealth tax" which would be a dangerous game.
 
unwashed potato! said:
yep, however, thousands of old retired people with savings are enjoying this, and they vote conservative. on top of that, the election is not far off, but those who renew at a higher price wont all be renewing before the election, so they may not have lost the votes of those who have 1 year left on a 5 year deal.

Noughtboy said:
<iframe height="572px" width="100%" src="https://www.ons.gov.uk/visualisations/dvc2362/figure1/index.html"></iframe>
And the total over that period will be 4.4m households. Additionally, rising interest rates tend to negatively affect the value of the housing market and likely lead to repossessions so there is a storm gathering here for a change in parties come election time in 2024. The Tories, knowing this, are very unlikely to call an early one and will delay until the last minute.
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Hasn't seemed to have generated the chart. Perhaps someone more astute can assist.
 
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Jono8 said:
His point was that in the South East, you don't get an average/reasonable family house for less than 500k these days, so a very large mortgage is a necessity.

That sort of figure you mentioned isnt some exorbitant figure reserved for the rich down south. It is the reality of just getting a modest 3 bed house!

Where i work, a few years ago some new relatively small 4 bed terrace houses with no garage and not much garden/land were going for £750-£800k....
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If Southampton counts as the South this isn't true. You have to maybe buy in not the greatest area but there's no way family houses all cost more than 500k.

My house is a 3 bed, detached which cost 210k in 2016. I took a second mortgage of 30k, since then, plus 20k of my own which was used to extend. Zoopla has my house up around 350k now.

The only downside is I live in Sholing, which is quite built up and certainly doesn't offer the field views the Mrs would like ( I would too). Hey ho, maybe one day we'll be able to make a move to somewhere more rural but right now I'm happy with the choices we made.
 
Gixer said:
If Southampton counts as the South this isn't true. You have to maybe buy in not the greatest area but there's no way family houses all cost more than 500k.

My house is a 3 bed, detached which cost 210k in 2016. I took a second mortgage of 30k, since then, plus 20k of my own which was used to extend. Zoopla has my house up around 350k now.

The only downside is I live in Sholing, which is quite built up and certainly doesn't offer the field views the Mrs would like ( I would too). Hey ho, maybe one day we'll be able to make a move to somewhere more rural but right now I'm happy with the choices we made.
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No Southampton doesn't count :P

Try Surrey, Sussex etc.
 
fez said:
They would take the hour to talk to their accountant and say "how do I avoid paying as much tax on what I earn as possible" and we might end up with less tax. The 0.1% are not taking salaries in a lot of cases as well. There is a reason the wealthiest of society pay a pitiful tax rate on their wealth. Its not actually salary they are receiving.

The only way you would bring in considerable amounts is a direct "wealth tax" which would be a dangerous game.
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Wealth stockpiling is the problem.
 
Jono8 said:
I dont really understand the thinking behind all of this anyway.

I understand that they want to curb inflation on essentials. We don't want constant large price increases on food and energy etc.

However, I do not understand the fix for this being raising another essential (ie shelter/a place to live) to absolutely astronomical costs (for both mortgage owners and renters)...?

I think i'd rather have food going up a bit, costing me a few hundred a year extra, rather than my mortgage going up and costing me £8,000 more a year in interest :confused:

I dont see how this benefits anyone other than the already wealthy who own their homes outright or have masses of savings.
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Because it's not just food going up a bit, it's everything going up and that affects *everyone*

And the fix isn't raising the cost of another essential, it's raising interest rates to apply defaltionary pressure. That the raising of the cost of mortgages happens is incidental not the specific purpose since raising interest rates has many other effects as well. And this doesn't affect *everyone* in fact isn't it a minority of homes have a mortgage on them and of those only a small % are on variable rates to be affected immediately. The rest are shielded, for now, by being locked in.

And since economics is about confidence, just the threat of raising rates even further or people seeing what their mortgage will go to when their fix ends, means they change their behaviour now in anticipation of future costs, which again applies deflationary pressure.
 
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B
Raymond Lin said:
Field view?

But will need like like £75k to do this up i think.

www.rightmove.co.uk

Check out this 3 bedroom semi-detached house for sale on Rightmove

3 bedroom semi-detached house for sale in Burghill, Hereford, HR4 for £175,000. Marketed by Andrew Morris Estate Agents Limited, Hereford
www.rightmove.co.uk www.rightmove.co.uk
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terrible example, many FTB mortgages wouldn't touch that house in its condition, so you're looking at cash buyers only or at least a substantially lower LTV to buy it.
 
Jono8 said:
No Southampton doesn't count :p

Try Surrey, Sussex etc.
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Thought it might not! Haha. Appreciate its down to area a lot. Can't say Southampton is great all the time. I do also appreciate many have started careers and want to live within a reasonable commute distance from work. Partly why I put up with Southampton as I can cycle commute to work.
 
HangTime said:
If you just mean remortgaging, wouldn't the lenders just pull out of the market? Why would they agree to offer someone at a mortgage at 4.5% max if base rate is 5%? They could probably make more money investing that capital elsewhere, lending to other institutions etc (not sure what pies than can get their fingers in). For a cap to work, it either needs to be subsidised or be at a high enough level to permit profitability. I might be missing something here though as I'm still not 100% clear on what renew means.
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no, not remortgaging that's a new debt, I mean the old debt on renewed terms. call it a capped standard variable if you like, whatever, the point is to stop banks creating new money. the banks aren't really going to lose money, the old debt was made and being repaid, they just don't get to double-dip every 3 to 5 years.
 
fez said:
Thats not fair though. Is it fair that someone has been paying a mortgage at 2% for the past 10 years whilst others are entering the market at 5%? Is it fair that some people own their properties outright and have no mortgage? Is it far that some people locked in a 5-10 year mortgage just before the high interest rates hit?

There is no such thing as fair. Its a bit of luck and usually it evens itself out over time. If it doesn't it doesn't. Perhaps this will be the wake up call some people need to be a little more financially responsible and actually plan for a future where they might not always be able to live up to the edge of their means without consequence



Isn't the argument that people basically haven't actually changed their spending habits in response to rate rises. What proportion of the population is hit by them? The only direct exposure I have is my mortgage which is about to expire at the end of the year. Plenty of people don't have to worry about that for another few years. If I didn't have the mortgage issue looming I would be having an alright time with the 4% savings rate I am getting.
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Yeah exactly.
The hurt is felt by people with loans that are variable (I've never had a loan or finance car so no idea if this is a thing, ie are they variable or fixed generally?).
Mortgages thus are the main one. But this probably hurts most renters, obviously FTBs and people early in thier mortgage journey.

Most people have 5 or less year fixes. So in 4 years almost everyone who's going to get hit, will be.
No idea what this is as a proportion. Of UK demographic.

The other side is people not spending because that savings rate is attractive.

But really it's not super attractive. It's good if you have no plans for the money. But 5pc isn't that much.


I've not changed my spending habits because I fixed in time to avoid this. Mortgage is my only exposure to the pain. Vat increases would change my spending habits. As they would hit immediately. And then I might think about saving more due to the double whammy of more cost and more savings rates.

I'm actually thinking of spending big on a van. Because of skirting the mortgage hit for 5 years. I'm certainly not helping reduce inflation. Then you think about all the rich who don't even have a mortgage.


The amount of people this hits is small. But it hits those people hard.


(again. I have no idea how car etc finance works, by that I mean is it generally variable)
 
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gazref said:
You can't make assets disappear. You absolutely can tax them. Due to shockers like the bedroom tax the idea of a wealth tax makes some people nervous because they think it means the family with a £1m cottage or the household pulling in 150kyr that will be impacted.

It's the select few who's money makes 10s-100s of millions ad infinitum. It's the companies owned by shareholders sucking out record profits that will just sit in a spreadsheet somewhere or be used to buy even more assets that will feed the cycle.

Start taxing these entities (owned by the select few) with intent and the government will have more for public services, more money to pay back the BoE for all that borrowed money etc...
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As long as it is completely restricted to that and not allowed to creep otherwise I wouldn’t be the only one to walk away.
 
danlightbulb said:
B

terrible example, many FTB mortgages wouldn't touch that house in its condition, so you're looking at cash buyers only or at least a substantially lower LTV to buy it.
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You're probably right. I also have two young children so my free time is rather limited these days. As we all know the way to keep the costs down doing up a place like that is do as much as possible yourself!
 
Freakbro said:
Because it's not just food going up a bit, it's everything going up and that affects *everyone*

And the fix isn't raising the cost of another essential, it's raising interest rates to apply defaltionary pressure. That the raising of the cost of mortgages happens is incidental not the specific purpose since raising interest rates has many other effects as well. And this doesn't affect *everyone* in fact isn't it a minority of homes have a mortgage on them and of those only a small % are on variable rates to be affected immediately. The rest are shielded, for now, by being locked in.

And since economics is about confidence, just the threat of raising rates even further or people seeing what their mortgage will go to when their fix ends, means they change their behaviour now in anticipation of future costs, which again applies deflationary pressure.
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But why should mortgage owners be the ones to bear the brunt of fixing the problem for everyone? A mortgage is basically a necessity to get on the ladder these days unless you earn an absurd amount or have wealthy parents. Something that is not people's fault (that is the fault of rich people and banks starting centuries ago).

No one wanted an insanely large mortgage for an average family home, but our society and economy has made it a necessity due to greed from the rich. No one wants massive rents either. Now the people already having to pay a lot of money to keep a roof over their heads, have to spend gross amounts more to bailout the economy from greedflation from the rich as well?
 
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dLockers said:
100%. I am in semi-mature discussions to pull the plug on the UK.
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Yeah when gf gets back going to have a serious chat about it.

Its a big decision. But talking about it now will be sensible. 4 years left on mortgage fix would tie in nicely with making plans now.

I'm sure UK is just going to decline. And we've spoken about it before. But truly leaving family is a tough decision. And will probably be the only scuppering to it.

Of particular concern is paying more and more for nhs and pension contribution to not actually get help from it when we need it. We aren't burdened by kids. So no need to worry about that. I don't want to come to retirement and the state of the UK is that it was better to have nothing at this point. With a dead nhs and pensions starting at 100 years old

I'm very keen. But we need 'the talk'
 
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danlightbulb said:
Everything is unpopular depending on the cohort you're in. This has to be about what is fair, and spreading the pain more equitably not just on one group.

If money is to be removed from the economy, then fine, remove it at all levels proportionally equally. Remove it from companies too, remove it from the stock markets, remove it from inheritance, remove it from high incomes. But those are all NOW things. Money also needs to be removed from historic benefited things as well, to disbenefit those who have already made a mint off the backs of others (i.e wealth).
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Ok Karl Marx, back in your box....
 
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