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!

Do you also think that a surgeon should be paid the same as a bin man? I’m pretty sure we decided against communism.

If the government is bailing any sort of bank / establishment out it's not done to help owners vs renters, it's done to help the economy in general or as part of a stimulation style policy.

With zero equity in homes most people wouldn't be able to upsize - then all of the starter homes would just be full forever and not turned over to new families?

If taxes are used to bail out mortgage holders people who rent will probably also benefit in some way- their homes won't be being sold from under them as landlords aren't able to raise the rent inline with inflation to cover the mortgage. If there's no bail out what do you think will happen to the people in rented accommodation that's repossessed by the banks? It'll impact everyone.

But also as a tax payer you don't get to pick what your taxes are used for! If you did I wouldn't be funding half the crap it gets used for, I'd be directing it where I wanted it. But you don't get to do that - it gets decided as part of central policies.

Your mistake is thinking of equity only on the profit side of things.
Obviously it galls to think of people who bought multiple houses decades ago having their profits protected, but they aren't the only people potentially affected by a market crash. What about the thousands of first time buyers with modest homes at the bottom end of the market who are now faced with suddenly being thrown into negative equity and being trapped/losing large sums of money on their homes? Why should they be forced to pay for the governments bad decisions?

Mortgage rate rises do also impact on renters, inevitably. Rents go up too as landlords pass on the cost.

Agree. Owning (or buying) a house gives people an advantage over renters in terms of being able to choose decor, have longer term stability etc. Benefitting from rising prices shouldn't be part of the equation. The trouble is so many of us now see it as an "investment" rather than somewhere to live. Our individual financial plans and the nation's economy both rely to a large extent on the idea that house prices will forever rise. Weaning ourselves off it will be painful.

@3BSHKATS there’s an irony in your post because using government money to bail people out is NOT a free market- as the tories claim to be- it’s actually pretty bloody socialist!

And how do they suck up Those increased rents? with their benefits. 10% rise I believe it was this year.

I agree a mortgage is debt and interest rates can go up as well as down, if you can't afford to pay your mortgage because of this, that is a great shame because many will in that that scenario through no fault of their own. But I don't think the government should bail them out.

What the government should do/should have done before now is create conditions for a society where the opportunity for an affordable home, good education and to be able to work and earn a living under fair conditions is realistic for most. Put the brakes on the conditions which is widening inequality.
If society looks like that then fewer people would be overstretched and struggling in the first place.

So create planning policy that allows land to be developed outside of the big developers virtual monopoly.
Stop the race to the bottom of workers rights and conditions like people being forced into gig economy jobs because decent contracts aren't on offer.
Create decent working conditions for teachers so we can retain the talent we need there.
Etc
People being unable to pay their mortgage is a symptom not a cause so we should address the root causes of social problems.

Also the mentality that people should be punished for buying their own homes doesn't protect the interests of renters, it protects the profits of landlords.

What the government should do/should have done before now is create conditions for a society where the opportunity for an affordable home, good education and to be able to work and earn a living under fair conditions is realistic for most. Put the brakes on the conditions which is widening inequality.
If society looks like that then fewer people would be overstretched and struggling in the first place

@PimpMyFridge yes absolutely!

I doubt anyone will be bailed out, they will just have to extend their mortgages and live in a smaller house than they want.

I'm on the fence. On one hand people should not lose their homes which they obviously passed an affordability test to get a mortgage on.
However with the state of the country at this time I can't see where the money would come from.
Or where these people who lose their homes will go. There's no social housing available, landlords are selling up.
There's a massive housing storm about to explode.

This is where its going to get bumpy.

The reality that we can't just keep the market up by government intervention is starting to bite. We've done that repeatedly and it's no longer an option. The country simply cannot keep doing it.

The party of cheap credit is coming to an end and there's going to be an almighty hangover for many. We as a country have to wean ourselves off cheap debt (not just mortgage debt) and the levels of consumerism we've had, it's going to impact many people's lifestyles going forward.

But obviously nobody is concerned about you losing value in your mortgage free house. They're worried about the people who find themselves in negative equity and/or who will lose their homes because they can't afford their mortgage. I think you'd be very worried indeed about that if your children had managed to buy property, but only recently - in which case they probably would have 'stupidly overstretched' to do so.

People who bought ages ago, don't have a mortgage and whose house is worth so many times more than they paid for it that it could halve in value and they'd still be up will be absolutely fine whatever happens. Their generational luck is safe. It's more recent buyers who will really suffer.

@Darkandstormynite yes and inflation has been partly been caused by the money printing done during the pandemic- too much QE, too much money sloshing about.

100% agree with this

Well that shows how economically illiterate you are, because actually none of that is true.

It's pretty hard to disagree with that, but it's also absolutely useless to figure out how to deal with the situation we're in now. Obviously all problems - political, economic, personal - could be 'solved' with 'well, if you'd just arranged everything perfectly to avoid this situation it wouldn't have happened'.

I'm not bothered about whether the house makes a profit as we aren't looking to sell, but it'd be nice to not have an extra few hundred a month going our isn't even going to paying off the house. We are fortunate in that we made a lot of compromises to buy well within our budget (ie not our first choice on area, smaller than ideal) and we will be able to afford it, but it's shit. No one say interest rates rising so sharply if they bought pre covid even though yes of course people should have known they wouldn't remain low forever.

I am worried about what's going to happen to the thousands who can't afford their mortgages- where on earth are they going to live?!

Well, you’re mortgage free and bought 30 years ago? Presumably for a fraction of the price it’s worth now? Obviously you wouldn’t mind because it wouldn’t inconvenience you. Although the argument could be made that you could sell your mortgage free home, downsize and use the equity to give your children a decent sized deposit.

Yes people have overstretched themselves. Because they had to. We had to move to the very edge of the county to be able to afford to buy where we were living. It takes 1.5 hours to drive in to the city which is where we both worked and DH still does. And we had to buy a complete doer-upper because we couldn’t afford something that was renovated. We’ve had to slowly do that up while living here and there’s still more to do.

The amount our house value has gone up is ridiculous, that isn’t up for debate, but saying people have overstretched themselves as if they’ve pushed their mortgage to the limits to get a utility room when actually they’ve pushed themselves to get a shit home that needs a lot of work doing is a joke.

No one saw*

Yanbu tax payers should not step in to help mortgage holders

It’s not like there aren’t other priorities for funding

@Hardbackwriter and there are countries in Europe that do housing much better. Vienna had some amazing social housing for example where about 70% live in great affordable rented secure property. A lot of the problems now can be traced back to Thatcher sellling off council housing stock and creating a housing ‘market’

Also agree that lots of people haven't stretched themselves just so they can have an extra bedroom or whatever; its expensive to buy now and wages are shit in this country.

What?! Why not. And I say this as someone has lost money on houses, never been lucky enough to make money. I wish I had.