To think no one has a right to make money off their house

[Laughingstock1991]

The general consensus among financial commentators this week has been that the housing market has turned. Interest rates are still going up and are unlikely to come down for a few years. The low interest rate financial experiment that has been in place since 2008 has ended and it’s unwinding is going to be painful. The housing boom was based on cheap credit.

My mortgage is likely to go up about 400 a month. Lots of commentators reckon we are in for a big fall in house prices. Good thread here:
https://twitter.com/EdConwaySky/status/1668987423643119623

What pisses me off is the absolute assumption made by some people (like my friend today) that the government should use public money to bail out mortgage holders. Most people were stress tested on their mortgage- I was- and yes it’s going to be tough but do I think public Money (renters money) should be used to bail out mortgage holders- fuck no! The Lib Dems have raised this also today.

House equity is unearned wealth. There are no guarantees. We have been through a boom and now it’s going bust. Hopefully sanity will return & housing will be seen as a home again- not an investment. Its not a ‘market’.

And I say all of this as a homeowner who is going to have to pay a lot more. I want everyone to be able to afford a decent home- not just those with money.

I don’t think that’s unreasonable!

It’s an investment, like a savings account, but you live in it; do constant work on it, and spend lots of money on it.

Jesus. Read your post back and then call me melodramatic again. 🙄
Million quid- what are you talking about?
Fair enough if you have saved and paid the bills that way but I wasn’t really talking about only you.
I meant the millions of people who do fall on bad luck and take out of the system.
Its a fact that 51% of people take out more than they put in. Fact.
When you have never taken out, only put in and then fall on bad times through no fault of your own, and then told tough shit, well it’s not great really is it? Sounds like you of all people should know that.

Why should they? They already pay a lot of tax to own a second home!?

Not enough.

This.

My generation has been perpetually shat on. The early 30s now. Graduated into 08/07 crash with jobs scarce. Things started to look up. Lots have worked hard to save deposits and buy. Others haven’t and have travelled the world, or spent money on living in London, partying, booze and drugs. Then we had COVID, then we have these interest rates, this col crisis. Right as we are starting families. 2 years ago when I fell pregnant with our child it looked to be ok. Not perfect timing but comfortably doable. Now it’s crazy. If there’s a crash I might just think fuck it. Why bother anymore. I am a third way through my working life and will have nothing to show for it. May as well just go on benefits and live off the system. The grandparents can gift anything required for the kids and they can inherit and skip us. Time is the most precious thing. Not wasting away all my time with my son for nothing.

Rearrangement and restructure is what's needed. A PP mentioned pensioners in high value homes with private pensions receiving a state pension. They'll be getting more besides, like my own DM. Her house will be worth 500k, she has a great private pension, receives the state pension (which she freely admits she does not need and gives it to charity) plus a free TV licence and help with fuel bills. Why not make these means tested and direct the savings elsewhere?

Then there's people in social housing with extra bedrooms. Scrap the bedroom tax and move these people to places with the exact number needed. A spare room is a luxury, not a need and that goes for everyone, renters and owners. Frees up houses for families. The expectation that a social home is a home for life needs to change to an expectation you will be housed according to your needs and this will mean moving at some point.

I'm a homeowner and mortgage free. House was 40k as it was small and in a less salubrious area. These choices enabled me to pay it off in 8 years and I'm proud to say it is now worth a whopping 80k! So when it comes to people in massive places, far larger than they truly need (not want), I do think bail outs take the piss somewhat. I'm happy to see a 2parent 2dc family in a modest 3 bed getting help, absolutely. Same family in a large 5 bed in a pricy area though? No way. They should really downsize. Help should be for those who have exhausted every way to help themselves.

Pensioners can claim pension credit to top up their income if its lowish, which can include housing costs.

Lol

And what would have happened to those houses if landlords hadn't so generously bought them to rent out?

BTL is just another thing which has helped push the cost of housing up so much.

Help to buy, BTL and the ridiculous stamp duty holiday, along with low interest rates have caused a massive housing bubble.

The government will not be bailing out mortgage payers.

1. it would counteract the whole point in interest rate rises.

2. interest rates have been abnormally low since 2008, the rates are never going back down to those levels.

So where do all the people who can't afford to buy live in your brave new world?

I feel awful for what is coming for anyone who is about to dip into negative equity and be pushed into unaffordability when their current deals end, repossessions and evictions, a huge spike in homelessness all on the cards.

That will create a sweet spot for those with deposits saved waiting to get into the market as house prices drop but the human consequence for this benefit isn't something that can be ignored.

It will also create a huge supply and demand issue with rented property as people lose mortgaged homes and seek rentals for potentially the first time in decades. Landlords will put up rents to cover ever increasing interest rates and because they can as demand outstrips supply.

The only people who will benefit will be those who are mortgage free with no intention or need to refinance or sell. People who may likely be sitting in family sized homes with adult children who have potentially already left home... Which again causes a supply and demand issue for that type of house.

The next 5-10 years are going to be difficult for a great many people.

On the whole if the alternatives are

1 - support people’s interest payments on their mortgages so they don’t become homeless
2 - have many more people try and take up rentals that are apparently unavailable anyway and end up paying for whoever is homeless to live in temp accommodation while also funding paying private landlords rent (likely paying the mortgage for someone along the way)

Then I’d probably pick 1. It’s likely to be no more expensive overall and may actually be cheaper.

I have no particular skin in the game personally. We have a mortgage but it’s for less than 2.5 x our joint salary at the end of our fixed rate in 2027 & we have investments that would offset almost half of it & I have relatively wealthy parents who would help so we are in little danger of not being able to pay our mortgage.

We pay around £25k in tax/ni between us and very recently paid another £30k ish in VAT getting our house extended, reroofed, replacing kitchen/bathrooms/boiler/ electrics etc. I’m pretty sure people like us are just about “the taxpayer” but on the whole make a minor contribution compared to those on very high salaries. Still I doubt many of those people would particularly object to helping with mortgage interest more than helping with rent, paying for temp accommodation etc.

If making loads of people on mortgages go into negative equity would actually help the overall housing market be better for people starting off then I can see it’s not the end of the world but I don’t think it would particularly. Maybe the answer is that if you can’t pay your mortgage the government is allowed to pay the lender the capital remaining without any penalty and they then part own your home. They rent it to you at a reasonable rate and after a period of time you have the option to either buy it back from them at current market rate or to sell your portion to them at current market rate. If they end up owning it then it either becomes social housing or the return from it is ringfenced to continue the scheme or to pay for other new social housing. It’s not that simple I’m sure but I think we do need in general to just address the lack of social housing as if there were plenty of it that would likely help address both rents being too high and spiralling house prices.

Another point, how much are all these hotels costing that we are putting people in because we simply have no bedsits or accommodation.

If you have children, the council will pay your mortgage. Never mind the government. The discretionary housing fund will help you to stay in your home because the council are the ones that will have to deal with you on their doorstep with your bags. And quite simply, they can’t.

Exactly, it's not unearned wealth. And lots of us do it to have a property to pass on to our kids one day, and it is purchased with 100% earned wealth from our jobs! The value will go up and down just like any investment or interest gained via, say, a savings account. Therefore if it increases in value it is earned.

An awful lot of families with 300k (at least ) mortgages just to buy a 2 or if you're lucky bed starter home are going to find their mortgages becoming unaffordable. From 2 to 6% that's about another £1000 a month. In interest. In my town we're talking more like 500k with a ten percent deposit for a 3 bed semi. Who is going to house those families when they can't afford their mortgages? It's going to be brutal. I'm already resigned to the fact we will have to move in a few years to get the mortgage down before we need to remortgage again. But who knows if we will be able to sell?

Increases have affected everyone, not just renters. My dc brought a one bed flat and got a five year fix just before the interest rates started creeping up. Had he not fixed, his mortgaged would have almost doubled in less than 18 months.

"The only people who will benefit will be those who are mortgage free with no intention or need to refinance or sell. People who may likely be sitting in family sized homes with adult children who have potentially already left home... Which again causes a supply and demand issue for that type of house."

Agree with this. They need to start taxing wealth. I have family members who live in a massive 5 bedroom house, just the 2 of them. Fully paid off. With big teacher and nurse pensions. These are the sort of people who could afford to pay more. Not the people who are working, with kids, squeezed into houses that aren't big enough. Able to pay their way now but knowing that won't be the case when their fixed rate runs out.

There has always been boom and bust though. I am in my early 30s too and have a mortgage that will expire in 2024..

Mass (private) home ownership is something that actually is a bit of an anomaly in the UK's history. Home ownership rates really shot up in two time periods- post war boom and right to buy..of course as our economy stagnated, inequality grew (is growing to 1920s/1930s level) and there are dwindling council houses to RTB, we are reverting to historical precedent..

Personally I am from a country where 89% own their home but the vast majority bought flats that were built and controlled by the government. So they are independent of market forces in a way as the government is often the mortgage lender for these properties (and the land/maintenance is undertaken by the government ). My aunt's husband died and the government forgave 50% of her mortgage loan despite her not having any insurance. That's what makes it truly secure.

I never thought growing up that I would be entitled to buy a home on the private market as logically homes bought on the private market are subject to boom/bust conditions so it is very risky for people on lower incomes/careers where wages don't rise dramatically to purchase as it would be inevitable their wages would fall short at some point in the 25 year term. I was very scared when we purchased our first flat in London in 2019 as I felt we had no choice but to buy (as renting was so unstable) and we didn't feel rich enough to buy. So the only alternative is to keep switching jobs to increase earnings. Not possible for everyone of course. I worked out we basically have to double our earnings every 5 years in order to sustainably keep our heads over water (since we have gone down this route of buying on the private market). This is insane given we had no other option of secure housing! And it would be the same if we had left london as our earnings would have dropped..
Our earnings have grown 70% in 4 years which still falls short so in our last year, I hope to increase our household income to £150k.

It's not your fault we are all in this situation but at the same time we have to make the best of it since economic mismanagement means we have no money to transition to a more secure system where the bottom half (people like us, younger people with less secure careers) can own or rent homes that are state controlled. At the same time even though it all looks hopeless, I don't think going on benefits is better at all. You might have more free time but your benefits would be eaten up by inflation and you wouldn't get any council housing so you would be subject to the free market but with even less money than the average home owner. The main problem here is 80% of people actually can't survive comfortably in the free market (and no safeguards) over the course of 30 years without making huge sacrifices (and perhaps most can't even wing it). But being genuinely poor in a free market economy with a threadbare welfare state sucks way more than what you have now.

Which why Labour will save the day when they win the next election. The highest price crashes will say that’s kicking the can up the road, but so fucking what ? Everyone in life seems to lunge from one crisis to another we’re all used to it now.

If I fall into negative equity, and I’m not supported by the government to stay in my home.

Negative equity and not being able to afford mortgage repayments are two seperate issues. Your home being worth less than the loan you took out for it, does not mean you can't stay in your home. Not being able to afford big hikes in mortgage repayments might.

As previous PP have mentioned, I think what will happen in the short term, is lenders will be encouraged to extend loan periods or allow people to go to interest only for a while ?

As someone else mentioned, there is only a very small minority of people who would actually benefit from a big crash in house prices, those who can afford to hoover up cheaper properties in cash and those who are buying for the first time and have saved a deposit and have stable jobs. So if someone is looking to buy a flat for £250k and have saved a deposit of 25k and the bottom falls out of the market and the flat is now worth 175k that deposit buys a lot more equity.

Labour will be "wining" a poison chalice and a maxed out credit card. I suppose they could study magic, that might help 🤔

Every time labour have come to power it’s been with a poison chalice and I would imagine they are used to it by now. Everyone loves the idea of the Conservatives until they fuck it up so badly that people can no longer function, and are worried about losing their home at which point They all decide they are socialists, and they like to bring labour in. Perhaps if they did it, the other way round people’s lives would be overall better.

This.. why are people so short sighted..

I must say that most young people I know personally who voted Tory in past elections are now struggling.

I used the word luxury as it was what you had used. You could say the benefits of owning the asset instead.
In the UK, most renters would buy if they could afford to do so. That would probably be very different if the rental market had not been allowed to get into the terrible state it is in now.

To be honest I'd happily rent forever and not own if it was like social housing of yesteryear. Guaranteed tenancy for life, sure you paid rent and at the end didn't then get that investment back as such- but you had repairs carried out, you knew if the roof blew off it would be replaced and you wouldn't be scrimping and saving. Most people could stay in the area they wanted as there was enough to go round. For us we only bought because we (fairly as there's hardly any stock) weren't eligible for a HA property and didn't want to be stuck to a whim to a landlord who could sell at any time really and who would financially benefit from us paying their mortgage. I know landlords have their place and some are happy renting etc; but there's just not much middle ground in this country.