To think the amount available to borrow for a home is going to be slashed?

[SwanBuster]

At a fixed rate of 1.5% for five years, a 250k mortgage offer would mean paying back £1000 per month.

Let’s say that’s what a given family might be able to afford as monthly repayments. These were readily available until recently.

It looks like fixed rates are going up fast … if they hit 5% then for the same ‘affordable’ £1000 p/m payment would mean they can borrow a maximum of £171k.

And if affordability drops further because of other expenses (let’s say they can now only afford 900 p/m because of rises in other bills), then that drops even further to about 155k.

what do you think the impact will be? AIBU to think this is going to hit the housing market quite hard?

No, you’re not a broken record and thank you for posting this. I’m very sorry for your situation.

But this does confirm the likely effects. It’s either going to be an utterly stagnated market or price drops to reflect the new real affordability.

if everyone in your potential chain dropped the price, the weird thing is everyone apart from the one right at the top wins (proportionately you’ll all have to borrow less).

No Inflated price on my home either I dropped 10 grand to sell it

The problem with this theory is that whilst you’re absolutely right about people who are already in homes being fine at least until their fixed rates expire, the new entrants are already participating in a market with completely different lending circumstances.

And it’s transactions involving them that will set future prices.

We are incredibly stressed at the minute . FTB found a great house but top of our budget . We are going through the mortgage application at present and scared shitless the bank pull the rug .

The area we live in is full of elderly couples living in large houses. You can only get a house if they either die or go into a home. There a lots of big family homes full of single/couples, crazy. This is not even an expensive area just an average area.

Certainly none of the paying over the asking price things have slowed down here massively hardly anything coming on market either. I'm on the Kent coast

And unfortunately the three D’s - death, divorce, debt mean that there will always be at least marginal liquidity.

Don’t panic. If the bank reduces the amount it can lend, you and everyone similar to you are the marginal buyer. Based on that, well - the market is going to have to adjust ….

You'll also see a huge impact on the renting market.

If their mortgage payments go up and there isn't enough profit in it then landlords will sell up. This will create a shortage of rentals and in return higher demand, which will mean higher prices.

Most people already on the housing ladder will have options like extending their term, moving to interest only, or renting a room. But people who rent won't have these options and I really worry for them.

The housing market is one giant Ponzi scheme that is long overdue a correction. Sadly it will be normal people that will suffer though. Human rights like shelter should never be left to the ‘markets’

When DH bought our house 6 years ago he was lucky to have quite a bit of equity from his flat sale. He could have had a mortgage for 100k more than he took. We could not have afforded to pay that mortgage or even an extra 70k on the mortgage these days without some serious cutbacks in our life. We know a lot of people who did take close to the maximum. The only reason he didn't was because I was working at a law firm at the time and a lot of lenders were giving AIPs and then deciding at the last minute that it was unaffordable (after buyers had spent hundreds on getting to the point of exchange).

I’m less worried, actually about this.

Rates going up are very much the landlords problem - both ethically and morally. Absolutely the landlord may have to sell up, but only to owner occupiers or other investors who can afford to take the new market rate for rent.

And the market rate for rent is set by incomes ( + benefits in some circumstances). These amount of income available that is allocatable to housing is set by that. The landlord can ask for whatever they want, but if it can’t be paid then 🤷🏻‍♀️

i think massive rent arrears are more likely, and landlords will have to bear the brunt if they have over borrowed to fund the asset purchase. I don’t think they can expect a bailout this time.

This is me. At 30 and living in the south east commuter belt.

Screwed over with tuition fees to get a job that you wouldn't have needed a degree for 20 years ago. Then screwed over with high rent and low paid junior roles. Then screwed over again with insane house prices in the SE.

The selfish part of me wants houses prices to go up because it'll help with out LTV and being able to survive. But the other part of me realises that I'm just pushing the issue onto the generation below me who got an even worse deal.

If only this had been dealt with before it got this out of hand.

Basically in terms of rentals I think we have reached an inflection point where landlords attempting to raise rents to cover their costs is going to be politically unpalatable given the other inflation in basics.

No matter how much lobbying is done, it will be seen as indefensible for a labour or Tory government to help them out. Thus those who need to raise rents to cover their mortgage costs will simply be painted as ‘bad business people’ who didn’t properly assess the risk of their business model.

Apologies if this has already been mentioned but the requirement for a stress test has been removed, not to say lenders can't keep it but it's not mandatory.
It will be the next PPI won't it - did your lender not make it clear that the rate may go up and check you could afford it? Claim here.........

And unfortunately the three D’s - death, divorce, debt mean that there will always be at least marginal liquidity.

And there's a lot of inequality, a neighbour sold in 2009 for 200k under "market value", lots of neighbour outrage about it. However he had 600k of equity so it didn't matter to him

I was browsing on right move earlier, to try and gauge what our house is currently worth (about to remortgage) and there are a lot of extremely beautiful £1million + houses on the market in our town, on very desirable roads. They hardly ever come up usually. I think potentially some people with bigger mortgages are worried about riding rates/losing their equity and are selling up.

We are in our early 30s and have two children, one is a teen and both have special needs so we really need a 3 bed as they won’t share.
Our parents were asking us how much deposit we’d need and to look into how much we could borrow etc we found out to get a mortgage for a 3 bed we need to be earning around 60k!
Together right now between us we earn 40k, it really looks like we are going to be stuck paying through the roof for our rental forever :(

Funnily enough I’ve noticed exactly the same thing round here - a lot of 1m+ homes up for sale in a village that’s gorgeous and where I had never seen one for sale in 4 years!

Funnily enough I’ve noticed exactly the same thing round here - a lot of 1m+ homes up for sale in a village that’s gorgeous and where I had never seen one for sale in 4 years!

the thing that always strikes me about such homes is they look ‘worth the money’ - an average 4 bed detached for 550k very close by very much does not look worth that, imho

The only people that benefit from high house prices are boomers, landlords and bankers

That simply isn’t true. Anyone who’s ever made a profit on a house - and that’s just about everyone who’s owned one in the last 30 years - has benefited. Why boomers? Unless you sell your house it’s fairy money and you get no benefit from the notional increase in value.

We have been private renting for 10 years (catchment area for best schools) and wanted to buy whisky saving over the years. Was at about 9% deposit so interest rates weren’t great plus kept saying if the rates increased etc affordability - also lots moved from London to my town and you’ve not seen prices like it - so we’ve been priced out of our home town ( Always been pricey but estate agents really cashed in with the young family’s from London with lots of equity - needless to say with the news we are now not even going to - on hold again now as darent but at maximum house prices and rates - so upset but going to see What happens in the next 6-12 mths.

Whilst not whisky - although I need one!!! 🤣

With the exception of the equity release brigade, who have been using their home as a cash machine ….

although even they may soon find they aren’t exactly benefiting.

although even they may soon find they aren’t exactly benefiting

They never did. The rates of interest are usurious and they’re fucked if they need a care home.