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.

This is so true.
15% interest rates in the past are just not comparable. If you stress tested to that level no one would have bought a house over the past 10 years.
House prices are always going to be dictated by current interest rates and salaries. People had to take out mortgages that were cheap.
The only way that this would not end up as a bubble bursting is if rates rose slowly in a managed way. But it is the speed of these rises which is frightening.

You’re not wrong per se, it’s never anyone’s fault (except the government), but my godmother had her home repossessed in 1990 because she couldn’t afford the rate rises, was in negative equity and just had to give the keys back. It was shit then and it’s shit now. The whole comparison of who had/has it worse isn’t massively helpful and achieves nothing.

YANBU
Totally agree with you OP.

Bought my 1st house (with DP) in mid 90s. My salary was £14k and house cost £60k

Equivalent pay for grade I was on then is now £32k, so increased nearly 2.5 times. So the house should now cost about £150k going by those figures.
Last house sold in that street for £240k, so a 4 fold increase

It's just the usual race to the bottom. Same as the "you are turning your heating on at 2 degrees? in my day we had no heating, no walls and no clothes and were perfectly fine in -15".

Most people will have done what was sensible for them to adequately house their family. It is NOT the same situation as previous high mortgage rate periods where housing was substantially cheaper. The rate increases have also happened really fast, faster than anyone could have expected.

That said, I remember all the doom and gloom of the crach in 2008. Everyone thought everyone would be bankrupt and homeless. Some people ended up in precarious positions, and for many more it was a time of tighetening belts, but eventually things evened out. I hope - given that this is caused by someone very specific - that that will be the case this time as well.

but I blame the government for allowing house prices to rise to stupid levels. For not doing something 20 years ago.

plenty of people have been delighted by the growth & made to feel rich & that they are now a millionaire on paper.

My aunt wants to downsize next year & is in a right tizz. Her home is worth about 1.5m & the ones she's looking at buying are 800k. She doesn't want to move now as she's going to be "poor". It doesn't make any sense.

Err, it's exactly the same.

I took out my first mortgage just before the attack on the £ and our exit from The ERM. Due to politics, the rate shot up in one day, I found myself unable to pay an extra 5%. Such a large rise was then unprecedented.

On that occasion it was sorted quickly, John Major was infinitely more competent than Kwaeteng, but hopefully this will be sorted too when our idiot chancellor does a uturn and then falls on his sword.

You have my complete sympathy, I know exactly how frightening it was

Exactly. I am a bit too young to have been affected myself, but there were a LOT of people in financial difficulties at that time, I was an estate agent a couple of years after the 15% and we had plenty of repossessions on our books. It was bad then, let’s hope this time it’s doesn’t get to that level.

This. They always, always have to find a reason that they were worse off and had it harder, even when facts disprove it. I don’t know whether it’s because they don’t want to face up to the mess they’ve created for working people today or sheer pride, but it’s maddening.

The difference is people can’t afford houses to have repossessed to start with. So it’s actually worse.