Mortgage Rate Rises

HACO said:
Their margins are 30% on new builds, even higher on new build flats. They will still make profits, just a little less.



Market value depends on what people are willing to pay. If nobody can pay, say £1500 for a flat. It doesn't matter whether the costs to the landlord is £1000 or £5000, the market value is still what someone is able to pay.



We are always at that ceiling, because if there were any headrooms the landlords would already be charging more. Landlords don't leave money on the table waiting for their costs to go up before increasing rents.

The only time rents increase is when people bring in additional money to pay, not when landlords have additional costs. When we had wage growth and low inflation, there were additional money to pay. Interest rates were going down for a decade, did rents go down? No.

The rental market is not that liquid. If you're a landlord and have a rent paying tenant paying £1000 and you want £1500 to maintain your previous margins, evicting them means months of nobody paying any rent and you searching for a tenant that may or may not exist. If tenants stop paying the landlords can't find someone who pays immediately. If house prices do drop then there would be new landlords buying properties who have a lower mortgage, and are able to undercut you on the rent.

These stuff are not theoretical, the concept is very well studied. Rents don't follow interest rates, you can plot rents and interest rates and see no correlation. Rents generally follows wage growth.
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Fair enough, I'll be honest it's not something I've studied in any detail, I just figured intuitively if landlord costs go up then they would charge more rent (assuming supply & demand and market rates allowed it). Happy to concede being wrong.
 
Lots of members on here will not really remember anything but low interest rates. I remember mortgage rates at 12% and parents really struggling. Anyone now getting on the hosing ladder will be in negative equity fairly soon as the market takes a hit with reposessions and sellers wanting to unload. Batten down the hatches, the ride is just getting started....
 
subbytna said:
Lots of members on here will not really remember anything but low interest rates. I remember mortgage rates at 12% and parents really struggling. Anyone now getting on the hosing ladder will be in negative equity fairly soon as the market takes a hit with reposessions and sellers wanting to unload. Batten down the hatches, the ride is just getting started....
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Sitting here waiting to find a cracking deal in the next 24 months :D
 
TheOracle said:
short lived joy when they either sell the house, or put your rent up
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And what do you think will happen when they either sell or increase rent?

Let's be honest, landlords are absolutely screwed. Homeowners will likely be able to ride it out by cutting back elsewhere but anyone who refers to their property as their "portfolio" is going to feel the burn from their greed over the last decade, and personally, I hope it burns like hell. Zero sympathy.
 
Diddums said:
And what do you think will happen when they either sell or increase rent?

Let's be honest, landlords are absolutely screwed. Homeowners will likely be able to ride it out by cutting back elsewhere but anyone who refers to their property as their "portfolio" is going to feel the burn from their greed over the last decade, and personally, I hope it burns like hell. Zero sympathy.
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Leaving loads of renters homeless. Sure, sounds fantastic. :cry:
 
HACO said:
Sitting here waiting to find a cracking deal in the next 24 months :D
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Price might drop but interest will be so high you’ll be able to afford the same thing you currently can and will be paying for it. Once they stress test people to 10% that that’ll change everyone’s views.

There’s nothing to celebrate about, the whole country is going down the pan at a silly rate.

Only cash rich will love that.
 
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