Mortgage Rate Rises

Hedge said:
My mate paid "rent" to his parents for years when we were young and it seemed a bit steep at the time to me.

By time he reached 23 or so and wanted to buy a house his parents had actually saved every penny rent he paid and gave him £20k towards his deposit. I think that approach was one I might use for our daughter.
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Did it with both of mine and threw them in Premium bonds in my name so they didn’t know , my boy every won 5k the little toad. Wasn’t quite 20k but was 7 and 10 ( plus winnings ) respectively.

They still don’t own homes though.
 
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Hedge said:
My mate paid "rent" to his parents for years when we were young and it seemed a bit steep at the time to me.

By time he reached 23 or so and wanted to buy a house his parents had actually saved every penny rent he paid and gave him £20k towards his deposit. I think that approach was one I might use for our daughter.
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That's what I was contemplating for my kids, great idea. No idea what the markets will be like when they are older, can't see it being any better than it is now. I think they will need some help.
 
adam cool dude said:
My daughter is 15. If she chooses to stay in school I will support her but if she chooses to go to work. I will charge her rent but it will not line my pockets. It will go into a savings account for when the time comes and she is ready to move out.
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I do this for my 19 year old, she is working, and has a lot of disposable income, so I charge £200 a month, but she gets a lot for free, basic clothing, toiletries, food, sim, access to streaming services, air con in her room etc.. basically she only pays for her car/fuel and going out with mates..

That £200 goes directly to a savings account for her, she doesn’t know this and does challenge the amount of rent/keep she pays, but always backs down when doing any form of calculation, because she is living the high life..

I paid £200 a month back in 1990 and never got this back, it didn't bother me and didn't motivate nor demotivate me in anyway, I knew when I wanted to move out as I was growing older/girlfriends etc and did so.. When I was saving for a deposit, I did have a word about the rent and did get 6 months rent free at the end..
The fact I had food provided for all meals, and basic toiletries and underwear/socks and the basics meant I knew I had it easy and didn't complain.

My daughter has £250 a week of disposable income.. after all her bills and travel to work, that's a nice amount yet she isn't remotely thinking of her own place yet, but we are already in the position of 'cars' where the nice low mileage Ford Ka she has currently (£5.5k) she thinks is slow and already wanting to spend £15k on something much newer/faster.. So we are going through the whole 'savings' aspect (she's saved £6k) and the crazy interest rates (Her bank want 27%APR for a personal loan!) and trying to help her through that, but the reality is, she is in the wasteful phase of cars/friends/going out..

So her hidden £200pm rent or 'savings' might come in handy, I almost thought it would be better at £300.. so after 2-4 years she has £7200-£14400 saved for a deposit, I mean you can try to educate them on finances etc, but at 19 with loads of disposable income, and showing her the true cost of buying more expensive cars.

It's absolutely fine to charge your kids nothing, everyone is different and if they are financially responsible is not a given no matter how much you think you educate them and support them. It is also not a given it will motivate or de-motivate them either, that's down to the individual as well..
 
Bit the bullet and spoke to a mortgage advisor last night. Gave us a figure of 1150/month as a top end which we can comfortably afford. Figured if we can afford it now when everything is ****** then it can only get better. Even a few % increase wouldn't make it unaffordable in the slightest, so sod it.
 
I started paying board to my Mom as soon as I had my first full time job at 18 (after finishing college). It was just me and my Mom in a terraced council house, times were hard, there weren't the type of benefits back then for support that there are now. No monetery support from my Dad either. So it was either earn your keep or we would both end up homeless.

There is nothing wrong with getting kids to pay towards household costs. It teaches them what life is really like as early as possible.
 
el_dazza said:
Bit the bullet and spoke to a mortgage advisor last night. Gave us a figure of 1150/month as a top end which we can comfortably afford. Figured if we can afford it now when everything is ****** then it can only get better. Even a few % increase wouldn't make it unaffordable in the slightest, so sod it.
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I’d be careful, a while ago they said it wouldn’t get much worse!
I’m fairly risk averse, but I’d hate to see this bite you on the bottom - personally I’d probably stick a good way below ‘top end’ of the affordability scale just in case :)
 
Since the US and European central banks has said there are rises coming later this year, US is only pausing it this month, it is likely the UK will follow suit...so rates are going to go higher, still...in theory.
 
US and EU are pumping money into the wider economy through their fiscal policy. I can’t see how those will bring inflation down.

BoE raising rate isn’t going to make a tiniest dent to inflation…and I think Bailey will just keep on doing his one trick over and over.
 
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mattyprice4004 said:
I’d be careful, a while ago they said it wouldn’t get much worse!
I’m fairly risk averse, but I’d hate to see this bite you on the bottom - personally I’d probably stick a good way below ‘top end’ of the affordability scale just in case :)
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That 1150 was at the top end of our very careful budget! We could realistically go a lot higher than that but I'm not chancing that in case things do go even wilder than they are now. Need to make sure we've always got headroom for unexpected nonsense.

Put it this way, we have a combined post-tax income of about 4300/month and our outgoings are approx 1800/month, of which 900 is the rent. Take that out and add an 1150 mortgage in there, it takes our total to 2050/month, less than half our income. Think it'll be fine :)
 
pc-guy said:
US and EU are pumping money into the wider economy through their fiscal policy. I can’t see how those will bring inflation down.

BoE raising rate isn’t going to make a tiniest dent to inflation…and I think Bailey will just keep on doing his one trick over and over.
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Raising rates is the only reason GBP has not collapsed. Think inflation is high? See where it'd be if 1 GBP were 0.75 USD. We import a lot and most imported goods and services are priced in USD.

The US and EU have the advantage of having stronger and more resilient currencies. GBP has been very fragile and unstable in the last few years and had a major crisis less than a year ago, we can't risk devaluing it even further, at which point we'll truly stop being a developed economy.
 
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robfosters said:
Charging your kids rent because you think it’s some kind of learning experience is absolute rubbish. Contributing for food, energy etc is fine, but basic rent is just a way for parents to try and make their own lives easier. They just use ‘learning and motivation’ as an excuse.
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I completely disagree...... i think kids knowing the value of money and the true cost of living before moving out is a very wise move..... to each their own and you teach yours how you see fit...... but accusing those who do as ripping off their kids is bang out of order.
like i said, I fully intend to charge our lad when he gets to a certain age if he is working and still living at home, despite the fact he is ultimately going to be in a very comfortable position relatively when the time comes because we are saving for him now - he doesnt know.
how that can be taking advantage to make our own lives easier i do not know. Also some people simply do not have the luxury to let a working member of their house hold live rent free.
 
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I was living at home until I was 29. I always made a contribution to my parents, but was never charged a full rent.

It helped me to save up a decent deposit to buy my first house.

They then gave me a couple of thousand to help me buy appliances and furniture.
 
HACO said:
Raising rates is the only reason GBP has not collapsed. Think inflation is high? See where it'd be if 1 GBP were 0.75 USD. We import a lot and most imported goods and services are priced in USD.

The US and EU have the advantage of having stronger and more resilient currencies. GBP has been very fragile and unstable in the last few years and had a major crisis less than a year ago, we can't risk devaluing it even further, at which point we'll truly stop being a developed economy.
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So no more borrowing?
 
413x said:
(again. I have no idea how car etc finance works, by that I mean is it generally variable)
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It's typically not variable in the sense that you take it out over a given term at a fixed rate.
HOWEVER - if it is a PCP agreement it's quite common that people have finance for a couple of years on only a portion of the car's value. Then at the end of that period they either pay the baloon payment to own it outright, or enter into a new agreement (especially if they want another new car). At that point, they will be taking out a new finance agreement at whatever the prevailing rate is.

So it's not actually that dissimilar from a mortgage whereby you can have a fixed term for X years, at the end of which you still don't own the item in question. You can then either pay the remainder (settle the mortgage balance / pay the car balloon payment) or enter into a new agreement at whatever rate is on offer.
Mercenary Keyboard Warrior said:
Has the average house not in effect gone up in regards whats average.
A high % of the housing when I grew up seemed to be terraces. Now I know they built way more flats so thats goign to make comparison hard
But 2 up 2 down was a good proportion of the houses that people lived in all their lives. Now it seems thats a starter home, or even less in many peoples eyes.

So whilst housing has gone up in price, I think expectations have as well.

My dad grew up in a 3 up two down, (3rd bedroom literally was a box room), along with his three brothers!
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It's an interesting question. I would say expectations for the average family home have gone up. Sharing bedrooms seems less common, people want fancy kitchens, ensuite bathrooms etc. Studies and gardens for WFH in more recent times.

However, people are having kids later and people are getting separated more than they did years ago. So this in theory should mean more demand for smaller homes. In other words I expect you are more likely to find people in their late 20s / early 30s living in flats than you used to.

I read that in 1980 the average UK home was 75 square metres, compared to 67 in 2020. So on average, homes are smaller than they were 40 years ago: https://www.electricaldirect.co.uk/blog/houses-getting-smaller
 
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413x said:
This is ours. I used the XX0 0 part of our postcode as a decent "area"

Detached £303,533
Semi-detached £237,146
Terraced £214,045
Flats £109,000

Yes. It's a cheap area! :D
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What's interesting about those numbers is that a terraced property is almost double the price of a flat, and about 70% the price of a detached property. That seems rare looking at numbers for other locations.

In other words, Terraced housing is relatively expensive in your area. The ratio of flat to detached (around 35%) looks fairly typically but terraced properties are way out of kilter.
 
There is no way they would let us join in my life time i think, and if they did, the exit criteria would be much much higher and less unilateral, rather than a 50.1% referendum (i am not even sure the last time required a Ref in the first place, it was just done for the public as they were no legally obliged to follow it through if they chose not to), they might require like a 70%. Who wants someone to come and go as they pleased in something as important as this, it would disrupt the EU massively in negative way.
 
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IvanDobskey said:
I was living at home until I was 29. I always made a contribution to my parents, but was never charged a full rent.

It helped me to save up a decent deposit to buy my first house.

They then gave me a couple of thousand to help me buy appliances and furniture.
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It blows my mind that anyone thinks this is positive tbh...

I get you have to live with the circumstances you find yourself in but by that age I had 2 kids, on my second house and staring down a divorce... and it's not like I'm a boomer, mid 40s now.

I can't begin to imagine living at home not being able to make all my own decisions/have 100% freedom until that age. It's got to do stuff to your brain.

An annex or something I sort of get but a room in a house at 29 I find weird and the fact it's the only choice for many is a symptom of a broken system tbh.
 
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