Mortgage Rate Rises

413x · 26 Sep 2022 at 13:11

TheOracle said:
I have to say, this can't carry on forever. House prices must come down. If first time buyers can't get on the ladder, nobody higher up can move.

It will be painful for those who bought in the last few years, but they must come down to sensible levels as wages aren't going up enough.

Pre covid things weren't so bad.
I skipped first house and went straight to what would probably be a typical "second house"

But now that house would be put of touch. Just 2 years later. That's unsustainable.

Going back to 2020 house prices would be a correction really. It would be a blip on a 30 year graph.

JamesH85 · 26 Sep 2022 at 13:12

BoE with a sharp 'no comment' about a emergency meeting this week. Make of that what you will!

Bald-Eagle22 · 26 Sep 2022 at 13:13

Crash in prices is all relative if your an owner already .

If there a big crash no one will sell and anything that comes on the market will sell quickly and prices will go back up again. Despite what goes on it all goes round in big circle and prices will come back up.

I can’t quite understand what the Chancellor has done here ? They sorted the price of heating out allbeit for 2 years and then cut taxes - like WTF ?

It just seems it’s line the pockets of all everyone the Tory party has a donation from given there probably going to lose the next G.E .

dazzlaa · 26 Sep 2022 at 13:14

I was looking at a huge 'new-build' estate that has been ongoing for a while near me this weekend. Still quite a way to go but seeing it did have me thinking that if they aren't finished soon they may struggle to sell. Rates do seem to be creeping up at a steady rate of climb.
Thankfully I have just over 3 years left of my fixed deal at 1.97%, hoping that after 3 years things have stabilised somewhat.

_Jimlad_ · 26 Sep 2022 at 13:15

kicking myself i could not fix earlier, but had a big short term loan ongoing for extension, just bad timing, but hey happy and healthy

glenimp617 · 26 Sep 2022 at 13:17

dazzlaa said:
I was looking at a huge 'new-build' estate that has been ongoing for a while near me this weekend. Still quite a way to go but seeing it did have me thinking that if they aren't finished soon they may struggle to sell. Rates do seem to be creeping up at a steady rate of climb.
Thankfully I have just over 3 years left of my fixed deal at 1.97%, hoping that after 3 years things have stabilised somewhat.

Maybe, but I've NEVER in the last 15yrs seen a housing estate which hasn't sold all 100% off plan. Not in the east midlands at least.

Interest rates may prevent them from doing so, but I think given the chance people will want to buy.

dazzlaa · 26 Sep 2022 at 13:19

_Jimlad_ said:
kicking myself i could not fix earlier, but had a big short term loan ongoing for extension, just bad timing, but hey happy and healthy

You win some, you lose some. I lucked out in the utility bill game of life. Currently paying 250% more than this time last year.

kevman · 26 Sep 2022 at 13:19

Problem is that if prices do go down people will just stay put until price goes up again. And they always go up again

Only way to truly reduce prices is to increase supply

dazzlaa · 26 Sep 2022 at 13:21

TheOracle said:
Maybe, but I've NEVER in the last 15yrs seen a housing estate which hasn't sold all 100% off plan. Not in the east midlands at least.

Interest rates may prevent them from doing so, but I think given the chance people will want to buy.

I haven't either to be honest, but I did see it in America after the 2008 crash. Hopefully that doesn't happen here but using that same estate as reference, 6 months ago it is something I would've considered. I couldn't even begin to consider it now.

kevman · 26 Sep 2022 at 13:22

_Jimlad_ said:
kicking myself i could not fix earlier, but had a big short term loan ongoing for extension, just bad timing, but hey happy and healthy

Yeah part of lifes ups and downs. We bought during covid so saved 1000s on the stamp duty. This will now be hoovered up in interest payments!

Rob_B · 26 Sep 2022 at 13:22

Bald-Eagle22 said:
... It just seems it’s line the pockets of all everyone the Tory party has a donation from given there probably going to lose the next G.E .

I mean, yeah, with zero exaggeration it's literally that. Look back at pretty much any decision they've made and you'll find that's likely to be the main reason for anything they do. They don't care about the working class.

kevman · 26 Sep 2022 at 13:25

Bald-Eagle22 said:
I can’t quite understand what the Chancellor has done here ? They sorted the price of heating out allbeit for 2 years and then cut taxes - like WTF ?

Basically anything they can to avoid a recession which will cost them the next election

fez · 26 Sep 2022 at 13:26

413x said:
As someone who wants to move once more, a downturn in house prices would be no bad thing. Really, I don't understand why British are so obsessed at wanting house prices to increase?

I think its pretty simple. Most people see their house as "their own" the second they buy it. They buy a house for £500k with a £50k deposit and they own a £500k house in their head. That house goes up to £600k and no only have they now got a £600k asset but they have "made" £100k in a few years. Who wouldn't want that?

They don't think about the fact that they own 10% of the house or that they are paying a large chunk of interest on that mortgage or that if they want to move homes they will lose a chunk to stamp duty/moving costs and most like the fact they are moving to a larger house.

The only real winners are people getting out of the market and there are very few of those in the grand scheme of house buyers/sellers.

413x · 26 Sep 2022 at 13:31

fez said:
I think its pretty simple. Most people see their house as "their own" the second they buy it. They buy a house for £500k with a £50k deposit and they own a £500k house in their head. That house goes up to £600k and no only have they now got a £600k asset but they have "made" £100k in a few years. Who wouldn't want that?

They don't think about the fact that they own 10% of the house or that they are paying a large chunk of interest on that mortgage or that if they want to move homes they will lose a chunk to stamp duty/moving costs and most like the fact they are moving to a larger house.

The only real winners are people getting out of the market and there are very few of those in the grand scheme of house buyers/sellers.

It must be that "I am worth 600k, last year I was worth 500k".

I feel from personal experience people don't gain until they are dragged kicking and screaming.

My parents will not downsize. They pay huge heating, council tax, maintenance cost etc and have even taken equity out rather than downsizing. Even though they are getting on now.
They simply won't downsize? Maybe it's seen as "going backwards".

Boggled my mind. All that money locked away while they sit there health dwindling. Rather than spending and enjoying. Or simply banking it and having an easy end of life.

fez · 26 Sep 2022 at 13:31

kevman said:
Problem is that if prices do go down people will just stay put until price goes up again. And they always go up again

Only way to truly reduce prices is to increase supply

If they go down enough it makes no sense for some people to ride it out. Some people could be a few hundred thousand in the red, paying very high interest rates and plenty of people are going to lose their jobs when the **** really hits the fan. Hoping that in 5 years you are back where you were a few months earlier and not just cutting your losses might not make sense.

There will be a race to the bottom once that happens and no will want to be buying a house that could drop another 5-10% in the months after you buy it when the bank have shafted them for a 5%+ mortgage.

Who knows what will happen. One of the reasons the gov will do everything they can to keep house prices stable and moving up if possible.

HungryHippos · 26 Sep 2022 at 13:33

To me at least my house is also my home not just an investment vehicle. Even if I sold now I'd still need somewhere to live, and renting isn't exactly cheap.

Biggest risk of falling house prices is negative equity for low deposit buyers, and higher interest rates causing some people to be forced to sell up or default.

413x · 26 Sep 2022 at 13:34

fez said:
If they go down enough it makes no sense for some people to ride it out. Some people could be a few hundred thousand in the red, paying very high interest rates and plenty of people are going to lose their jobs when the **** really hits the fan. Hoping that in 5 years you are back where you were a few months earlier and not just cutting your losses might not make sense.

There will be a race to the bottom once that happens and no will want to be buying a house that could drop another 5-10% in the months after you buy it when the bank have shafted them for a 5%+ mortgage.

Who knows what will happen. One of the reasons the gov will do everything they can to keep house prices stable and moving up if possible.

It will be jobs that breaks it.
There will be a number of people who's mortgage deals end in next couple of years who have debts large enough to be vulnerable. But without job losses most will probably be able to ride It out.
And as more People jump on 5 year fixes this number hopefully won't be huge (relatively)

Throw in mass job losses and its a whole different ball game. Your mortgage fix at 2 percent is worth nothing if you can't get a job.

fez · 26 Sep 2022 at 13:34

413x said:
It must be that "I am worth 600k, last year I was worth 500k".

I feel from personal experience people don't gain until they are dragged kicking and screaming.

My parents will not downsize. They pay huge heating, council tax, maintenance cost etc and have even taken equity out rather than downsizing. Even though they are getting on now.
They simply won't downsize? Maybe it's seen as "going backwards".

Boggled my mind. All that money locked away while they sit there health dwindling. Rather than spending and enjoying. Or simply banking it and having an easy end of life.

Many of the older generation simply don't want to move out of their family home. I can understand it honestly. I wouldn't want to go back to a small house or a flat after living in this house. Moving to smaller properties often means a reduction in everything. There aren't many nice 2 bedroom houses with large gardens, a garage, large living room and kitchen etc.

Your other option is things like bungalows which seem to have a "old people with money" tax.

My parents are in a 4 bedroom house that will start to get too much for them in the next 5-10 years. If my brother moves to the same area as we are in I think they will up and leave to be closer to us/the grandkids but I don't know.

glenimp617 · 26 Sep 2022 at 13:35

413x said:
It must be that "I am worth 600k, last year I was worth 500k".

I feel from personal experience people don't gain until they are dragged kicking and screaming.

My parents will not downsize. They pay huge heating, council tax, maintenance cost etc and have even taken equity out rather than downsizing. Even though they are getting on now.
They simply won't downsize? Maybe it's seen as "going backwards".

Boggled my mind. All that money locked away while they sit there health dwindling. Rather than spending and enjoying. Or simply banking it and having an easy end of life.

Maybe they want to leave it to you once they've gone?

kevman · 26 Sep 2022 at 13:36

fez said:
Who knows what will happen. One of the reasons the gov will do everything they can to keep house prices stable and moving up if possible.

Agreed - large proportion of the building trade is propped up by current house prices and peoples access to equity