Mortgage Rate Rises

[alec]

Literally the only way to sort out the housing crisis is to limit bad immigration and build more homes. Thats it. Supply and demand. Reduce demand, increase supply.

I can think of couple other ways
Tax empty homes, start with council tax
Tax second/third/20th properties

make homes a worse place to invest your free money

Boom, there is more supply and the ever increasing house prices stop increasing and allow ACTUAL supply and demand to regulate the market
Well, should avoid the "boom", do it gradually.

 

[fez]

That's why there is affordability checks. Your point is misdirected if the point you are making is about people overreaching.

This example is greater than 10% anyway. Was that the illustration you intended to make? Was the £50k number meant to be a big scary number? Because even in a 10% deposit situation the bank has still lost £10k.

I think a bank would rather take a £10k hit than a £50k hit and I think people are far more likely to hand back the keys from a £50k hole than a £10k hole so yes, £50k is a scarier number for all involved.

 

[200sols]

That's why there is affordability checks. Your point is misdirected if the point you are making is about people overreaching.



This example is greater than 10% anyway. Was that the illustration you intended to make? Was the £50k number meant to be a big scary number? Because even in a 10% deposit situation the bank has still lost £10k.

The bank wont be losing anything because the idea is loans backed by the government aka other taxpayers.

 

[Narj]

Its very hard for people to change their habits. If it wasn't, they wouldn't be habits. Its the same reason people ask millionaires why they became billionaires when the sane amongst us would have retired after a few million was sitting in our accounts. The sort of person who is in that position is the sort of person who won't ever be satisfied. If they were, they probably wouldn't be there in the first place.

The sort of person who aggressively pays down their mortgage and lives a frugal life is always going to find other reasons to remain frugal. "What if I can't work, what if I get an illness that needs money, what if the house needs the roof replacing".

Yep, you've summed me up perfectly. I have various pots/investments to deal with things like emergency medical care in later life but in all fairness the largest concern right now is bridging the gap from early retirement to being able to claim my private pensions. Once I've got the amount I need, I am pretty certain I can go from "accumulating" to "decumulating".

Not sure it's about being satisfied, it's just dwelling on the absolute worst case scenario all the time and negative life experiences do tend to make you want to avoid being bitten twice. Yes, I am probably mental.

 

[fez]

Yep, you've summed me up perfectly. I have various pots/investments to deal with things like emergency medical care in later life but in all fairness the largest concern right now is bridging the gap from early retirement to being able to claim my private pensions. Once I've got the amount I need, I am pretty certain I can go from "accumulating" to "decumulating".

Not sure it's about being satisfied, it's just dwelling on the absolute worst case scenario all the time and negative life experiences do tend to make you want to avoid being bitten twice. Yes, I am probably mental.

To be fair, the older generation often died with quite large sums of money because they grew up in a time where money was tight and they never got out of that mindset. Its hard to break. You just have to try and find a balance. The FIRE movement is a funny one. They seem to advocate very very aggressive pursuit of money in your prime years so you can retire early but then they expect to be living very frugally for the rest of their lives. I don't quite see the point myself. I would love to work 3 days a week but I probably wouldn't want to work none.

 

[Narj]

To be fair, the older generation often died with quite large sums of money because they grew up in a time where money was tight and they never got out of that mindset. Its hard to break. You just have to try and find a balance. The FIRE movement is a funny one. They seem to advocate very very aggressive pursuit of money in your prime years so you can retire early but then they expect to be living very frugally for the rest of their lives. I don't quite see the point myself. I would love to work 3 days a week but I probably wouldn't want to work none.

Nail, meet head.

Yes, my plan is to find something meaningful to do part-time rather than giving up work completely. I think working for the RSPB or some other conservation charity would be ideal for me.

 

[Foghorn Leghorn]

Yep, you've summed me up perfectly. I have various pots/investments to deal with things like emergency medical care in later life but in all fairness the largest concern right now is bridging the gap from early retirement to being able to claim my private pensions. Once I've got the amount I need, I am pretty certain I can go from "accumulating" to "decumulating".

Not sure it's about being satisfied, it's just dwelling on the absolute worst case scenario all the time and negative life experiences do tend to make you want to avoid being bitten twice. Yes, I am probably mental.

As @fez mentioned it's quite common for folk who've been conditioned for decades to save money to really struggle to switch from saving to spending. But don't worry, if you do struggle with it let us know, we'll spend it for you. No no, no need to thank me, I'm all heart

 

[slinxy]

Yep, you've summed me up perfectly. I have various pots/investments to deal with things like emergency medical care in later life but in all fairness the largest concern right now is bridging the gap from early retirement to being able to claim my private pensions. Once I've got the amount I need, I am pretty certain I can go from "accumulating" to "decumulating".

Not sure it's about being satisfied, it's just dwelling on the absolute worst case scenario all the time and negative life experiences do tend to make you want to avoid being bitten twice. Yes, I am probably mental.

To be fair, the older generation often died with quite large sums of money because they grew up in a time where money was tight and they never got out of that mindset. Its hard to break. You just have to try and find a balance. The FIRE movement is a funny one. They seem to advocate very very aggressive pursuit of money in your prime years so you can retire early but then they expect to be living very frugally for the rest of their lives. I don't quite see the point myself. I would love to work 3 days a week but I probably wouldn't want to work none.

My goals...
have enough in emergency funds to cover for an emergency so I don't have to dive into investments.. done
pay off my mortgage..
have 100k in stocks and shares investments and 200k in pension funds...

Then I should be on cruise control.. the plan is to get this done in the next 10 years and work part time.

 

[413x]

The people with a 1% deposit are also the same people who cant afford a 99% mortgage. Its a headline grabber pre election and its blatantly obvious.

Absolutely.
Its not the 1pc deposit.
Its the earnings to cost of house ratio.
When you're at the point of needing a house it's hard to hit the 4.5x or whatever multiplier.

As a single person it's near impossible for many. You often aren't super far in your career either.

The 4.5x is sensible though. I found it actually a sensible. Amount.

While housing stock is limited... The big problem won't go away.

 

[413x]

As @fez mentioned it's quite common for folk who've been conditioned for decades to save money to really struggle to switch from saving to spending. But don't worry, if you do struggle with it let us know, we'll spend it for you. No no, no need to thank me, I'm all heart

I found it really hard. I've only started in the last 6 months. But as a natural saver it is a weird switch to make

 

[413x]

To be fair, the older generation often died with quite large sums of money because they grew up in a time where money was tight and they never got out of that mindset. Its hard to break. You just have to try and find a balance. The FIRE movement is a funny one. They seem to advocate very very aggressive pursuit of money in your prime years so you can retire early but then they expect to be living very frugally for the rest of their lives. I don't quite see the point myself. I would love to work 3 days a week but I probably wouldn't want to work none.

So many of my family have died with lots of cash in the bank and a quiet, boring retirement and a very mediocre life set of experiences because they just accumulated. Not me. I won't aim for the FIRE stuff. As too much chance of wasting what could easily be a short life. Or getting old and having health issues so you can't do anything when you get there

 

[jaybee]

I agree with 99% or 100% mortgages. I wouldn't have paid nearly 20 years of rent if they were around when I could have utilized them. Instead I got in a rent trap and had to wait for nearly 2 decades to break the cycle as a result of a small inheritance to help me scrape together a deposit. When you can demonstrate the ability to afford the monthly payments, what difference is there between you and someone that has an extra 50K to start with, which in a lot of circumstances is gifted or inherited anyway?

 

[413x]

I agree with 99% or 100% mortgages. I wouldn't have paid nearly 20 years of rent if they were around when I could have utilized them. Instead I got in a rent trap and had to wait for nearly 2 decades to break the cycle as a result of a small inheritance to help me scrape together a deposit. When you can demonstrate the ability to afford the monthly payments, what difference is there between you and someone that has an extra 50K to start with, which in a lot of circumstances is gifted or inherited anyway?

Because it's a private companies money.

 

[Nutty667]

If you want a strong growing economy where people have money to spend, you can't go ramping up mortgage rates

But that's entirely what the rate rises are for, so people don't have money to spend, so it cools the economy and reduces inflation.
The fact the rate rises leaves people worse off is deliberate.

 

[200sols]

Because it's a private companies money.

Not really if we are talking banks. The money is simply created when someone is granted a loan. Driving up interest rates restricts the creation of new money, existing mortgage holders are simply collateral.

 

[danlightbulb]

But that's entirely what the rate rises are for, so people don't have money to spend, so it cools the economy and reduces inflation.
The fact the rate rises leaves people worse off is deliberate.

Yes I know, and I disagree with it because it's discriminatory - only impacts people with mortgages (and knock on to renters), likely more recent buyers also who have larger mortgages left.

 

[Nemiyen]

Yes I know, and I disagree with it because it's discriminatory - only impacts people with mortgages (and knock on to renters), likely more recent buyers also who have larger mortgages left.

But that's the only tool the BoE have to do anything with inflation or recession.

If they started taking a percentage of capital away from those with savings then it would cause an outcry! To make it fair, everyone should be forced to spend more or save and spend less - but that's impossible to enforce so they can only hit renters or those with mortgages or loans etc. (and those that want any of those too)

 

[Richie]

Yes I know, and I disagree with it because it's discriminatory - only impacts people with mortgages (and knock on to renters), likely more recent buyers also who have larger mortgages left.

Like yourself you mean?

 

[Goodie]

I remember there being discussion in the past about adjusting VAT on certain goods to have some impact, fully onboard with that as it hits us all. And yes I am bitter because my mortgage is due in March. I'll race you all to the bottom!

 

[413x]

The main issue with it, is it keeps renters renting for longer.
And that's bad for everyone long term.

It puts the cost to the state up when these people don't end up owning thier own home.
And it funnels money up to the wealthy in an accelerated way.

Of course inflation needs to be tamed. But I do see the issue that this benefits later life cash rich and hampers poor/cash light who tend to be younger (not always).


But.. Inflation must go down. But it is a shame it doesn't hit the wealthy. But it never does