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?

The intern at my Alma mater was outbid three times (eventually paid £900 for a room in z2 nowhere near the university) and he told me that the uni students are even moving to flat shares in z3 london suburbs where I live due to the shortage. When I was a uni student, most people wouldn't have considered that unless they were living with parents

Was totally standard to live in Z3 or Z4 in a flatshare when I was a student in London in 1998… nobody except the rich kids could afford Z2.

Changechangychange
Same.... students at ucl etc have always lived out in shithole houses in manor house etc. No living room cos someone's using it as a bedroom etc

There were deaths in student shit holes, one in Edgbaston specifically springs to mind in Birmingham where there Gas boiler I believe leaked carbon monoxide into the bedroom anyway there was a massive overhaul of student accommodation literally as I left university and a decision was made that purpose-built flats were the way to go.

I rented an ex council flat in a tower block in Camden with two other girls from my home country (we all studied at ucl/kcl). It was a 2 bed and the living room was the third bedroom. This was in 2012/2013 and I paid £690 for the master bedroom, my friend paid £790 for the living room and the last friend paid £600 for the small double. There was a dining table in my friend's room and we agreed I could eat there. It was pretty competitive even in my time but we still managed to stay in zone 2 and tbh our rooms were spacious. I had 2 wardrobes, a dresser, a double bed, a small sofa and a desk in my room so it was a pretty decent room. The intern I was talking to was privately educated so probably had rich parents but he told me he could not afford or find anywhere in camden which he would have preferred to his box room in caledonian road.

Edinburgh - priced out by airbnb

Side question - do universities still kind of organise student accommodation for their students when they’re out of halls?
When I was at university back in 1997 the student union used to basically publish a paper of all the student houses/places that were prepared to rent to students and you’d just find the ones that fitted your group size and ring around, see if they were free etc.
How does it work these days?

They don't, you have to organize it yourself. If you live outside the M25 (London university), you get at least one year in student accommodation but then for second year you have to find your own place.

So how do students find out where the student houses are? Is there a website?

Private rental. Generally you make friends and one of your mates finds the cheapest flat in your agreed area. Signs it's meant for students is that the living room already has a bed in it. Students don't tend to want to buy furniture so generally it must come with furniture. At first, I was going to rent a house with my friend (that I met in student halls) and three of her friends from her church group. It was quite hard to find a house in Camden for so many people at the time so we split up and then my coursemate decided to join us..the best case scenario is you have seniors who are graduating and then you can 'inherit' their rental.. I had quite a few friends whose parents purchased apartments for them in strand and Knightsbridge so they also rented out rooms to their friends...

Ok, so pretty informal. I was thinking of buying a property to rent to students in either Sheffield, Liverpool, Leeds or Manchester and am research stage.

I think most universities still have an approved private accommodation list. In fact they're generally a lot more stringent than they used to be. 25 years ago landlords just paid to get their property advertised on the list, now it's more of a fully accredited service where the uni inspect the properties and have all sorts of standards and requirements over and above the legal minimum.

I found the opening stats in this article quite eye opening: www.reuters.com/world/uk/uk-housing-market-may-face-perfect-storm-mortgage-rates-rise-house-prices-drop-2022-09-28/

The most recent government data showed just under two-thirds of 24.7 million dwellings across Britain were owner-occupied, with 8.8 million homes owned outright and 6.8 million owned with a mortgage or a loan.

There are more owner occupied households that are mortgage free in the UK, than there are mortgaged. That surprised me, as I'd always assumed that there would be more mortgaged than paid off.

Once again the baby boomers are coming out best on things financial (they're mostly mortgage free and insulated from interest rate rises), whilst it looks ever more bleak for the following generations. They got to retire at 50-55 on generous final salary pensions, and 20-25 year mortgages were the norm. Now it's work til 70 and mortgages of 30-35 years. Not to mention all the environmental/global warming issues they're leaving for us to try and sort out. If you think things are shit for the current working age generation, then it's looking even worse for our kids and grand kids.

And on top of that there's 9 million dwellings which aren't owner occupied - so presumably mostly privated rented or second homes. Guessing a lot of those are also mortgage free, owned by the boomers.

I’m a hospital consultant and couldn’t afford to live in Camden these days…. I think he’s being pretty unrealistic about student housing.

As somebody mentioned upthread, most UCL students are in Manor House/Turnpike Lane, or these days out in Stratford. Not in flipping Camden/Primrose Hill/Hampstead (and before somebody pipes up that Camden isn’t like Hampstead - it is price-wise these days).

Glasgow has the same problem too.

This was only 10 years ago! Its not just me, DH's ex grew up in the north london suburbs but had a bad relationship with her family, she was a UCL student and rented in warren street. I genuinely think at that time, it was normal.

I mean, you probably wouldn't want to rent an ex council flat, but I am not British and I don't really mind lol (was lucky to have a good experience living there). Due to that experience, I am looking at buying a 3 bed ex council flat in Highgate with DH. And i am not a FTB, already own a smaller flat in z3 north london but want more space and ex council flats tend to be more spacious. And in times like this, its better to minimize mortgage.

@altmember 50-55 was a typo, right? While people sometimes got to take early retirement in their 50s, often for health reasons, doing so would usually mean a reduced pension/lump sum to compensate for the expected increased payout time. 60-65 was the normal retirement age.

I think it really depended on where you worked, I joined the NHS 20 years ago and at that point pension scheme members could officially retire at 55 if they wanted. Ok they got less financially than if they waited until state pension age but lots of people were doing it.

It really was not normal for students to be able to afford private rentals off Charlotte Street in 2012. There are lots of student halls of residence around there, but private rentals were incredibly expensive. DH and my brother were both working in advertising/media agencies around there, and one of my friends who is a lobbyist for the pharmaceutical industry lived in a flat on Riding House Street.

I’ve just checked on Rightmove, and a two bedroom council flat in Camden Town itself (not Kentish Town or Archway) is just under £3k a month. Again, not really affordable for most interns.

Agree with prices in Camden. A colleague is related to an MP. MP has a property he lets in Camden - per room is £1000 per month ( and that is family ‘mates’ rates😳).

Re: the retiring at 50-55. It wasn’t the norm but it did happen. My own father was pre-boomer but he was leapfrogged in retirement by some boomers. From what I recall, there was a push late 80’s, early 90’s for teachers to go from 50. This freed up space for younger, cheaper staff. The pension would have been affected but it was a ‘good’ pension plus some ‘retirees’ carried on in supply or other jobs. Police - it is (or was) the norm for service to be 30 years. Back in the day, people may have joined the force without further qualifications so it was easy to reach 30 years service before 55 or even 50. Again, many got a job after retiring. Lots of executive cars I’ve taken over the years are driven by ex-police.

In my blue chip, years ago you could go at 50 but it would have a huge affect on pension. Now that’s not an option. Ten, fifteen years ago, redundancy deals at my work included offers of enhanced pension - you’d see anyone 50+ racing to get their name in. That deal is never offered anymore. You also used to be able to get retirement due to ill health relatively easily. Not anymore. Realistically that is only for terminal conditions now. Other blue chips had such fabulous pension deals it really was an option to go between 50-55. Sure you’d get less but still enough. This wasn’t the norm though. Finally, remember those ‘boomers’ were far less likely to have a degree. Yes, if they did it was free blah blah but relatively few people went to uni straight from school. That meant more people had worked 30 years plus by 50-55 than now, although some pensions required people to be 21 before they were eligible to contribute. For women, the retirement age was 60 so going at 50 or 55 didn’t seem particularly early. It’s all relative!

My FIL and lots of my friends parents retired at 50 on final salary pensions. It was very common back in the 90’s. Most of them started work at 18 and worked for the same company for the whole of their career. A different world to today….

No, not a typo. I know of loads of people who took early retirement or very generous VR in their early 50's. Generally middle management at blue chip companies. The ones that got bored then came back a year later as consultants on eye watering hourly rates (before ir35).

It might not have been the norm, but it was pretty common.

With regard retirement and general standard of living and how things have changed. A couple I know, both professional state employed jobs, two kids live in semi detached house outside of the south east. Both work full time, children in school, nice life, holiday abroad about one year in three.
Her parents, both worked in professional state employed jobs, detached house in the south east (my friend moved out of the SE because she couldn't afford it). Her parents had two children and mum quit work when they were born, went back years later part time. Holiday abroad every two - three years. Her parents both retired in their late 50s. Their pensions are MORE than my friends earn from their jobs after tax and deductions. And her parents live in a house my friend could never afford.

MY NHS sibling (doctor) retired at 55 last year. I am 60 and will work until I die as work for myself and just have a state pension and I still have a mortgage not least because I have helped 5 children buy a properties in the SE. Boomers are not all on the take.