Soldato
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Mortgage Rate Rises
- Thread starter glenimp617
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You must specifically mean those being paid a salary within the conveyancing industry, and not those being paid per hour, or in a profit taking position.
Caporegime
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Out of interest, what do you think someone should have done instead of buying a house or renting a substantially worse house for more money than the mortgage at the time?
It's a messed up situation.
I mean.. If properly stress tested the lender could say, no deal, if you can't afford 6%.
So then the potential buyer remains stuck in the rent trap, flushing money down the toilet each month, and unable to save a larger deposit fast enough to keep up with house prices.
I'm 42 and have been renting my whole adult life due to this. I. Was only able to buy when my parents died and left me a load of money.
Caporegime
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Some would have you believe "tough" though and that's not on.
Soldato
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Conveyancing is almost universally not paid per hour.
And I would expect many in profit taking positions would argue it was not worth it last time round given the significant increases in burnout, complaints and overall stress.
Could they not just turn the work away if they don't have capacity to service a huge influx of transactions, therefore resulting in less burnout, complaints and stress?
The whole stress testing thing doesn't really make a lot of sense when looking at long term fixes though. Over 5 years, your circumstances could change dramatically (either positive or negative), and rates could rise significantly more than the +5%* they check, over 10 years even moreso, and do they do stress tests for lifetime mortgages?
* interestingly on our recent remortgage they quoted it up to 12%!
Soldato
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The important point here is that a stress tested 6% with capital repayment, if less than your rent should be realistic and affordable.
Caporegime
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It's not less than rent when it hits 6%, but since at the time interest rates aren't at that price it's not exactly comparable.
I'm 632 a month mortgage now on a 3 bed semi new build
At 6% when my fix ends it would be £972 (Which is unaffordable when combined with everything else)
Right now on my estate 2 bed terraced are being rented out at £800, which I wouldn't go for as too expensive
What should I have done? Give up?
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Soldato
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Yes and many did. But the expectation wasn't for the market to carry on being so crazy after the first stamp duty "holiday" ended. So it made sense to bank what you could at the time for longer term security.
Unfortunately there's only so many times you can tell people that were having offers accepted a few weeks before the deadline that they aren't going to make it. Didn't stop them calling 5 times a day and verbally abusing people though.
Caporegime
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This is a situation that shouldn't have happened though. The deadline was absolutely ridiculous and should have had some sort of "If the the process has got to X stage then you still qualify".
I had to pay stamp duty on a new build yet had been in the process of buying it for 9 months (March 2021 to December 2021)
Soldato
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I would say that if a stress tested mortgage is less than what somebody is paying in rent then they would surely pass the affordability check, subject to having a sufficient deposit they should probably buy. What I would not support is accelerating house price growth, I would rather see lower house prices with higher interest than the opposite.
Soldato
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I am on your side here, I would prefer that you pay less to own than to rent given you are open to the risks and costs of ownership. However I think we are seeing an asset bubble and interest rates are clearly rising, therefore a double whammy of higher prices in conjunction with higher interest is a perfect storm. The simple answer is that houses are over-priced based on medium term interest rate projections and anyone buying now should be incredibly careful if they are heavily leveraged.
What you should have done and/or should do is entirely up to you. You've chosen to buy and that quite possibly could still work out better than if you'd have rented for that same time period.
It's your risk to take on and your decision, no one elses. If you do end up in a situaiton where you can't afford the repayments then you'll perhaps have to adjust living expenses or make career/work changes or downsize or move to a cheaper area.
"longer term security"
lol if there was a slowdown all those humans would have been made redundant. It was a big profit take at the expense of the workerbee.
Caporegime
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But the stress tested mortgage at 6% wouldn't be less than rent (At the time, because the rents will be priced at the time).
Soldato
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Then you'd still have a rush to get to X stage in time.
It should never have happened in the first place, it wasn't necessary then and it isn't necessary now.
When does your fix end? What is your total term?
Would it be not be possible to extend the term for a few years when it comes remortgage time? If rates are 6% then just spread it longer if possible until rates settle back down
Caporegime
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My fix ends December 2023 so there's a bit of time.
And then I'd have 28 years left on the term.
Don't really want to extend the term to be honest, but if we have to then we'll do it.