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?

So what do you suggest? Make these people homeless? Housing is already on the short side!

I'm on the fence about this.

I am old enough to remember Black Wednesday and spiralling interest rates - people losing their homes and literally handing their keys back into the mortgage lenders.

We didn't stretch to buy our home. We could have borrowed more but didn't because I am very risk averse. I stress tested our mortgage payments up to 15% to make sure that we could manage (if needed).

However I am very aware that we are lucky to live somewhere where the average house price isn't crazy - although we had to move areas and change jobs to be able to afford to buy (we couldn't have bought in the town where we were renting - too expensive).

I feel extremely sorry for renters who don't have any security at all in this market. Rents are sky high and they can be thrown out on a whim. At least with a mortgage you have security as long as you make the payments - and you can ask your lender for forbearance (interest only, payment holiday, extend the term etc) - renters don't have that option.

I wouldn't be averse to help for homeowners in genuine need - they have nothing further they can cut back and if not helped then they will lose their home. Simply because there aren't enough rentals to go round and people have to live somewhere.

But I have zero sympathy for people who are complaining about not being able to afford to go on holiday, go out for meals, play golf, get their nails done.... Deal with it. Nobody is entitled to these things and it's certainly not the taxpayers' responsibility to fund a lifestyle that you can't afford.

I think a market correction is on the cards and it is not going to be pretty

A generation has got hooked on cheap money and low interest rates

They don’t teach financial stuff in schools and cheap credit is acceptable way to live

The Tally Man now wants paying back and it is going to be painful for a lot of families

How does it benefit anyone to lose their home though? That will inevitably cost the state money to house them and to pick up the pieces when their mental/physical health takes a battering.

My brother and sil are both primary school teachers living in the south east and are faced with loosing their home as the mortgage payments doubled. If they move they lose their support network and childcare.

I'm a single parent on a very tight budget, luckily I have a fixed rate for a couple more years but don't know what I'll do once it comes to an end.

Don't forget to allow for PIP, Child Benefit, Council Tax Reduction etc.I guess the £172 is maybe transitional protection following a move from legacy benefits. So nearly £3K a month off the state in total. Not many countries would award that amount of benefit indefinitely. Any rent shortfall can temporarily be met via a Discretionary Housing Payment and this fictitious person would also be high priority for social housing. So maybe not such a bad deal? Especially with any child maintenance on top

I think it's quite easy to say things like this when your life is proceeding as you'd imagined and you imagine the people struggling are some pampered middle class who have been taking the piss.

I, somewhat unexpectedly, started divorce proceedings in January. I, very unexpectedly, got made redundant in March. My fixed term ended in April and has spiralled since then and I can't enter a new term because the house is on the market. The housing market is what it is so the sale proceeds at a stately pace, and if it falls through, as they do, we'll be starting again. My mortgage has gone from £1200 - £1721 in that time.

I'm fine and don't (and won't) need government help, but life can unravel pretty fucking fast sometimes.

Might I ask you a question? What household income range would you say constitutes the 'squeezed middle'?

For all the smug boomers stating they struggled, they conveniently forget Family Credit (precursor to Tax Credits) and Mortgage Interest Relief At Source. Both substantially added to family income. Yes interest rates were higher but loans were much smaller, and the salary to house prices ratio much smaller. The situations are not comparable

@Flavourflava that's so true - I am sorry to hear you're going through tough times at the moment. I hope things improve for you ASAP.

I don't have an issue provided it's balanced by them sending me a payment every month for 15% of my rent

@Blackbyrd

I'm a boomer and I'm not smug.

We had no tax credits or family credit.

We lost a vast amount on the value of our property, to the point where we couldn't move from our one bedroom flat, as we were in negative equity.
Many thousands lost their homes. Even more were trapped and couldn't start families, like us.

Drop your attitude.

This thread is the usual peak Mumsnet clueless six figure salary type bull shit. People will their heads up their arse and no grip on reality

And the rapid nature the central wank is increasing rates is causing so much stress in people's lives. Andrew Bailey thinks it's ok just to simply say I know this will be hard for many. Yes they can increase but do it at a rate to allow us to see an impact of a rise. They are obsessed with an arbitrary 2% inflation rate. I've search for the answer as to why that magical number. Picked from thin air. What I do know is that rates will continue to rise. They are forcing the recession quickly through rate hikes but they can't get unemployment down. Yes that's their goal, hideous unemployment rates which will bring down the hidden theft rate to the magical 2%.

You couldn't even buy a studio flat for 2x mine and my DPs joint income and DP is a high rate tax payer.

Yep. And anyone else is a feckless layabout apparently.

Are you saying that people are are assuming that every house owner is on six figures, or the average mn poster is on six figures?

Because neither is true.

We've been kicking can down the road since 2008... we've now run out of road.

It's going to be painful for many, no two ways about it unfortunately.

Reckon on house values being -15% in 2 years time. But I think the lenders will extend terms to support. Those with a high LTV could find themselves in negative equity for a while.

If you listen to people on here the COL crisis doesn't affect them as they are on six figure salaries tinkly laugh but it has got a bit tighter and they've had to forego their weekly organic chicken from the farm shop.
I mean ffs being a home owner is a privilege? When you earn too much to get social housing but not a six figure salary what else are you meant to do exactly?

I’m a home owner and I agree with you completely. We shouldn’t have any help because it’s a privilege to be in this position- I know this because I spent decades stuck in poorly maintained rentals.

We have the option of downsizing or selling if the mortgage payments become unaffordable. It’s renters that I worry about though as they are already paying well over the odds for sub standard properties imo.

When posters are suggesting homeowners will be made homeless, it sounds like putting the cart before the horse to me.

Re-possessions will not necessarily be necessary, nor will switching from mortgaged to rented accommodation. All but those already living in 1-bed flats can downsize, surely?

We live in a tiny mortgaged ex-council house with a few years left to run on a fix, but could, if we were determined to remain homeowners and avoid re-possession and re-entry to the rental market, downsize. We wouldn't be homeless; the DC would need to share a room, DP and I might have to turn the living room into a bedroom, maybe we wouldn't have a garden, maybe we wouldn't love the area, but we'd remain on the property ladder, and have a smaller mortgage. Downsizing could be facilitated as a sensible option.

Ideally, banks will negotiate longer terms or payment holidays.

After experiencing a series of unravellings myself, you have my sympathies. I hope your house sells and your life gets back in track.

As someone whose parents lost their home in the late 80s, I don't think you can overestimate the human cost. My dad was made redundant from a secure job and couldn't find another. My parents ended up divorcing and me, mum and sister ended up in a council flat and my mum turned to drink to cope.

There are a couple of schemes in Scotland to help people in mortgage difficulty by buying a share of their house or buying the house and renting it back to them.

https://www.mygov.scot/help-mortgage-difficulties/get-help-from-the-government

Not if the market has fallen to the extent that you have negative equity, which is is what happened last time.

NewJob, what are you on about? We've got a joint income of less than 50k as public sector workers, I drive a 21 year old car. Still pay for childcare for youngest DC. House in same state as when we bought it as a doer-upper, as no money to do it up with.

Homeownership is absolutely a privilege and one which most who are having a shit time in the rental market would chew your arm off to enjoy. The fact that property is so utterly commodified in the UK ‐and that this has been actively encouraged by the current economic model‐ is gross.

They were talking about this on the news the other day and the experts were saying the govt must not do this. As it negates the interest rate rises which have been done for a reason. If the govt do this then inflation carries in rising. If it ain’t hurting, it ain’t working.

and for individuals who haven’t stretched themselves or can’t afford mortgages why on earth should they as taxpayers bail out people who have bigger, better houses?