Mortgage payments of less than £1000 a month are a bit of a thing of the past

[Chillisnaps]

Was chatting with someone I know earlier who bought their 4 bed house in late 2020, and they are paying back £750 a month. We are currently buying a much smaller, cheaper property yet we will be paying a few hundred a month more.

If you bought your house decades ago, low house prices mean you’ve been lucky enough since to gain significant equity.

If you bought 3-5 years ago, although house prices were rising your mortgage rate was likely to be incredibly low.

It’s a catch 22 now.

On a 200k property over 35 years you will be paying around the region of £1000 a month.

In most parts of the country, 200k doesn’t buy you a lot. In parts of the south it would get you nothing. Up north it might buy you a 2 bed, but then you’re paying £1000 a month (minimum!) for a small flat or house not suitable for growing families. It’s unlikely to gain in equity at the rate properties used to and you have to find the cash to move, as well as have the available funds each month to cover the repayments on a more expensive property than this. It might not be possible if having kids has affected your earning potential, or you have large bills such as nursery fees.

What is the answer? Surely something has got to change? I have no idea how anyone younger than me is going to be able to buy their own home and think there are a lot of people who are mortgage-free or halfway into the term who are completely oblivious of this.

We purchased our home in 2002, we a large deposit from an inheritance. We are now mortgage free.
When the time comes, we’ll sell up, downsize and gift our children a substantial lump sum to put towards a property. They will also benefit from our life insurance policies in time.
I would imagine many families have similar set ups.

Up north it might buy you a 2 bed, but then you’re paying £1000 a month

In my area it gets you a 4 bed house!

Prices will fall if people can't pay it.

But 'up north' there's plenty of places where £200k will buy a 3 bed semi in perfectly acceptable areas so it's not a given that family houses are completely out of reach everywhere. This is in commuting distance of Leeds and other cities so not necessarily places with no jobs either.

I'm in South Wales, bought my home in 2016 at a cost of 85k.

My house is 4 double bedrooms, 3 bathrooms and has a driveway and I pay £370 a month mortgage, although this is still at a very good fixed rate of 1.8%.

I will be mortgage free on 15 years or so.

'up north' (whatever and wherever that means) you could easily get a 4 bed semi for less than 200k

This is what I mean. It’s nearly ten years on. I bet your home has gone up by 25%-50% in value and rates have tripled.

Depends where you live, where dd is living it's more like £500 for a 2 bed, you can't generalise

I've got a three bed semi and it's £530 a month mortgage up north

I think you’re being unrealistic about houses in the north.
I bought my first house in late 2022 with only a 10% deposit and my repayments are £650. That’s for a 3bed detached in a decent area.

Totally get it!

Our mortgage on a 3 bed detached is less than £1k and always has been, even on a 4.54% rate 5 years ago! BUT the same house is now worth circa 70/80k more than when we bought it in 2018.

If I go back to the time when we bought the house in terms of ages/careers/wage we wouldn't be able to afford this house. So people in the same position as we were in 2018 have to go for a smaller house/flat for more money than we paid for the house.

It's inherently unfair (and it doesn't cost me anything to admit that as a fortunate person already with a mortgage!)

What’s your interest rate on the repayments?

Thank you - exactly this! Crazy to think that hardworking people with your jobs couldn’t afford the same standard of living now.

I believe it varies greatly across the country.

We bought 22 years ago, but only a 2 bed, we moved 6 years ago to a 4 bed while we had a lot of equity we still more then doubled the mortgage due to local house prices. Our mortgage until last year was around £750 but since last year had gone upto £1300. Thanks to interest rates, we had to restart the loan term when we moved so still have 20 ish years to go on our mortgage. We are hoping to pay it off early as we are saving, but it won't be early enough to help DC's onto the property ladder I'm afraid.

I'm hoping for a serious correction in the housing market, especially in high cost areas, as I don't know how some can now aford to get a mortgage here now.

£200,000 locally would buy a flat, not even a 2 house and it would probably be a 1 bed.

Where in South Wales? I’m in Cardiff and bought a £300k house in 2017! Needed upwards of £100k worth of work too.

My mortgage is currently under £1000 a month but when we remortgage in a few months this will go up sadly.

The north is a big place. In my bit of it you will get a house but you won’t get a garden and it may not be in the nicest area. Which for £1k a month you would have liked to have thought you would at least have a garden.

it won’t change op until a lot more houses are built. I have noticed that where big estates are going up it is depressing the house values in that area like for like. Houses still considerably over £200k however.

Yes the country needs to solve the housing issue in some bits anyway.

I think it's often felt like catch 22 for FTBs.

We were "lucky" to buy years ago but we paid nearly 6x what our friends had on a similar house a few years earlier. I seriously considered holding off because houses looked so ridiculously overpriced at the time. Our mortgage got up near £1000 too, 17 years ago, when that was a hell of a lot more money than it is now. On an absolute dive of a 60s terraced house, miles from anywhere, with fire hazard polystyrene tiles on every ceiling.

Your choices are jump in and start swimming, or stay renting. It's often very hard at the start, whether you feel it's due to house price rises or interest rate rises or cost of living. But over the years it eases a bit. Each generation might feel they have a perfect storm which makes it uniquely hard, but it's been hard for lots of different groups, for different reasons, over the years. The thing that helps everyone is time.

We were very lucky for a period. Our mortgage was less than £150 a month (interest only) for our flat- our interest rate was 0.3%. That will never be the same again.

A large inheritance for a deposit is fortunate but most definitely not the norm.
Let’s hope care home fees don’t clean you out before your children get a penny.

We have a two bed terrace with garage, drive and garden and we pay £360 a month. We bought in 2016 for 60k but house prices in our area really haven't changed much.

I think fewer people will own homes in future and there will be more corporate landlords

This country has been through an unusual period where home ownership rates have been high, but it's not the historical norm.

4.02%

Yes i agree with this. I think corporate landlords will be very soon.

I bought my small two bed in 2019. I'm paying £489. About half the price I'd pay to rent it. (East Midlands)

What’s your repayment rate? Things have changed hugely since.