Bailing out the squeezed middle's mortgage repayments?

[EveSix]

Listening to Any Answers and feeling frustrated, but wondering if I'm missing some nuance.

A caller is advocating for government bail-outs to cover mortgage payments for home owners impacted by recent hikes in interest rates.

I feel a sort of existential exasperation at this idea.

I absolutely understand that times are tough, and that we form strong attachments to the buildings we live in and the choices and advantages that a certain income affords us: holidays, the ability to have savings and university funds for our DC, as were mentioned in the programme.

I understand that there is, what some would argue, a precedence for such a bail out in terms of recent quantitative easing, furlough payments and schemes to support businesses following the pandemic.

But home ownership is a massive privilege in itself, in a skewed growth economy that encourages profiteering from the basic human need for shelter.

Home 'owners' don't own their mortgaged houses; they owe money to the financial corporations which will be the ultimate beneficiaries of such bail outs.

Does the squeezed middle need bailing out? It seems ludicrous to me. People have been permitted to overreach financially. Surely, the remedy is to spend our own assets first; use our savings; the rainy day did come. Move in order to downsize or relocate to a cheaper area; we're not tethered to the building we currently call 'home' if we no longer can afford it.

The caller asserted that "...life is for living!" by way of explanation why scrimping and cutting back feels like deprivation.

What am I missing?

I just don't get what the answer is here @Abitofadventure , half the posters one here don't want mortgage owners to receive help. I don't get why anyone would want to see a load of people made homeless?

And the idea of getting 2nd jobs would be great if so many places weren't closing down or were flexible in shifts to allow for parents to share loads of childcare without having to pay £££ for an overnight Nanny. If we are all being encouraged to stop spending (who even are these people spending, not the people that need help ffs), then all the jobs that could be 2nd jobs won't exist as people won't be eating out etc?

Why does mortgage = squeezed middle though? I can't downsize or move to a cheaper area
I mean I could sell and rent but I couldn't afford rent as it's £200 more than my mortgage
Just because I have a mortgage doesn't mean I have spare money or am the squeezed middle

See I am also one of the people who didn’t overstretch but just can’t afford my mortgage payment to double. To rent would be just as expensive as doubled mortgage payments and I am in the years of paying a huge childcare bill. Along with hugely increased energy and food prices it’s just unsustainable. We don’t have new cars or holidays either. No one could have foreseen such a massive cost of living crisis when we took out our mortgage.

My guess is this. A bail out by the “tax payer” is not going to happen and nor should it.

Consumer protection regulation in banking has ramped up an awful lot in the last couple of decades. Banks will be more supportive and offer proper forbearance options and there won’t be mass repossessions left right and centre. They won’t be allowed to “get away with it” while making billions in profit.

People will have to get used to having less disposable income, but I also appreciate that when basic essentials like food and energy are also on the rise, it’s going to be really tricky for many.

I think a bail out would be grossly unfair on those renting but would support measures by the banks to allow people to keep their houses. Such as reduced payments and extended terms, which prevents repossession but means no government money is used and the buyer still pays their full amounts (plus increased interest over the term no doubt.)

I thought the idea about allowing mortgage holidays was a good one. It gives people a bit more breathing room to adjust to changing circumstances which may mean moving house but without the massive tax bill the country can't actually afford.

I do also think we need more social housing too as an alternative to home ownership. Not even cheap rent, just fair rent!

Government bail outs won't happen. Like someone said below the whole point of such rises is to cause pain because that's what's needed. There's no point in kicking the can down the road.

Anyone who thinks lenders are going to be going the extra mile to stop repossessions is also deluded. They'll do the minimum they have to and are already prepping for a high volume increase in repos in the nearish future. Anyone who works in finance and is linked to the financial support/litigation/legal areas will likely have already noticed the prep - moving resources, padding out teams, refining process. It's not difficult to decifer.

Banks are expecting carnage.

Not bailing out those with mortgages will equally be unfair on those who rent as they will suddenly find thousands more people who they will need to compete against in able to find somewhere to live and the rental price will increase because of it.

I think there should be some sort of help for home- owners. Lots of people are facing real problems through no fault of their own. I’m not necessarily suggesting the government gives them direct cash, but may be a period of reduced interest on mortgages, easier to extend mortgage lengths, mortgage holidays, etc

Any measures such as these would actually benefit renters as well, as rent money effectively pays the mortgages of landlords, so if mortgages remain cheaper, then so would rents.

I'm really torn on this. We are one of those "squeezed middle" families, though luckily we have a year before our fixed rate is up. We were very sensible when we bought this house, borrowing significantly less than we were told we could. However, EVERYTHING is so much more expensive now, and our wages just haven't kept pace.

I wouldn't expect the government to bail us out. I do think that the lenders need to bear some culpability - surely advisors cannot be stress testing payments for new lenders sufficiently?

I'm someone whose parent had their house repossessed back when interest rates went very high. We ended up in filthy temp accommodation until my parents luckily got rehoused by the council. I was in the middle of A Levels and it was horrific. I would spare other people from that experience - not that there are many council homes available for them to go into anyway, should the worst happen.
And that's kind of the point for me - we need to keep people housed. There isn't the safety net of council houses that there used to be. There also aren't enough private properties to rent if mass repossessions occurred.

Many many people aren't wealthy, just because they have a high value house or a mortgage. Some places are very expensive to live, so people have overstretched even to buy a modest house. Most of the people who would be helped, won't be living in mansions with their own swimming pools!

I'm also a believer in welfare state only working if everyone feels personally invested in it - so you help out those who previously wouldn't have needed it and in turn, they aren't so resentful when their taxes assist others in future.

This help would be temporary and more financially sensible than the fallout of just letting people get in with it!

(I wouldn't qualify for help so have no skin in the game beyond not wanting people to lose their homes. It really is one of the most stressful things that can happen to a family).

It's also not a race to the bottom. We bought a sensible house, didn't overstretch, don't run expensive cars or have flash holidays. I'm really careful about money, having seen what it's like to be bones of my arse poor. I still think it's right to help others avoid that.

As an idea, I don't know why the government doesn't support councils to buy homes from people who can't afford their mortgage and rent it back to them. The home owner has security of tenancy, controlled rent and the house becomes part of housing stock eventually.

I'm a homeowner and wouldn't support such a scheme.
DH and I went without for a long period of time to save our house deposit and buy our first flat in 2010, when our friends were all having fabulous holidays.
We remain the only people in our entire extended circle who got no help from parents, or a bit of cash when granny died.
We've then lived within our means ever since. We drive older vehicles that we've bought in cash. We don't do flash holidays, or meals in fancy restaurants. We've never had a credit card or store card between us.
We've worked hard to refurb the three homes that we've owned since 2010, which isn't something everyone wants to do. We bought our current home because it meant we'd be wildly financially under committed.
I've consistently saved ever since I was a teenager, always putting something away each month. Last week I sold my investments and paid £30k off of our mortgage. I would have preferred to do something more fun with that.
I'll be beyond fucked off if people like us end up paying for those who have been, at worst, reckless with money and, at best, shortsighted.

There should be more council houses built. But if the government helps with mortgage payments, what is the point of interest rate raises?

This is an excellent idea. Councils can buy empty properties, but there is sure to be some rules about buying up properties and then housing those people who would not necessarily be top.if a housing list.

It would also put a stop to that ridiculous outbidding by the home office to house asylum seekers. No agenda here, but two government entities bidding against one another is madness. Councils are currently being outbid on suitable properties. Housing is a mess.

I feel very strongly that it would be morally wrong to provide this support.

Of course it's an awful situation for individuals but government is in charge of the bigger picture.

• the market badly needs a correction, which will be artificially avoided if loans aren't allowed to fail.
• you'll have the taxes of people who will never be able to buy, buying homes for people in much better financial situations than them.

TBH I'm not even sure forcing the banks to give borrowers extra time etc is the way to go, it's still artificially propping up the market.

And I say all this as someone who loses if the market crashes.

Completely agree with this. We have also been cautious, with a house worth x2 our combined income. I don’t think people who bought at the top of their budget with record low rates should be bailed out. Those rates were never going to last forever and people need to own their financial decisions.

Well it's all about people thinking this day wouldn't come when anyone with half an ounce of sense knew those low rates couldn't stay.

We've stayed in our smaller house instead of trading up to the max we could have afforded. We've overpaid and now excited to be knocking the capital on the mortgage down quite quickly.

We haven't had the big house, with all the trimmings because we knew eventually rates would go up and we'd rather be safe than sorry.

If people overstretched then that's the gamble they took and sometimes gambles don't pay off

I think some people are stereotyping here. I know of plenty of people like us, who were very comfortable with their mortgage a few years ago but spiralling costs such as food, childcare, mortgage rises etc mean our basic costs are well over £1000 a month more. It would cost us much more to rent than our mortgage. Our public sector pay is way behind inflation. I’m not suggesting the government bail us out, we drive old cars, this year’s holiday is camping, we have both returned to full time work ( which increases childcare care cost but we are slightly better off) . I don’t like the picture of it being people being irresponsible, it’s having a huge impact on everyone.

Ah see I think they did stress test but people got used to the low interest lifestyle and commited to things like payments for big cars/new kitchens etc instead of realising that (as was clearly advised by anyone worth listening to) interest rates were inevitably going to go up

The taxes of the squeezed middle have been bailing out the poor lifestyle choices of many for years. It’s only right that they are now given assistance if needed.

As an idea, I don't know why the government doesn't support councils to buy homes from people who can't afford their mortgage and rent it back to them. The home owner has security of tenancy, controlled rent and the house becomes part of housing stock eventually.

It would certainly be worth looking at a way to convert homes at risk of default into council homes, but why should someone of decent means (presumably, if they were once able to buy) go to the top of the housing list and stay in their luxury home? Also aren't council houses supposed to be priced at market rent, if they can't pay the mortgage, could they pay the rent or will they need to find a smaller/cheaper property?

I can see it working for ordinary 3 bed houses but not for everyone.

@Italiandreams posters don't want to consider any version of events other than reckless, stupid or fancy kitchens. Simply not listening to other experiences.

Yeah I agree @Italiandreams - I am confused by the "people shouldn't have been irresponsible" . Tbh, I thought we were being sensible! We followed financial advisors advice, listened to our parents etc. We didn't stretch either. No new cars, never been abroad with the kids, always camping holidays here (and often in back gardens of family members!).

I suppose sure, perhaps I shouldn't have paid the £50 a month on us going out on a family day trip and instead put it away into savings!?

It's the whole COL that's gone mental and making our current mortgage and childcare a stretch to pay. But come October when we move to our new term, we are going to be in the red every month unless DH can pick up extra shifts (which aren't a guarantee)

This.