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?

You put 5 kids through private school and gave them a house deposit Xenia and from your previous posts I'd hazard a guess that you earn upwards of £300k. I'm not sure anyone is going to be weeping tears for your lack of pension.

Your choice... a ridiculous one, but your choice!

I feel no pity for you.

If I had raised five children and given them the level of support that you have, quite frankly I’d be expecting one of them to take me under their wing and sell the bloody house so that you can put your feet up.

Faisal Islam on Twitter:

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I don't understand giving deposits to children who earn well. Why not let them earn their own money for their homes.

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

WTF are you on about.

I am from the Baby Boom generation and I am not on a final salary pension.

I am never going to be able to retire.

In the 90s we lost everything when we couldn’t afford the £2700 per month mortgage. Dh had been made redundant and I earned £350 per month.

We have them lost everything again.Firstly when Dh was finally diagnosed with cancer and the NHS refused to treat him so we ended up having to pay for cancer treatment and operations ourselves
20 months of living expenses and no income. Then just as we were starting to rebuild we lost everything because of lockdowns.

The thing is I don’t know anyone who retired at 50 or anyone who retired with a final salary pension.

I am one of many who paid into a pension but as the companies went bankrupt or closed down . All my pension payments are gone.

Stop thinking that if people were born in the baby boom era we are all rolling in money

"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."

FFS. This ill-informed bullshit again. Don't be so ignorant, @altmember

I'm at the tail end of the boomer generation. I don't know anyone on a final salary pension. No-one.

I know plenty of people who have NO PENSION AT ALL because their employer didn't provide anything. Compulsory pensions only started in 2018. But that doesn't suit your narrative does it?

I don't know anyone who retired at 50. Another teenage fantasy. Let's look at my siblings.

Dsis1 - retired teacher in her 70s - pension about £22k
Dbro - age 67 - accountant, still working full time.
Dsis2 - age 64 - Nurse, NHS for 30 years, now private healthcare, working part time. NHS pension about £23k
Me - 59 - still working full time - with mortgage
Dsis3 - 57 - still working full time

But you go on living in your little imaginary world if it makes you feel better. 🙄

Because rents are also sky high and even people who earn well have difficulty saving deposits?

WELL SAID @MintJulia . Additionally all of us 50+ have lived through recessions and high interest rates. So many families who went through the hell of having their homes repossessed in the 90's and others stuck for years with negative equity.

There were certainly boomer winners however they were primarily male, white collar, working in blue chip companies like the one I work in. If you were female with children you’d have struggled to work unless you had family to help as childcare was hard to find, plus there was no right to request flexible working and no maternity pay. I know women in my industry with broken service and pension records as they had to leave when they had their child as it wasn’t feasible to stay, males senior managers wouldn’t offer reduced hours, they’d have had to have returned quickly post birth and they’d have needed a relative to look after the baby. Again, I’m not saying there were no childminders and nurseries but there wasn’t the infrastructure there is today. So many obstacles.

the whole ‘cheap houses’ thing is over egged too. People have always had an envelope of money committed to their mortgage (I was spending 40% of my take home in 97) - what happened late 90’s on was the ratio of money spent on interest payments went down so the amount spent on the house purchase went up. Now don’t shout me down I KNOW that house prices have now gone beyond that envelope in the vast majority of areas, with London and the SE getting there much earlier than other places, I’m simply saying that looking to 1970 and saying I could have bought that house for 20k, boomers had it easy etc. is over simplistic.

https://www.theguardian.com/money/2022/oct/04/uk-mortgages-rate-fixed-deal-tax-u-turn?CMP=fbgu&utmmmedium=Social&utmsource=Facebook&fbclid=IwAR0OWtg3SLbBBuFmrtn_VxXqqrE4gYFNhaTnWsw4fZN7FmuXTqzlQCKnPmI#Echobox=1664897554

You know how some people say they're not interested in politics and give the impression that they think politics is a separate thing all by itself and nothing to do with them?

I I think the lesson from this thread and others is that we all need to be interested in politics, because politics is doing this to us.

You know how some people say they're not interested in politics and give the impression that they think politics is a separate thing all by itself and nothing to do with them?

I know some people are stupid. I guess there is a strong 1:1 correlation.

Between my DM and DF it was crystal clear that if you don't take an interest - and an active part - in how your life is governed, you can't really complain. Although it's been grimly amusing seeing peoples apathy being weaponised until there's fuck all point taking an active part.

Interesting isn't it how things have changed. The middle class world you describe in the past where women had no choice but to stay at home after children (working class women always worked btw). Now, women have no choice but to go back to work after children, either way, women have no choice.

You're probably better off saving to help you pay the increase as overpaying won't reduce it much unless you've nearly paid it off.

Pretty sure my parents weren't imaginary. They strung retirement out til mid 50's and were some of the oldest ones left after majority of their colleagues had already taken er or vr. Their final salary pensions almost put them into 40% tax. It was very normal for middle management.

I work in banking and some of this is irresponsible journalism causing panic, of course lenders aren’t going to drastically reduce their rates overnight, it’s just not practical. To avoid constantly having constantly have pricing meetings and to redo all documentation, websites, material both internal and external (which costs millions every time, consider how many times the BR has gone up since Dec 21 ) and to see how the larger UK financial and political markets fares over the next 6 or so months, they are going to be overly conservative in their pricing and lending criteria. They basically don’t want to lending money in form of mortgages, loans haven’t seen their pricing go up too too much. They don’t want to lending money, the feeling I got is that for the most part is that it’s irresponsible lending at those much higher rates, so if you are getting a mortgage at 6% you can unequivocally afford your monthly repayments.

remember the goal from BOE is to curb borrowing and basically trigger a recession to dampen inflation, that won’t happen overnight. The MPC are meeting again in November and December to see if the BR needs to be altered, it won’t come down, it may go up.

i can see discounted SVRs being offered in the interim if the fixes are unaffordable. It’s shit, so so shit and this government have a lot to answer for but try not to despair, it is the absolute last resort for the bank to seize a property and it’s not a desirable outcome for them, so they will 100% work with you to keep you in your house until this does rebound, and it will, probably not to rates around 1% but it will come back down. It’s just when.
its worth remembering that the last crash, 2018, the BR went up but it did come back down in a year

My parents were the baby boomer generation abd got completely screwed but the massive mortgage rate hikes. We nearly got repossessed it was so bad. I will say though that our neighbours at the time were able to but their council house for a tenner and made an absolute killer when two decades later it was worth 750k (we’d long since moved then into a tiny new build in a less desirable location). I can remember my father absolutely seething at that.

We have just remortgaged but are in the very fortunate position that our ltv is below 50% so the rates were still around 3%. If you’re near the next increment to bring down the payments I’d be overpaying as much as you can to get there

If prices drop % LTV will go up, for existing mortgages won't it?

@RagzRebooted yes I asked this on another thread. So the example I had was 300k on a 500k house is 60/40. House drops 20% then it's 300k on a 400k house which is 75/25.
Not sure where this leaves someone overpaying vs saving though.

Yes technically because you could lose the equity that you have in your property but the amount you borrowed has stayed the same, I’ve read figures of up to 10% fall in house prices but this is of course going to be regional because demand drives price.

if you are making over payments then you are increasing the amount of the property you own and thus decreasing your loan. Most mortgage providers allow 10% of your mortgage balance per year as a max.

That's an absolute cracking deal. My LTV is 25% and last week my lender was offering 3.7% (but I couldn't actually get it because there's a 6 week waiting time to speak to one of their mortgage advisors🙄). This week it's gone up to 5.1%

The decrease in value won't affect the mortgage until you need to do something (like when your current fix ends for example). But from what I've seen recently, rates don't vary that much by LTV, not until you get above 80% anyway.