Mortgage Rate Rises

[adam cool dude]

Sitting here waiting to find a cracking deal in the next 24 months

Yeah but you are going to still need a massive deposit to get one because no one will touch you because the country is in a mess. During the last crash we needed an LTV of 75% to just get anything decent rate wise. It will be a fantastic market for those who have the cash to put down but do not expect a cheap house with 5-10% deposit because it will not happen!

 

[smokedog]

Without landlords he would also have a mountain of cheap property available for him to buy...

Not everyone wants or is ready to buy, renting gives people choice.

There are plenty of good landlords, I have been renting for the past 5 years and my rent hasn't increased in that time and any issues I had have been fixed promptly.

 

[glenimp617]

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.

Well personally I hope you'll be ok. If he sells, you'll have to find somewhere else surely or pay more rent. It's not good for either of you.

 

[fez]

When we first got a BTL the rent barely covered the mortgage. It's now mortgage free but doesn't really make any profit as such.

How is a mortgage free BTL not making any profit. Outside of tax and upkeep, everything is profit.

 

[HACO]

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.

Having a lower loan balance at higher interest rate is always better than a higher balance at lower interest.

Why? Because when a high interest times end and rates go down, you remortgage and reduce your payment. But having an absurdly high loan on low interest means interest can only go up from there so inevitably the day comes when you struggle. The reason we're in this crisis is just that.

Yeah but you are going to still need a massive deposit to get one because no one will touch you because the country is in a mess. During the last crash we needed an LTV of 75% to just get anything decent rate wise.

I've saved up a massive deposit (that happens in an absurd market when you need to save a £150k+ deposit to get a tiny flat).

 

[delta0]

-15% from pre-covid levels seems more likely, probably 25%. The market doesn't move without first time buyers and their affordability has been crippled. Anyone previously looking at a 250k property with a 50k deposit would have expected repayments of £850 per month. At 6% their borrowing capacity reduced by 70k. They are now looking at a £180k budget. Some may stretch a little, but decreased in excess of 25% seems probable. If mortgage rates get to 7% or higher then -30% seems certain.

We are so far from the subprime situation in 2008 that caused those kind of falls (albeit briefly, the UK average was actually 15%). Lending is far stricter as a result of what happened then. That’s why they are talking of mostly a plateau to slight fall with the extreme end suggesting the headline grabbing 15%

 

[jonneymendoza]

Sitting here waiting to find a cracking deal in the next 24 months

Cash buyer?

 

[HACO]

Cash buyer?

Either cash or very high LTVs.

 

[glenimp617]

I've saved up a massive deposit (that happens in an absurd market when you need to save a £150k+ deposit to get a tiny flat).

Hold tight for a bit longer mate, you'll end up in a seven bedroom mansion soon

 

[jonneymendoza]

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.

And by cash rich you mean foreign cash because the British pound in cash is becoming worthless

 

[neocon]

Is this a form of QE?

Bank of England launches bond-buying programme to prevent 'material risk' to UK financial stability

News of the bank's action, aimed at "restoring orderly market conditions", had an immediate impact on the rates demanded by investors to hold UK government debt.

news.sky.com

 

[glenimp617]

Santanders rates up again this morning +0.25%

 

[jonneymendoza]

Either cash or very high LTVs.

Nice. Good luck mate. Every man for themselves and we should not grab pitch forks on people like you who may reap the mess.

It ain't your fault we are in this mess unless you was Boris right hand man? Hehe

 

[dlockers]

Either cash or very high LTVs.

You'll need even more now the £ is worthless and foreign buyers snap up the bargains.

 

[jonneymendoza]

You'll need even more now the £ is worthless and foreign buyers snap up the bargains.

Yes exactly. Need that foreign money lol

 

[HACO]

Hold tight for a bit longer mate, you'll end up in a seven bedroom mansion soon

I'll take 6 bed mansion too

Is this a form of QE?

Bank of England launches bond-buying programme to prevent 'material risk' to UK financial stability

News of the bank's action, aimed at "restoring orderly market conditions", had an immediate impact on the rates demanded by investors to hold UK government debt.

news.sky.com

Yes and no. Mostly a market stabilising effort rather than being aimed at offering liquidity.

Nice. Good luck mate. Every man for themselves and we should not grab pitch forks on people like you who may reap the mess.

It ain't your fault we are in this mess unless you was Boris right hand man? Hehe

I'm Boris himself man.

 

[Haggisman]

Having a lower loan balance at higher interest rate is always better than a higher balance at lower interest.

While true, neither option is relevant if nobody will lend to you because the combination means you fail the affordability checks.

Purely selfishly, a crash would probably help us too, as we're hoping to upsize in the next couple of years, so if price are lower, so hopefully is the cost to move (although obviously we'll lose equity in our current place as well).

 

[kevman]

Is this a form of QE?

Bank of England launches bond-buying programme to prevent 'material risk' to UK financial stability

News of the bank's action, aimed at "restoring orderly market conditions", had an immediate impact on the rates demanded by investors to hold UK government debt.

news.sky.com

Just reading up on all this so no expert - but yeah it is similar to QE

 

[smokedog]

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.

So let's say the LL sells and you have to find somewhere else to live but nothing is available to rent at a suitable price? How is that good for you?

There is a rental crisis right now in London. Tenants now are bidding for places before they have even viewed them or asking for up to years rent up front.

 

[HACO]

You'll need even more now the £ is worthless and foreign buyers snap up the bargains.

My money isn't in £ either As soon as Truss became the likely winner and the crisis began I moved everything to USD and CHF.