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?

[trolleybusses]

@SwanBuster I am not sure that it's about nice properties as much as the fact that salaries in the city are on the up and that's a lot of people in London. Two bed flats a la 60m2 in naice areas are currently being advertised for 700-750k. Now I'd like to think they will fall - however, my house in a less naice area where non-city professionals live costs 750k and I reckon the house might fall more than the two bed flats. The squeeze on anyone who only got 3% payrise is huge this and next year. Inflation is high, interest rates going up. My friends in IT, pharma, consultancies all got quite large bonuses and pay increases this year.

The big problem is affordability outside London will drop. People on MN who talk about 500 pound mortgages will disappear

[giffyg]

i thought London flats haven't performed so well due to the pandemic. Lots near me sold for similar prices to the last few years.

[tithead22]

I took out a 5 year fix on a 20%ltv in 2018 - speaking to my mortgage advisor it looks likely that my payments will go up even though I’ll have 40%ltv when I remortgage shortly 🙃

[Nothappyatwork]

@SwanBuster

There is very likely to be emigration kicking in soon, at least for recent-ish immigrants who haven’t already got a ‘stake in society’ (I.e. a house).

The UK economic situation is not looking good, to put it mildly - as is the general global one too, to be fair.

But if you were an immigrant with no financial ties and it’s a choice of a shitty situation in the Uk, or a shitty situation back home, which would you pick? I think it will be increasingly the latter.

As far as buy to let owning the ‘first rung’ on the ladder - you’re right - they own a lot. But, as already mentioned, they are the ones with the debt, not the renters. Many of those who entered recently may find it is going to be increasingly tough for them to justify owning said asset when there is a high risk of needing to dig into other parts of their income to subsidise their mortgage payment if renters have their incomes squeezed beyond the point where it was feasible for them to pay.

I think you underestimate what back home looks like for non-economic migrants.
As for renters not paying their rent if they squeezed. if their on benefits the landlord will just apply to receive their benefits directly should arrears mount up to more than two months so that fixes that issue.
So many landlords have left the market in the last two years I believe that availability for rentals is an absolute nightmare, nobody is gonna risk getting kicked out by not paying the rent if they’re working and able to pay.

[PrinnyPree]

Hey OP we have a house and are itching to sell to get something bigger (plus problems with a neighbour), but where we live in Cheshire is absolutley booming and with mortgage rates rising I can't see how we can do it now.

Really kicking myself that we didn't move when we were first looking in 2020 but with a baby on the way and Covid we dragged our feet, would've probably got a 10 year fixed rate too since they were so low at the time. Our house is a bit of a squeeze but I suppose with utilities projected to go through the roof it makes sense to batten down the hatches. I hope the housing market does return to some semblance of normality though, at least we have something so can't complain too much. X

My husband is also convinced there'll be a bust soon as he's been reading a few articles about the 18 year boom and bust housing market cycle, right now it's following the same trajectory of going absolutley bananas and everyone scrabbling to buy because they're worried it'll go up even more (which usually proceeds the bust) so the bust might happen a little bit earlier than the forcast 18 year period at this rate.

But if I could really predict the market I'd be a millionaire so who knows 🤷‍♀️ (I was convinced both the 2016 Brexit vote fallout and Covid in 2020 would burst the housing bubble) 😅

[trolleybusses]

@giffyg they haven't done well but are still marketed at 700-750.

However, rise in rates and drop in prices doesn't mean house crash i.e. stagnation or somewhat drop maybe but people will still payout a lot per month. Affordability doesn't have to get better.

I guess boomers will be ok with houses being less expensive but better for their pensions and savings. Or maybe they will rebel once their hypothetical house value goes down.

Tories are already targeting private wealth, look at their policy regarding care...yes, medical care will be capped but not hotel fees i.e. you still pay out lots and lose your house. I don't know how many people have noticed the subtle difference and small print.

[SwanBuster]

@Nothappyatwork

I think you underestimate what back home looks like for non-economic migrants.
As for renters not paying their rent if they squeezed. if their on benefits the landlord will just apply to receive their benefits directly should arrears mount up to more than two months so that fixes that issue.
So many landlords have left the market in the last two years I believe that availability for rentals is an absolute nightmare, nobody is gonna risk getting kicked out by not paying the rent if they’re working and able to pay.

I’m pretty well traveled, and pretty well covered in terms of social circles that I know what their homes look like and what non economic refugees are increasingly thinking about the Uk. Many have already seen economic disasters through fiscal incompetence. They probably recognise it faster than the average Uk citizen.

And I think you may have underestimated the bullets the renters have in their chambers (move back to parental home could be an option for many, downsize to a HMO or lodging for single people etc), and their willingness to pay rent above everything else.

Taxes, food, water and energy come before the landlord on the list of priorities for most - which is as it should be.

[NotMeNoNo]

When we took out our first mortgage in the early 90s I checked repayments up to 15%, you can do it on any online calculator.

[SwanBuster]

But we’ve discussed this before and I know you’re a buy to let landlord. When those get eviscerated, I’ll be handing out the popcorn.

[giffyg]

When we took out our first mortgage in the early 90s I checked repayments up to 15%, you can do it on any online calculator.

and?

[Nothappyatwork]

@SwanBuster

I’m pretty well traveled, and pretty well covered in terms of social circles that I know what their homes look like and what non economic refugees are increasingly thinking about the Uk. Many have already seen economic disasters through fiscal incompetence. They probably recognise it faster than the average Uk citizen.

And I think you may have underestimated the bullets the renters have in their chambers (move back to parental home could be an option for many, downsize to a HMO or lodging for single people etc), and their willingness to pay rent above everything else.

Taxes, food, water and energy come before the landlord on the list of priorities for most - which is as it should be.

I think you’re very wrong they are I was in a situation last year where I was renting and paying out over half my income in rent before I bought a house and given how dire the situation was in terms of being able to find something else I would’ve gone without food/heat to pay rent to avoid being forced to leave. Taxes at source not much you can do about that. I believe its not optional 🤣

So you are suggesting that refugee numbers will decrease? Interesting

[giffyg]

with today's house prices rates only have to get to 6/7% to have the same impact on people's disposable income as double figure rates did in the past

[Nothappyatwork]

@SwanBuster

But we’ve discussed this before and I know you’re a buy to let landlord. When those get eviscerated, I’ll be handing out the popcorn.

If you’re referring to me with that comment I rent to my daughter so I’m pretty sure my investments are safe as houses as they say.

[giffyg]

However, rise in rates and drop in prices doesn't mean house crash

I never said it did

[giffyg]

@Nothappyatwork why rent to your dc?

[judithkerr]

@giffyg agreed, yes rates don't have to go up by much to have an impact. The only question is what will the impact be. A crash i.e. better affordability or 100% mortgages and 35-40 year terms as standard and people getting used to paying more for their accommodation and fewer holidays and treats. Also are we in the 90s or 70s - will wages go up or not?

[Nothappyatwork]

@giffyg

@Nothappyatwork why rent to your dc?

I owned the property already in an area that she wanted to stay in but I didn’t so given that the mortgage was absolutely buttons and it would cost her a lot more to rent in the area it was just logical that she would take over the house. I am risk adverse and massively under leveraged. I could work 20 hours minimum wage and cover all my outgoings. Hence I have absolutely no skin in this game whatsoever.
but having seen the way the markets been propped up for the last 23 years I don’t believe they’re about to allow that to slip now.

[giffyg]

Why not just help her onto the ladder though or gift her the property?

[mumda]

Lending has been insane. House prices are insane.
Negative equity ahoy!

[Nothappyatwork]

@giffyg

Why not just help her onto the ladder though or gift her the property?

Why should I do that ?
Nobody gifted me a property or helped me onto the ladder.
I have more than one child are they all gonna get a house ?

[Grintyphop]

@giffyg

There was a theory that in 10 yrs or so there would be a glut of larger family homes on the market (boomer generation dying) which would suppress prices. Combined with higher interest rates who knows.

We are boomer generation but only in early 60s...

[giffyg]

because the vast majority of dc can't buy without help & I assumed you could afford it. My parents didn't have help but they could afford to help me so did, it didn't cross their mind to not help because they didn't have help.

I have more than one child are they all gonna get a house

or they could all just get a share of the one you have, are they all getting help with rent?

[Nothappyatwork]

@giffyg

because the vast majority of dc can't buy without help & I assumed you could afford it. My parents didn't have help but they could afford to help me so did, it didn't cross their mind to not help because they didn't have help.

I have more than one child are they all gonna get a house

or they could all just get a share of the one you have, are they all getting help with rent?

Yes the others are getting assistance with uni halls and potentially yeah that is the long-term plan the share of the rent from the house will be split between them if somebody else takes over it or if it’s sold obviously eventually it comes to than one way or the other but now I don’t feel the need to assist them onto the housing ladder they are too young. Either way though it’s been a very good investment.
And for all moaning about house prices then that’s one of the things that’s causing the major inequality, not everybody has parents that are able to gift them deposit etc. if all the parents butted out that would level the playing field wouldn’t it ?

[Flaunch]

The housing market is obscene. My 90 year old house has appreciated in value from 200 to 375k in the 6 years we’ve owned it. It’s completely unsustainable and as as awful as it will be there needs to be a ‘crash’ .

[giffyg]

And for all moaning about house prices then that’s one of the things that’s causing the major inequality, not everybody has parents that are able to gift them deposit etc. if all the parents butted out that would level the playing field wouldn’t it ?

absolutely but as you say the long term plan is to help them & it will come to them one way or another so you not going to level the playing field are you?

I was lucky that I'm a Londoner & my parents didn't want me paying off someone else's mortgage so I could live at home rent & bills free to save a hefty deposit.