Mortgage Rate Rises

LabR@t said:
Wages are lower all relative
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For house prices to stay the same, whilst the base interest rate goes up past 5-6% - it doesn't add up, I don't understand how house prices can remain the same if the cost of mortgages gets very expensive?

Or is that wrong?
 
Screeeech said:
For house prices to stay the same, whilst the base interest rate goes up past 5-6% - it doesn't add up, I don't understand how house prices can remain the same if the cost of mortgages gets very expensive?

Or is that wrong?
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people will happily take on huge levels of debt, if the bank lets them

I've long struggled to understand how the young members of my team have been able to buy the houses they have. They are worried sick about the rates going up.
It simply doesn't enter peoples minds to budget for a rate rise. They are maxed out, so when their fixes end they have nowhere to go. They can't afford a penny more.

I think banks will have to switch everyone onto interest only mortgages, where they are technically renting from the banks.

What confuses me is that after the 2007/2008 crash I thought banks had to have tighter lending criteria. How then, has my cousin who earns below UK average, and his wife who earns minimum wage part-time been able to buy a 5 bed detached house?
 
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TheOracle said:
people will happily take on huge levels of debt, if the bank lets them
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Yeah I mean, that's true I guess - but wasn't that already happening, as house prices have gotten very expensive and many people are already indebted to the eyeballs, where the interest rates were low.

I mean, in order for the banks to lend huge amounts of money where the monthly payments aren't £2-3k a month - how exactly would they do it?
 
I maxed out my mortgage when I bought.
Felt like the done thing. Even being fairly good in finance I didn't really ever think to check what my outgoings would be at 5pc. Didn't even think about it.

I did think about house price rises/falls and negative equity. But not rates.

To my ignorance I didn't even figure how much 1pc actually meant.


Come remortgage time the bank said we had A1 credit scores. And despite Lloyd's being a stingy lender. They could lend us up to 310k. I even said to the advisor. I think that's ridiculous.

And now here I am with 207k mortgage concerned for the future.

With 310...yeah... Nope!

And this was March 2022!
 
I really hope at worst they stagnate but I hope no crash happens. I’ve been working towards buying our first for many years and we finally got into it this year. We’re on 1.99 for 3 years and I calculated that we can afford to 5-6% if required but I hope we don’t get to that. Of course in 3 years things can change massively as we have seen what the last 3 have done.
 
Screeeech said:
Yeah I mean, that's true I guess - but wasn't that already happening, as house prices have gotten very expensive and many people are already indebted to the eyeballs, where the interest rates were low.

I mean, in order for the banks to lend huge amounts of money where the monthly payments aren't £2-3k a month - how exactly would they do it?
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People ultimately need to be responsible for their own finances. Pesonally, I wouldn't go over a set amount per month. There is a calculation, or a generic term like 20/30/40 something. Can't remember it now, or maybe it was for a car loan lol anyway, my point is that you don't want to be going over a certain percentage of your income per month on a mortgage, or anything for that matter. People have been going silly. Maybe in the hope that as houses go up, wages will also and in the future as the LTV drops they will be better off.

My take is that the gap between house prices and wages has been too large for too long and that it couldn't carry on forever.....as well as low rates.

This is why I was always annoyed at the housing schemes and stamp duty holidays.
 
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grudas said:
I really hope at worst they stagnate but I hope no crash happens. I’ve been working towards buying our first for many years and we finally got into it this year. We’re on 1.99 for 3 years and I calculated that we can afford to 5-6% if required but I hope we don’t get to that. Of course in 3 years things can change massively as we have seen what the last 3 have done.
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Well at least you thought about 5-6% rates. Some people didn't, and can't afford it.
 
413x said:
With 310...yeah... Nope!
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Bloody hell mate, can you imagine!

When I was young debt never really bothered me, but it does now, to the point a few years ago I started to really worry and had sleepless night. Probably the best thing, as I went on a mission for a year to clear it all right down and the only debt I have now is a small mortgage. We'll I say small, it's not 6 figures at least.
 
TheOracle said:
Well at least you thought about 5-6% rates. Some people didn't, and can't afford it.
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I can see how people get into it. Banks offered us obscene amount of money but that would have maxed us out with 0% flexibility. It’s good that I had my half sensible hat on.. or I’d be extremely worried right now.

Problem is that for us, we were able to afford what we wanted for 30-40% under that amount but for many that max just about gets them into what they need. And that is scary. I do feel that government will do all they can to prop the market.
 
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TheOracle said:
Bloody hell mate, can you imagine!

When I was young debt never really bothered me, but it does now, to the point a few years ago I started to really worry and had sleepless night. Probably the best thing, as I went on a mission for a year to clear it all right down and the only debt I have now is a small mortgage. We'll I say small, it's not 6 figures at least.
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I can probably clear down a big chunk of 207 in 5 years. But 310? Not a chance. To me that is an irresponsible account to lend 2 people on our salaries. (74k)

I know its under 5x but still seems like 5x is too much
 
413x said:
I can probably clear down a big chunk of 207 in 5 years. But 310? Not a chance. To me that is an irresponsible account to lend 2 people on our salaries. (74k)

I know its under 5x but still seems like 5x is too much
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as a father of an 11 and 13 year old, I worry what the future has in store for them. They'll probably be living with me forever :cry:
 
TheOracle said:
as a father of an 11 and 13 year old, I worry what the future has in store for them. They'll probably be living with me forever :cry:
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This is another thing. We are child free. Yet still I'm concerned for the future. No way we could afford child care with everything else around going up.

My sister (who very much wants kids) is buying now. She doesn't even seem to really like the house. But times ticking for kids.
I hope the market doesn't screw her. She may be buying at the top.
 
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A friend of mine owns several houses and rents them out.
He's cash rich (millions) and just this afternoon tells me he's already sitting there waiting to hoover up a few repossessions in the not too distant months.
 
LabR@t said:
Housing crash helps everyone in the long run
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I hope it happens even if I went into negative equity. It cannot carry on like this. It is an absolute joke.

My daughter is 15 and unless she gets some super duper top paying job or marries and millionaire she has to wait for us to die to get on the ladder which just isn't right.
 
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