To think people with an average mortgage are still far better off than their renting counterparts

[Theinventoroftoasterstrudel]

I met with a friend today who was moaning about having sorted their remortgage this week and how their payments have increased by £250 a month due to interest rises. She's now paying £1000 for their 3 bed semi and I do fully appreciate how stressful knowing this remortgage was due has been for them this past year and how painful suddenly paying so much more is. I'm not in any way trying to minimise that for my friend or others with a mortgage in this position.

However, I rent and we live in a very similar property in a similar area to her which I had been paying over £1100 for for the past 2 years and a few months ago this increased to £1250. When we were told about the increase we looked to see if there was anything we could possibly find for cheaper and everything comparable was actually closer to the £1400 mark.

I feel like the news has covered the impact interest rises are having on home owners virtually every day since the mini budget last September but renter's have only had a cursory 'and rents will increase due to landlords passing on their increases' at the end of the odd story. And with zero acknowledgement that rents were already so much higher than mortgages anyway and still are. It's not like renting has suddenly become the better option; it's still utterly impossible!

Am I being unreasonable to think there needs to be more outrage and support for renters and not just those needing to remortgage.

As a homeowner I agree with you. During our first few years owning we paid more in the mortgage than rent for the exact same properties in our street. If things went wrong in those years it wouldn't have been good. However our mortgage started to go down which we knew it would and obviously rents are only going up.

Yes they are always costs with ownership and we have had to shell out between 2 and 4k each year over the last few years but this wouldn't bring us near the rental cost for our property now as our payments have reduced a lot. We had the option to extend our term to keep things nice and manageable, renters don't have this option.

You are quite right that maintaining a similar lifestyle level as a renter is much more expensive if doing it by renting than on a mortgage. Yes renters are being seriously impacted.

The reason behind it is that mortgage payers have managed to convince the banks that when the chips are down and costs rocket and house prices drop, the bank is unlikely to have to deal with a default, the mortgagee will find a way to keep paying, may lose their equity if the house price drops by more than their original deposit, but will make it through.

People who are renting because they can't yet get a mortgage are in that position because the banks have not yet been convinced that when the worst of the financial storms come along, that household will stay afloat. It's shitty because it means that the most vulnerable people are the least protected but banks are not charities, they are trying to make a profit and they are allowed to do so by only doing business with more affluent people.

If we as a society want less affluent people to have access to the same security as more affluent people there needs to be a much stronger safety net, guaranteeing that if unemployment or ill health or financial disaster strikes, then the state will cover the mortgage interest - with a ceiling based on the reasonable cost of a basic size of home for that household size.

The mortgage-paying household is committed to the long-haul and has to make savings elsewhere when the going gets tough. The key phrase in the OP was "we looked to see if there was anything we could possibly find for cheaper and everything comparable..." - renters have the choice to downgrade to something not remotely comparable if rent becomes unaffordable. It's not a nice prospect obviously, but downgrading from a basically ok 3 bed semi in an ok area to a 2 bed terrace or flat in a shitty area is a relatively simple option to access if you have no other choices

If a mortgage payer loses their employment they aren't entitled to help with housing costs and may have to sell up, potentially losing tens of thousands in destroyed equity if they have to accept a low offer in order to get a quick sale. They will probably end up in the same shitty 2 bed rental but they will have fallen further to land there.

Of course more affluent people are in a better position than poorer people but we don't live in a socialist utopia. "Poor people struggle to make ends meet" is not news. "comparatively wealthy people realising how deep in the shit they are" is news.

When the election comes we all need to hold our politicians to account to make sure that whatever policies are introduced to sort out this quagmire, the effort is spread evenly across all sectors so that everyone gets lifted up a little bit rather than the "squeaky oil" more affluent middle-income people getting more help than the poorest.

We've just spent £20K on absolutely essential maintenance (something we could in theory have been prosecuted for if we hadn't done it). Within the next few years, the house will need a new roof (it's already got a small leak with a bucket under it in the loft), which will probably cost a similar amount. That's on top of regular expenses like boiler servicing and insurances.

I'm not denying that overall it's better to have a mortgage as you end up with an asset. But I don't think it's cheaper at the time. Also you have to wait until you can afford to fix stuff or else borrow money. I would definitely be on at the landlord to fix the roof now if I were renting.

a colleague is renting a two bed house in my area for £1050. So still cheaper than a mortgage.

There are a minority or home owners in particularly unfortunate situations but most are still far better off than renters. In our case, even with rates going up when we come to renew we’re looking at paying the equivalent of renting a similar property but

.. that will be after years or having the benefit of paying much less than if we’d been renting

• having the security of not having to move house every year or 2 with all the upheaval and expense of fees, setting up a new home, potentially even childcare/school/job changes etc that can go along with that
• have friends that despite good references and income haven’t been able to secure anywhere within local area
• not having to worry when we’ve changed jobs/reduced houses/been on maternity leave that we won’t meet the eligibility criteria for renting
• being able to fix accidental damage from children in your own time
• not having your house and garden inspected every 6 months and constant supervision from afar
• being able to let a friend etc stay a few months if you need to
• not having to somehow build up a pension pot needed to fund an extra 8-10k on top of your living expenses
• not having 5 years security of knowing exactly what you’ll pay
• far better quality when shopping for houses (I was astounded at how nice houses for sale were compared to those for rent when we were first looking to buy)
• often option to downsize and clear much of mortgage, renters can save money downsizing but without advantage or their equity, the savings can be more minimal

There are a minority of homeowners with exceptional circumstances who would of been better off renting but the majority of homeowners are in a significantly advantaged position compared to renters

This! Absolutely right.

YANBU, OP.

Some real fantasy economics on this thread by homeowners claiming they have to regularly replace windows, kitchens, boilers etc. As a tenant, I've nearly always had to live with out-of-date kitchens, inefficient boilers, ageing windows etc. They're hardly comparing like with like if they imagine all rental properties are kept immaculate and in good nick - at least as a homeowner you can get the leaking roof or damp problem fixed when it needs doing, not have to live in horrible, dangerous conditions for months or years while waiting and pleading for the greedy landlord to fix the issues, or give up and spend thousands on moving and deposit costs to move to another probably equally shitty property.

All while spending considerably more on the rent than the mortgage interest costs (which is the relevant comparison).

And there are costs beyond financial. The stress of renting over many years has been enormous and left both me and dh with stress-related illness (asthma from untreated damp in a previous rental also had a big impact on my health). Having to find somewhere to move to at 2 months' notice because the landlord wanted to move family members in. Never having security and worrying about how you're going to pay the rent in old age. And no, most renters don't get any help from benefits at all - both dh and I work full time and all our rent comes out of our earnings. It's usually cost upwards of 40% of our combined earnings. Much more than a mortgage would.

This is not true for everyone. Many homeowners can't afford to replace roof as soon as it's needed, many live with old boilers because they are saving for new one. Many live with out of date kitchens. I did for years before I could afford to change it. Let's just say the previous owner was into pulling door off and not repairing leaks under sink...

Now dangerous conditions is a different matter, that should be absolutely fined to hell by councils. But not every renter lives in dangerous conditions for months or ever. I never did and I rented for over a decade.

Renting is shite, there is no argument against that but it’s not always the case that renters are paying more than mortgage payers. That’s just the exact comparison between you and your friend. I was renting a nice house for £950 up until I bought a much worse house and my mortgage payments are £1300. But I decided to suck it up for the security and long term gain. There are downsides to owning such as the cost of maintenance etc. But not having the possibility of being kicked out of your home at any moment was the main point for me.

Yes, we intended to replace the knackered bathroom fairly swiftly after moving in but then found we had penetrating damp so the money saved for the bathroom on new gutters and repointing. We couldn't afford to replaster, so 5years on our bedroom walls are still water stained and crumbly. We couldn't afford to replaster because not long after the penetrating damp, we had to replace the flat roof on the bay window, as it leaked. We could then no longer use the shower as it blew the electrics and unbeknown to us was leaking below the floor. When the electrician came to fix the shower it showed we needed a partial rewire (we knew from the survey we needed a new consumer unit but thought the actual wiring was fine). We've still got holes in various walls and channelling out of the plaster where the rewire was done and we're only just getting fixed because we absolutely need to sell the house. Other essential maintenance we've had to do includes a new boiler, replacement velux window, replacement floor, joist and ceiling under the leaking shower, replace the toilet downpipe and connecting drain, replace fencing, fell a tree and replace 2 doors and 1 window.

We knew the house was a project, but the survey didn't pick up the gutter, repointing, roofing or electrical issues and didn't identify the leak under the shower. None of which was covered by insurance either.

Our mortgage is £2k a month and rent on the house opposite (which is identical in layout) is £1450.

Um. Sure, if they let you stay. But more likely they will end the tenancy and increase it by whatever they feel like.

And the cap you spread of is RPI. So 10% recently, not exactly minor.

As an ex renting homeowner I completely agree with you, I do wonder whether some of these people who have needed to do a lot of work bought listed/old character properties or houses which needed a lot of doing up in the first place?? I doubt most renters are fortunate enough to live in beautiful character properties and if it’s a case of having bought somewhere quite run down then surely the homeowner had factored that in. E.g. saved 30k on the sale price so actually over the course of the mortgage was better off even with paying for those 20k of repairs. You really are completely right, I just don’t think many people who haven’t had to rent (privately) while bringing up a family etc really have a clue. Think they think it must be like renting a nice holiday let on a longer term basis when actually the quality of most rental properties is a world away

This is exactly what I said upthread. It is currently cheaper to rent than to buy when comparing like with like, namely a 100% mortgage. The only way to pay the same as my comparison upthread is to be on an interest only mortgage, which is the same as renting but with additional costs of owning the house and massive risks. The house would only start accumulating equity at the point of houses continuing to rise in price. Any sale before this time would be at a loss when factoring estate agent and solicitor fees.

People citing that their neighbours mortgage is half their rent are not factoring in the somewhat hefty deposit / equity in the property. Our mortgage is 1k a month but we owe less than 200k when it is worth around 800k. The monthly rent would possibly be around 3k. At the current base rate of 4.5%, it would costs 3k a month to service an 800k mortgage on an interest only basis.

For those, who don’t understand what I mean by interest only. This is just renting the 800k or whatever amount for the total value of the house. In 25 years or 40 years time, the person paying an interest only mortgage would still owe the original 800k and are therefore in no way paying off the debt and paying towards owning the house.

I have done all 3, rent, mortgage & landlord.
Everyone is having a hard time at the moment my personal mortgage has gone up nearly every month. Rental mortgages which are at higher rates than personal ones (possibly a quick & basic indicator of why rents are higher) are coming to the end of their fixed term.
I haven't put rents up since before COVID as I have sitting tenants but they are now paying £200/£250 pcm less than the market rate. In one I have a tenant who treats it well, in another they have caused circa £10k worth of damage - but evicting people is not something I take lightly however it is a real issue as workmen don't want to go there to complete work as it's not 'nice'
As a tenant I paid my rent & yes it wasn't cheap but once it was paid I was done. However I have made choices in other areas of my life for the last 30 odd years that have financial implications both positive & negative, marriage, children, jobs, cars, phones, holidays, full time/part time, areas to live. Things like, whether to get the bus or the train to work, train shorter but more expensive. I have also taken financial risks some paid off, some didn't but I am responsible either way.
A large part of people's circumstances can be down to choices for the majority of people like when to move out of parents home & in with a partner.
But whatever your choices/circumstances are, the percentage everyone is paying on fundamentals has risen

Sorry I appear to have written an essay!!!

Then you're comparing apples and oranges.

The relevant costs are mortgage interest only. The amount you spend over that on paying down the mortgage is irrelevant because that is building up an asset. And how much you choose to spend on repayment monthly will depend on the length of the mortgage - so someone aiming to pay off a mortgage in 10 years will pay (by choice) much more than someone choosing to pay it off over 30 years. But they will have the benefit of owning their house outright in 10 years and then paying nothing more! So it's a way to build up equity NOT a sunk cost.

Whereas the renter will still be paying rent forever, with rental payments only likely to increase, and no build up of equity.

How much of the £1300 you currently pay monthly is mortgage interest? How much of it will be in 5 years? 10 years? 20 years? Without acknowledging this your statement is highly misleading. You chose to buy as you say because you recognise that it will give you greater security and long term gain. So stop pretending you pay more overall by buying. You don't. That's precisely why you chose to buy!!

I found your post interesting so no worries it was lengthy

Above to @UggyPow

I totally agree with you and I've never been a renter. Once mortgaged, you have the ability to fix for 2/5/10 years. That reassurance and piece of mind of fixed outgoings are extremely useful. As a renter you are at the mercy of the landlord and the rental agreement. If you are able to agree a long term rental with a cap on increases is a slight comparable but I'm not sure how common this is.

Renting is worse than owning. Only benefit is flexibility of moving quickly. So probably 1 pro vs 99 cons.

If I’d had a 1.5% mortgage, I would have saved money on the side for the rainy day when my mortgage was no longer 1.5%. And if I’d had 1.5% for 5+ years, I sure as hell wouldn’t complain about it increasing.

The only people I feel slightly sorry for is people that took 2% deals out Summer ‘22 for 2 year fix (which was probably a bit silly) for 4-5x their salaries. Everyone else has had enough “good times” to make up for the bad.

95% mortgages in Summer ‘22*.

No one is saying home owners are not better off in the long term once the mortgage is paid off. But that doesn’t help now when they can’t afford to pay the mortgage that has suddenly shot up. A huge number will be having houses repossessed so they also won’t have anything to show for it either.

Being mortgage free in your 30’s isn’t exactly the norm though is it.

My mortgage takes me to 66.

We own and our mortgage is currently fixed and about £500 a month. We live in London. To rent an equivalent home would cost us £2500 a month. Dh has a good salary but we'd be really really struggling if we rented. I don't know how people are managing. I feel so so grateful that we own our house