To be more worried about mortgage rates than energy bills?

[IconicKitty]

No one is denying the energy crisis is going to bite most of us, but the mortgage interest rises are seriously worrying. And I think this is passing people by because they're on a fixed deal at the moment, which they locked in when interest rates are low.

My fixed mortgage ends next year, and current interest rates mean I'll be paying about £500 more a month. If this doesn't change before my deal ends, this will be much more dire than the energy crisis for those with mortgages.

It will affect renters too as landlords will put rent up once their mortgage increases.

@SafelySoftly its all very well saying that now but most people in their twenties and thirties have never experienced the high interest rates of the past. Mortgage advisors stress test it to an extent but never fully explained the possibility of it rising so sharply and quickly.
It’s like pre pandemic people criticising others for not considering there could be a pandemic when there’s been loads before. You live within your own time with your own experiences!

It's not like people have had much choice. Have to borrow to the max to afford to buy....

@SafelySoftly harsh when people from the BOE were saying mortgage rates wouldn't go up within their lifetimes

I think it’s because that’s when the rates are likely to peak.

And I think this is passing people by because they're on a fixed deal at the moment,

or a large proportion of the country are retired and don't have a mortgage

Surely you anticipated that mortgage rates were historically low when you worked it how much you could afford to borrow?

When we got the mortgage for the current house (borrowed 2.5x our annual income at the time) the woman at the building society told us they would happily have lent us double that amount 😱. I don't know if it's the mortgage lenders or the borrowers who are to blame for the situation where people get so overstretched on their mortgage. House prices are so overinflated in parts of the country there needs to be a readjustment so they become affordable but nobody wants to be the generation who don't make money on property.

I don't know if it's the mortgage lenders or the borrowers who are to blame for the situation where people get so overstretched on their mortgage

The sellers are also in the mix surely.

Clearly not. It seems that too many people have taken on debt they simply cannot afford.

I'm not sure if you've seen but renters are been affected the bbc panorama doc was excellent on this

Government intervention doesn’t mean subsiding peoples mortgages but it may mean asking banks to be more flexible by offering switches to interest only or extending the term etc. Standing by and letting people’s homes get repossessed is not good for the economy but more to the point, it’s simply unkind and reinforces the gap between the rich and the poor even further.

The only thing with the mortgages is lenders should have been building in quite a bit of slack to ensure people could afford it even if rates rose. Even though utility bills are rising, wage rises should help with that.

There will be a minority who are hit hard, no doubt, but there's been a need for some forced sellers to help the market correct for a while

It’s surely because people have been stretching themselves so much that house prices have got so ridiculous. Clearly there should be far more regulation of the sector if people aren’t properly advised that interest rates may go up and have been uncharacteristically low.

Standing by and letting people’s homes get repossessed is not good for the economy but more to the point, it’s simply unkind and reinforces the gap between the rich and the poor even further.

This isn't true because actually a) homeowners are relatively speaking, the richer end of the market & it protects them. High property prices mean high debt for landlords to service = high rent, its better for poorer people if property is worth less b) its not helpful to the economy for such a huge proportion of peoples earnings to go on rent. That money winds up in the banking/financial system, rather than circulating around local economies driving demand for goods and services & creating jobs.

If I understood what he said on his podcast it isn't that he is talking about using any government money for bail outs or anything, it is about letting people move over to interest only or extend their terms rather than reposes. He also made a good point about how fast mortgage interest goes up yet how much savings interest lags and the profit the banks are making from this.

It’s surely because people have been stretching themselves so much that house prices have got so ridiculous.

Low interest rates have inflated assets.

But it's hardly the fault of individual buyers. Once the prices are inflating there's nothing any of us can do about it. We borrow what we have to.

I work in mortgages. We've been stress testing at around 8% for years

Then they need to pay the price. No government intervention they have meddled enough in the housing market. Let them take responsibility for money they willingly borrowed from the bank. Interest rates are still historically low anyway.

And people forget that for many buying even at inflated prices was still cheaper then renting.

Then they need to pay the price.

Plenty of people have already paid the price. Look at wage growth in the country since 08, look at the investment in public services, look at house prices vs income ratios

I’m really worried about this too, more so than energy rates for my family personally as we somehow seem to be quite energy efficient. As a pp has said, rates do seem to be coming down a little - it will still be more for us than it is now (probably £500 a month which I’m very lucky we can afford) but I was seriously worried and losing sleep over how high it might get. Sorry to hear you’re worrying too.

This ‘they need to pay the price’ is bullshit. You’re trying to blame people for being born at the wrong time. When wages stagnated, house prices are sky high, you need two incomes to afford a house and yet if you have a child the cost of childcare wipes out virtually a whole income.
This whole generation of ‘big spenders’ who need to pay the price for their decisions would likely have been fine if born 30 years ago.
Im fed up of being blamed for being in a situation we couldn’t predict or control. A situation created by a generation who are far less affected by it with their solid gold pensions and no mortgage.

My fixed deal ends January. For some reason I took my eye off the ball on this and I’m going to get caught out now. So for now I’ve extended the length of the mortgage to the maximum I can ie to the age of 70. This I did online and it has immediately brought the monthly payments down. I will then fix a new deal before the next Bank of England meeting. Hopefully in 5 or 6 years time rates will be back down and I can overpay and bring the term down.

I mean 67 not 70

"Pay the price"? So what, we should be punished for paying the going rate for our houses? Should we all have stayed paying even more rent to our landlords? Would that be more responsible?