To think impending higher interest on mortgages is not comparable with when rates were higher in the past

[Shortjanet]

I keep reading on here that people should not have taken out mortgages without "stress testing" them to interest rates of 7, 8, 9, 10, whatever %. The implication is that people have been borrowing irresponsibly to buy their homes. It doesn't take into account at all the relationship between house prices and earnings which, given the low interest environment for years has meant they people have had no choice but to stretch beyond what would be affordable at higher rates if they wanted to buy a home. In a lot of cases people would have been much better off paying a higher interest rate on a much lower house price than the situation we have now. This is not the fault of the average mortgage paying homeowner.

We are lucky that our last fix ended six months ago and we remortgaged with a ten year fix then, by which time we will have almost paid it off. I really feel for people who will need to remortgage in the coming months.

It’s deflecting the incompetence and ineptitude from the Tory government to ordinary people. As if everyone is reckless and irresponsible and not the Tory government.

This talk of get a 2nd job, downsize etc is just nonsense. We sold our second car. Got the fuck all sum of £250.

Of course YANBU, it’s all about the income multiples!

YANBU the sheer size of the mortgages is the issue not the interest rate. Bloody stupid media coverage all round

Its so shit. The pain will be felt by average people who've worked their arses off to buy average homes in average areas on average wages. Then they'll be blamed for having taken out mortgages they can no longer afford, through no fault of their own.

I've seen many parroting it on here too. "Well you should never have taken out a mortgage you couldn't pay at x%" What the hell were people supposed to do? Hop in a time machine back to where houses were affordable at x% rates before buying?

Too many idiots believe this

First house was £30k - managed 12% interest payments no problem

Current flat is £480k - no, we will not manage even 8% interest rate as funny enough our salaries are not 14 times what they were in the 90's

Exactly. If the bank tell you they'll lend you £250,000 at 2.5% or whatever and all houses in your area cost at least that amount, you're a bit unlikely to go 'no thanks, I think I'll stay in rentals (which cost more than the mortgage) just in case interest rates go up to 10%.

How are people supposed to buy houses under those circumstances?

People have borrowed the amount the market and lending practices dictated. As individuals we have had zero control over this. And yes, if you'd made a decision to not buy ten years ago in case of huge rises you'd have spent way more on rent. If you bought 18 months ago on a two year fix and still have relatively high ltv to could lose out hugely on what is essentially a gamble over which you had no control.

Suddenly the stupidity of ever increasing house prices championed by many becomes apparent.

We need to storm parliament and overthrow the incompetent, cheating, heartless cunts who caused this unnecessary and entirely self inflicted chaos. They can reverse the poxy budget and windfall tax the energy companies. Then things will settle. The bloody banks can also take some of the slack as they still owe the taxpayer billions.

Imagine the chaos we’d have suffered under Ed Milliband…🙄

This.

Unfortunately, we have a complete misalignment of incentives all round, such that there isn't enough of a coalition around dealing with the problem before the shit hits the fan.

We should have engineered a long, slow real-terms drop in prices via large and consistent building and above all a loosening of planning laws. We needed huge numbers of new affordable homes coming on stream, keeping prices reasonable.

We didn't, because nobody cared enough. So now we'll run the risk of prices collapsing under the weight of enormous interest rate rises and growing defaults. Bad for absolutely everyone.

It’s 2007 all over again.

I’m worried for my DD, &250k mortgage and fix ending next April, she’s currently paying 3.75% and the 10 year fix has just risen to 4%. It’s a month until she can lock in a fix and she can’t afford the ERC to end her current fix early. If rates go up again within a month then that 4% could become 5%.!

I'd be interested to hear from some who have voted IABU.

I did stress test my mortgage at 10%. Knew I couldn’t afford it.

Then I stress tested my rent if my landlords mortgage was 10%. Also couldn’t afford it.

So I could have bought a house and risked homelessness if rates went up to 10%. Or I could have not bought a house and risked homelessness if rates went up to 10%.

I did the first one. Who wouldn’t?!

I think that up to about 5 per cent is to be expected over the lifetime of a mortgage. I do wonder if perception is skewed by those who have borrowed in the last decade.

When I took mine out it was a 0.5% tracker over the base rate and in 2007 that rate was 5.75%.

I continued to pay at the same rate as the lower rates seemed artificial and unlikely to last.

The speed of increase is a concern but we are still well within a very normal range over the last 30 years.

Expecting to stay under 3% probably foolish, not being prepared for 8% quite understandable I would say

So fed up of people saying "well we had 15% interest when we were young so I don't know why you are complaining about 6%" when IT'S NOT COMPARABLE.

Yes the interest rate was higher then. But you didn't need to borrow at 10 x average salary to buy a house in the first place.

It's just typical of the boomer "I'm all right Jack" attitude that has ruined this country.

My friend’s dad used to tell her that when he bought his first house interest rates were 15% and she didn’t realise how lucky she is blah blah blah. She pointed out that in the 70s you could buy a house for 3 x your income and keep a family on a single wage. It’s just not comparable at all. Now we’re all forced to buy or rent on 10 x our joint salaries and we’ll be in big trouble if interest rates go up that much. I’m really worried about it.

People also have much higher outgoings. Broadband, phone contracts, nursery fees, massive utility bills incoming. To go back to living like we did in the 70’s would mean no life at all because even stuff that everyone could afford, like weekly cinema visits, or fish and chips, now cost a fortune.

I think that the people who go on about the 15 % days being as bad/worse either don't understand percentages or have no idea how much houses cost these days. Either way it's best to just ignore them.

YANBU op. I hate that stupid boomer attitude. They have no idea how much better off they were.

I don’t think anyone blames individuals who borrowed the new normal amounts and indeed needed to do so to get on the property ladder.

but from a maths point of view it’s the same. If not worse now from an affordability pov due to cost of living.

but I blame the government for allowing house prices to rise to stupid levels. For not doing something 20 years ago. This has been a ticking timebomb for decades.

15% of 30k is 4500
6% of 350k is 21000

House prices have increased several times the rate of wages.

it is very true that housing costs were a much smaller part of take home pay in 60-80's at least and they have risen substantially since then; but back then food and fuel were proportionally more of wages relatively speaking food and clothing is now much much cheaper even with recent rises. Which is why we had a lot less clothes growing up apart from school uniform ( and most people managed with 1-2 trousers /skirts and jumpers and 2 or 3 shirts not 5 of each; most people had about 3-4 outfits max a sunday best/ party outfit and play clothes for holidays weekends, most kids wore the same coat all winter whether for school or out and about and the same with shoes 1 pair plus wellies in winter and sandals in summer plus slippers and trainers or pumps