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.

Negative equity and forced into a SVR rate of 7.7% isn’t paltry! When your 2.4% deal comes to an end. That’s the issue!

Well, no.

Renters (of any generation) < Z on property Ladder < Y on property ladder < X on property ladder < Boomers on property ladder

I’m sorry you got caught out in this way.

What did you buy the property for? Presume it was 75% mortgage, 20% HTB Loan, 5% deposit.

What is the property worth now? Assume you bought 7+ years ago? As HTB interest doesn’t start until year 6, and increases annually, you said it had increased by £60?

This. Let's stop the comparisons and the race to the bitting

Sorry, £50/month.

£600 a year? On a loan that started at 1.75%? It can realistically can only increase by 0.2-0.25% per year? So, £50 = 0.25% increase? Ie 2% x 1.12 = 2.25%?

So, if you’d borrowed £100k HTB Equity, the interest would have been £2000 per year at 2%, and it’s now £2250?

i don’t get it

We bought the house 5 years ago. HTB is interest free for the first 5 years and then starts being paid. Ours starts in July. We’ve worked out it will be around £60 a month. We were paying nothing before so that’s the ‘increase’ I mean.

Property was bought for £267k, 75% mortgage, 20% HTB and 5% deposit yes. Zoopla tells me the house is now valued at £230k. Neighbours recently sold there’s for £215 however so think it might be a little overestimated. Zoopla doesn’t take into account an ongoing legal battle with a large piece of land behind the houses that means there is a waste ground being used by travellers and rough sleepers while this is ongoing and so it’s now a less attractive area to buy.

Ours won’t achieve full value as we had a major leak recently and haven’t been able to fully repair the damage due to costs. Plus we haven’t been able to afford to decorate so new build white with 3 children after 5 years looks very grubby. I think we would be lucky if we got £200k for it right now.

Paid less of the mortgage than planned as my partner was furloughed during covid and we took a 6 month mortgage break during this time. So by the time HTB take their 20% back and the mortgage is cleared we walk away in debt.

I suppose it is a question of whether houses are viewed as an investment or place to live.

As an investment they will probably will be pretty poor at first, but time will probably deal with that, provided the swingeing interest rate increases that are coming are serviceable to allow people get to that point.

The issue with IR rises is always the delta. Someone who is entering year 6 is not only having to cope with the large base rate rises, but also the phasing in of the interest rate on the government equity loan simultaneously (you probably don't need me to tell you this).

The real issue is for people who bought these as starter homes with the intention of moving onto bigger places - because my guess is that they are stuck for 10-20 years to ride out the NE.

In about 2-3 years time I think HTB will be held up as a prime example of why the government should not involve itself in markets like this, and indeed why it doesn't usually.

Agreed!

We had a full vision in place of enter year 6, remortgage at a similar rate. Our earnings should have been higher at this point (but covid put a stop to that) so we could add the help to buy loan into the mortgage and pay it off that way.

Ah that makes sense.

So the equity loan has been adjusted to reflect the price fall?
ie if you think it’s dropped 25%, then the equity loan is adjusted accordingly? Right?

So if it started at £53,400, it’s now £40,050?

Threads like this are so frustrating. Life has on the whole got worse for everyone other than the super rich as a result of 13 years of this government. They love it when we look to each other to ‘blame’ rather than shouting about the actual issues.

Pretty unrelated but zoopla is so much less accurate than it was 10ish years ago. Our house sold for 50% more than the zoopla estimate. We were shocked.

Apparently smaller properties are in demand just now because many people are downsizing due to financial issues.

It's the constant moving that worries me with renting.

Everyone we know who privately rents has moved in the last twelve months. Not usually from their own choice, but because the LL is selling or gas out the rent up too far.

It really worries me that so many children are growing up without a garden, and without pets and having to move all the time. It's not my idea of stability.

@MidnightMeltdown house was bought ten years ago so not that long ago really.

It's a long time in terms of house price growth though. London house prices have doubled in the past 10 years

😮How much? Does he live in a castle or something?

I had a new boiler just over 2 years ago, cost £1,300. I had the 30 year old bathroom suite replaced at the same time, cost, £5k all in, but I concede that wasn't an actual repair, it was functional.

In 2020, I had to have the windows and doors replaced ( £13k). The year before that, new soffits, facias, guttering and downpipes, plus re-felting the roof on the bay window - £2.6k (and that was cheap - next cheapest quote was nearly £4k).

I had a leak under the sink at the start of this year, emergency work to stop it was £200+. Then a proper fix was another £150. Then I needed a new kitchen tap, £140, and the annual boiler service was £110.

I now need a fencepost replacing, and I can't find anyone who'll come out and just do one post - too small a job, apparently.

Three rooms, plus hall/stairs/landing, desperately need redecorating. It seems bloody endless, there's always something that needs doing and it's always expensive. And I'm too old and decrepit to go getting up ladders and shite myself.

Fourth post on thread sums it up…

Everyone we know who privately rents has moved in the last twelve months. Not usually from their own choice, but because the LL is selling or gas out the rent up too far.
We had moved nearly every 2 years when renting- my 15yo has lived in nine houses, if you look at our list of addresses it looks like we were under witness protection scheme😅

Tbf people on here kept wanting the landlords to sell. Loads are so... It should ve Yay?

Transitional period. Rent will stabilise.

Huge immigration + landlords selling (meaning house exchanges where properties were empty for months) = spike in demand.

Both winding down.

Flat in my building came up today, reduced. It’s on for the same, maybe slightly less, than I was quoted for a similar one, when I chose mine, 18 months ago (my rent hasn’t increased in that time).

I totally agree OP. There is even a petition out for people to have their mortgage paid as a salary sacrifice so they dont pay tax before mortgage for fucksake! I think it is shit that people are paying more for an asset that is now reducing in value, given that actual house sold prices have gone down (asking prices have gone up, but they are not selling at that price), but try paying for something you'll never own! It is a bit childish. If you look back through history home values, disposable income and interest rates have been very much cyclical and interlinked. People must have known that very low interest rates and skyrocketing values were unsustainable? If they didn't, they probably should have.

There are lots of schemes to help homeowners, but not renters, so the wealth divide persists. That said, I have been very down about not being able to afford a deposit in recent years, but now I'm glad I'm not tied into a mortgage with falling home prices and increasing interest rates and high inflation.

Haven’t you heard of the term, buyer beware?
You have to research schemes like Help to Buy a lot before deciding whether they are right for you or not. They are a con, unfortunately, though a legal one. They do suit a small minority of people, though.

I don’t tell renters not to have children. People can do what they want but actions have consequences and blaming government won’t get you far.

Yanbu I'm so grateful that we have a mortgage - we pay £794 a month (so less than £400 each) but to rent this same house would cost us around £1450 a month which would be almost my entire salary gone!

Having a petition out for something is very far from it becoming legal and that salary sacrifice scheme to help repay a mortgage sounds highly unlikely to ever become a reality.
I wouldn't say there are lots of schemes to help homeowners - which ones are you referring to?
Of course there are some schemes to help people buy property like Help to Buy - already discussed as only for the desperate or Shared Ownership (likewise).

I have to say I agree with you here. "help to buy' was a total misnomer and was really about helping housebuilders. And most people who bought "help to buy" houses paid over the odds for them.
And most people in the property industry would agree with your view of the scandalous lack of accountability when it comes to issues with new builds.

That said, next time you make a big decision it's definitely worth a good read on Mumsnet first as I know that I (under a different name) and many others, were warning about the huge risks of help to buy new builds.

But you have been very unlucky, for almost everyone home owning is by far the better option. And I imagine you know that really and will be very hesitant to actually sell up

How come she owns while you rent ? You made different choices in life. If you want to own then you need to find a way to make it happen. I think both scenarios have their pros and cons.