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!

Agreed.

Its amazing. Its like downside risk doesn't exist when buying an asset.

Never ceases to amaze me. Are people really this poorly financially educated?

If I recall correctly we were stress tested for our rate doubling but that would still have been a bit less than 6%

I do think people are sometimes too focused on borrowing max amount as cheaply as possible right now. Our focus was very much on affordability/stability and so we arguably overpaid the first half of our 10 year fixed rate and the 5 year one we had on the previous house. It has however meant that we feel fairly relaxed at the moment as we have several more years of pay rises and time to save before we have to renew the mortgage. Not everyone has the option but I know people who do often don’t take it as they don’t want to risk paying more than they need. I’d rather pay a bit more but be secure in the knowledge I know it’s affordable.

And that is precisely the problem.

And because they over-stretched themselves and did not due proper due dilligence, now they have their hands out for a bailout.

And we are not talking a billion or two. This would tens of billions of ££ when the public finances are already decimated.

Never ceases to amaze me that those same folks think there is an unlimited pot of money.

Bought my house about 15 years ago. The price went down pretty much after I bought it. No other house on our street (all identical) has sold on the last 15 years for any where near as much as I paid for mine. When my first mortgage deal on this house was up I was in negative equity. I’m barely at a break even point now with what I owe on my mortgage and what it would get if sold. I am however pretty lucky in a sad kind of way as I’ve just come into some inheritance which will pay off the mortgage later this year. I’d love to upgrade to a slightly bigger house - basically just to get an extra toilet as there is literally no where to add one into our house - so if house prices do come down I may luck out there. Currently my 3 bed is worth about £80k (very old terrace) and newer build 3 beds which aren’t much bigger but do give an extra toilet and a garden that we also lack are around the £200k mark. Even with my house as equity I’d never get a mortgage for the rest on a single parent income of around £16k.

Oh and I’d never heard of stress testing mortgages til I’d read about that on MN. Having had the same lender for 15 years due to never being able to remortgage with another lender due to my wage halving after going part time and getting divorced my mortgage deal has always just changed to their next best offer without all the financial checks. When I bought the house 15 years ago I was on twice my current salary and was married - mortgage was actually only taken out based on my salary not joint for complicated reasons but it did actually mean we borrowed much less that we would have done if the joint income was taken into account at the time and until the current interest rises my monthly mortgage is currently around half what it was when I bought it due to interest rates falling.

But people will suffer, people with morgages wont be able to pay their mortgage. They will loose thier homes. Not forgetting that some landlords have mortgages, and if their house gets reprocessed , then those renting also loose their home. I am sick and tired of non home owners, thinking that people who have mortgages are rich, I for 1 own my own home, I am not rich, I worked hard for it. I cannot afford to pay an extra £400 a month on my mortgage, my wages havent gone up. I bought my house 20 years ago, why should I loose it now through no fault of my own. I dont agree with the government bailing mortages holders out, and I personally wouldnt want that, I have never claimed any benefits, and dont intend to now, but I also dont agree with my the taxes I pay to "bail"out the bankers, or to waste it on stupid government projects that dont work. However, something must be done to stop home owners, and consequently renters, from loosing their homes. Rents are also going to "triple", when landlords mortages go up.

15 years ago there wasn’t stress testing! It came in after the 2008 crash precisely to stop risky lending. You would be a risk now due to low earnings. Like many, when the going gets tough benefits beckon or full time working.

I think the banks have to take some responsibility if they have stress tested people but clearly not high enough. They will need to work with people , extend terms, give mortgage breaks, let people go interest only for a while until things settle down.

Are you proposing to confiscate the repossessed properties from the banks or are you suggesting the councils pay the banks their loans back?

They do not have the funds and even if they did, it would come from taxpayers all the same.

The main reason that the mortgage rates (and other significant inflations) are as horrendous as they are is because of Liz Truss and Kwasi Kwarteng essentially dismantling the financial markets with their absolutely shambolic mismanagement and disregard of process, due diligence and common sense. That is literally it. So yes, there should be help (means tested) for those now so appallingly squeezed for mortgage and rent increases because of that. Its not actually possible for many people to simply “find the extra money”, families will go to the wall, wrack up debt, and significantly suffer because of AVOIDABLE situations that led or at least significantly contributed to this current crisis. And renters will feel it too, it’s not just home owners - who do you think the landlords will pass these huge hikes on to? They sure as hell don’t be absorbing it themselves. Shame on the government for letting two such absolute buffoons have any level of financial responsibility.

It's not based on luck at all, do your research and follow the markets you know when the right time to buy is, some have some have not and that's life I've been on both sides

Giving people lifelong council houses is the main reason there's a shortage of homes, far too many people don't help themselves and live off hand outs

A lot of people don't understand finances and the markets and sis t do their research they are in a mess because of it, interest rates can go up and down and they do. People lives in a fairytale thinking they would stay low forever and stretched themselves

So nothing to do with selling off the council houses then.

@Fluff3
But people will suffer, people with morgages wont be able to pay their mortgage. They will loose thier homes. Not forgetting that some landlords have mortgages, and if their house gets reprocessed , then those renting also loose their home. I am sick and tired of non home owners, thinking that people who have mortgages are rich, I for 1 own my own home, I am not rich, I worked hard for it. I cannot afford to pay an extra £400 a month on my mortgage, my wages havent gone up. I bought my house 20 years ago, why should I loose it now through no fault of my own. I dont agree with the government bailing mortages holders out, and I personally wouldnt want that, I have never claimed any benefits, and dont intend to now, but I also dont agree with my the taxes I pay to "bail"out the bankers, or to waste it on stupid government projects that dont work. However, something must be done to stop home owners, and consequently renters, from loosing their homes. Rents are also going to "triple", when landlords mortages go up

If you've been paying your mortgage for 20 years you should only have 5 years left? And should be nearly paid off? You're very unlikely to lose you home as you will have plenty of equity, just from the payments without even factoring any price increase in 20 years.

Yes, the 'historic' lifetime tenancies that allow the elderly and very, very elderly to cheaply rent 3-bedroom 'council' homes without having to worry about bedroom-taxes and council tax contributions, etc is a bit of a problem.

But a mere drop in the ocean when the majority of people are struggling so much just to put a roof over their dc's heads.

Govt intervention is needed - draconian intervention - no more large scale private developments. We need large scale 'council' housing housing developments instead. The workforce needs somewhere to live before they can actually work.

6% Mortgage rates are fine - it's the inflated prices of the few houses we have that buggers the private market up, so the better off accumulate property, leaving the rest to.......

Many people who are renting g don't get benefits

Of course it's part of the problem but giving someone zero incentive to move out also blocks the house, like I say too many people not helping themselves

And many are and have never contributed anything to society other than overpopulating it and expecting everyone to pay for their little darlings

Who are you referring to? Certainly not the elderly 'house blockers' as their "little darlings" flew the nest a generation ago.

Maybe the 'underclass' who churn out kids despite Govt measures that mean that even the prolific breeders only get benefits for 2 dc max now.

There was a bloke in Germany in the last century who thouht he'd solved the 'underclass' situation. After annihilating a few million people, he realized he couldn't construct a perfect society that way so he 'topped' himself instead.

Can't remember his name, but I think it started with H.

@Laughingstock1991

"House equity is purely based on luck and timing"

+++

Actually it's based on planning regulations restricting house building so that demand for new houses has outstripped supply of new homes being built since the 1970s.

You are of course correct that the amount of house value increase is down to timing. But the fact that over the long term is has risen is a supply and demand issue.

Your view point has opened my eyes a little and given me a different perspective. We saved for a deposit to buy a house like mad when DH and I first married. Our reasoning was to pay off the mortgage ASAP so we would not have the outgoings of rent/motgage. We were not thinking of children at that time, and it had not crossed our mind to try to make a profit. Indeed, on that first house we got sucked in to an interest only mortgage, so "lost" money but not as much as we would have if we had rented. 2nd house was larger as by then we had 2 dcs. We still live here. The value of the house is immaterial to us as it is our home, have lived here for 20 years, and will continue to live here. We are in the fortunate position of having completed the mortgage, but whilst we were repaying the mortgage, it was just an outgoing, just as rent would have been. It would never have crossed my mind to expect any help with something that we had taken on ourselves, particularly if it was at a cost to other tax payers. I am positive that if the mortgage repayment had bcome untenable we would have downsized.

House price INFLATION is the result of failed capitalism. EXCESSIVE BANK LENDING combined with a DELIBERATE SHORTAGE thanks to government policy and builders drip feeding the market rather than competing with other builders to provide the best houses for the least money. Also to note is the fact that the building companies are often the land bankers with up to 20 years worth of land they are withholding from the market for nothing more than greed. Equity should be nothing more than what you put into paying your house off combined with genuine improvements to the property.

That's what we call a Ponzi economy, not a real economy. People pay tradesman to do things, improve their homes etc in places without a housing ponzi scheme. House price inflation is a curse not an economic blessing.

Rubbish. Any "profit" you made was part of house price inflation which then leads you to paying an inflated price for your next house. A very un-virtuouse circle. ie what you have done is part of the greater Ponzi scheme that UK housing is.