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?

DD and her Fiance could have borrowed £380k, instead they borrowed £250k, which is less than 3x their joint income. Thankfully with every house over £300k they looked at, they didn’t even get a chance to offer as they went over asking straight away (during covid).
They compromised and went for a house that needed a (little) bit of work in a cheaper location but close to a great Primary school.

@Damnautocorrect I agree but people love to make money on property (even through very few benefit from it)

So much depends on circumstances, if your a FTB with a high LTV, be prudent & future proof as much as possible.

Someone with a lot of equity, no more childcare costs, secure jobs, savings can be a little less cautious.