To be terrified about mortgage

[melodypondisasuperhero]

We finally managed to get our first mortgage last year and now this is happening. Our rate is 3.09% which runs out in August, currently the follow-on rate is 5% but I imagine this will go up several times before the end of the fix. We could manage 6%, probably just about 8%, but any higher than that and I really don’t know.

AIBU to be terrified? Or am I missing something?

I think that’s how it was explained, anyway.

That’s how it was explained to me years ago. Once the pot of money at that interest rate has gone, the deal is pulled.

Just your last paragraph. Do you have any evidence of this as to me this is scaremongering again on top of your previous comments on interest rates
You must work in the industry to have such knowledge. Can you share a source?

Utter nonsense, one’s employment status does not dictate the ability to get a fixed rate. It may impact their scoring, but, utter scaremongering.

If you are under notice if redundancy, then different. Lenders do not have a crystal ball to foresee companies laying off.

stick to facts please

Just to say last spring I looked into redundancy protection insurance for my mortgage. Unlike in years gone by this is no longer available. Anywhere.

So 6% might be do-able this year. Next year?

If you're working in an industry vulnerable to currency fluctuations then security might not be so good. Thats most UK industries.

I have no expertise, I'm just repeating things I've read/seen on tv/ been told by someone who knows better than me.

This article from last week informed many of my comments.

news.sky.com/story/interest-rates-are-high-enough-to-dampen-demand-and-cause-real-financial-pain-for-millions-of-households-12703187

verdant. That’s an interesting article. Thank you for linking.

I have no idea what the answer is to the future, especially given the fact that historical rates on average list 5% as an average.

I’m in Australia and basically over here, if the mortgage is for your primary residence, if your circumstances change and you can’t pay, the bank can’t make you sell, as long as you’re making some payments on the mortgage.
i assume this is because the government doesn’t want to take on the responsibility of housing people who can’t pay their full mortgage but can pay something.
It makes banks more conservative about lending as they basically take on the risk of you not paying.
I was working in a bank in the U.K. in the 1990s when people were in negative equity and it was a nightmare for everyone - the banks would prefer that people can stay in their houses and ride out a storm paying something rather than having the huge expense and hassle of bringing eviction notices and selling houses that may not be worth as much as the mortgage on them.
Keep this in mind - banks can be negotiated with and they don’t want you to lose your home, nor do they want the bad publicity of making families homeless.

Front page of tomorrow's Express:

This! I work for a bank (one of the big 5) in product and it’s incredibly undesirable for them to repossess houses as the banks will basically own lots of property no body can afford to buy because of interest rates and stricter lending criteria.

What Chris hare is referring to is people selling because they think they don’t have a choice sort of like a lot of people panicking and moving their mortgage over the past few days

I’ve been telling people this for months and they haven’t wanted to listen the aMount of steps and hoops at the bank would have to go through to repossess.
I have been in this situation in a divorce eight years it took them to even get to the point where they were talking about repossession and that was only because I started to be an absolute cow and refuse to pay anything towards the mortgage because he was being an arse. But literally we hadn’t even got into the court date stage, eight years of me paying I would say 60% of the mortgage payments whilst we settle the divorce.

The media are obsessed with this type of reporting

Exactly, plus it’s the banks commitment to ‘responsible lending’ they set their acceptable income multiples and affordability criteria, imagine if natwest or Barclays started repossessing homes left right and centre, that would result in mass people switching other products from the bank, current accounts, savings, FX, loans, credit cards etc. Banks suffer hugely from bad press and reputation damage and it affects uptake of their products, it’s even more of a concern with neo challengers in the market place that won’t be tarnished by this

The banks need to lend responsibly agreed

but playing devils advocate, banks only need a fixed level of capital to be solvent - they themselves borrow at the SONIA rate (formerly LIBOR)

so banks need money full stop and can’t operate at a loss in the long term can they? Worst thing would be a run of the banks on top of that

Agreed having a bunch of distressed assets is not what a bank wants but then again that’s exactly what happened after the financial crisis and there were a bunch vulture funds in the waiting who bought those assets at discount and started flogging them off

I’d like to think that all of the regulatory constraints since the financial crisis would prevent a similar scenario from arising here - our banks are a lot more robust and cautious now than they were 15 years ago - but who knows

Repossession of the home is always the last resort, obviously it can happen that’s why secured lending (mortgages) is far less risky for banks than unsecured (loans, credit cards etc) but I think reputationally if all the highstreet big banks started repossessing houses because they’ve set the interest rates on mortgages unaffordably high after years of high borrowing and low rates, they’d haemorrhage customers, especially profitable ones (students, new to work, pre retirement customers) aka the ones they desperately try to attract through switching incentives.

also, the base rate is only 2.25% it’s been a very drastic step for some banks to put up their rates to as high as 6% (nationwide have on 80% ltv) looks like they don’t want to lend right now, as previously they were content with 1% profit margins

I do you think the other thing that people need to know is the credit cards and unsecured debts can be turned into secure debts by the courts so that’s the area you need to be really careful with don’t wrack those up with living expenses.

to somewhat quell my own panic, I looked up the base rate from the last crash in 2008, it did come back down within the year, so whilst I don’t personally believe we’ll be seeing rates under 2.5% for a while, I’m hopeful it won’t be as ludicrous as it is right now

It's always worth talking to your lender. I am helping someone through my job who cannot meet her mortgage payments due to temporary ill health. Bank have been good, giving her payment holiday for some months.

LOL. They won`t be able to sell, unless it is proper knock down price, because the market for those flats is looking at a much higher monthly mortgage rate than even a couple of weeks ago, and good luck raising rates into a recession. Young people will just go home to parents if they can, expect loads of empty rental in city centres, it is happening already.

I think it does depend where you are. In our city there’s a huge huge shortage of flats and especially student accommodation. People may change the demographic to whom they advertise their flats to but ultimately demand is there. This may change over time but I can see it immediately falling off a cliff.

So can I.

What city is that that is short of student accommodation? Most cities are littered with the stuff.

Liverpool

@DeadHouseBounce www.manchestereveningnews.co.uk/news/property/manchester-university-students-accommodation-crisis-24904327.amp

Is that you Truss?

Tone deaf as usual..

People are scared. Some çannot afford that rates their providers have actually quoted. Couple this with other rising costs.

Can't wait to get you out.

I give you till Christmas.

Above comment directed at this.