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!

Depends when you bought, young couples who bought their first house last year haven't got any unearned wealth from it, they probably couldn't sell it for what they paid so it is the opposite.

House price reductions are usually accompanied by wider economic consequences. Otherwise people would just refuse to sell and the market would stagnate. You need a lot of forced sellers to see actual price drops. And there is so much pent up demand that even a small price drop sends buyers into a frenzy. House prices aren’t going to fall until demand exceeds supply, sorry.

Most people don't inherit until they are about 60 so they are not going to not work until then, waiting for the house, they have to live somewhere and pay bills and live their life, they are not going to sit on the dole. I am not from a particularly well off family but my grandparents bought their small bungalow in the 1930s and my parents bought their house in the late 50s, it was not that uncommon to be homeowners.

If house equity is off the table, why would anyone buy? You may as well rent and not be saddled with expensive maintenance, taxes, insurances, etc. And how far do you take that? Should landlords only rent out for the cost of mortgage and taxes? Once they’ve paid off the mortgage, should they lower rents to reflect actual expenses? I do agree with you re. government bailout though, bad idea.

I’m not sure what you mean by ‘bail out’ ? I’d be happy with the richest being taxed more, ditto people with second homes and some of that being redistributed. There’s no help for mortgage payments with UC, but there is with rent so I’m not sure it’s in anyone’s interests for the low paid to lose their homes

I'll believe it when I see it too! These predictions seem to come and go every other week...

I rent with DH and 4 kids. We're in a private 2 bed and technically overcrowded. We had to offer 25% over the asking rent to secure this house and judging by the state of the rental market around us we are now effectively priced out of any further moves to a more suitable property or even an equivalent sized one in this area (we've always lived here- it's historically a poor area that has undergone something of a boom for unknown reasons!). Our rent payment is so high we're living hand to mouth with no spare cash for saving a deposit. I'm unlikely to ever own a property which absolutely destroys me tbh. I feel like a massive failure.

I dread thinking about what the interest rate hikes will do to rental prices. These interest hikes are going to hurt far more than mortgage holders. They're going to rock the entire housing system if the government doesn't act. I don't know what the answer is but from experience shit typically falls down- and renters are at the bottom of the shit heap already.

Agree with you. The 'economy' will pull something out of thin air to make sure house prices keep going up. It's all built on thin air anyway!

I really recommend listening to some of what this guy has to say- he’s an estate agent in the know and has some brilliant insight into what is going on- even he thinks the good times are long over https://twitter.com/moving_charlie

I agree. I'm currently selling my property and my only offers are less than I paid 10 years ago. However, I've paid off my mortgage so anything I get will be a deposit for my next property. That's fair.

I am someone who was made homeless at 12 with 3 siblings and my parents when our home was repossessed in 1988 and spent 2 years as a family of 6 in a one bed council flat.
My parents split then and my mum has never managed to have a cure secure housing ever since,she's stuck in precarious private renting as a pensioner.
A little government help at the time could have made a hell of a difference.

@followmyflow it’s the ‘economy’ pulling something out of thin air- ie, money printing that has created this shit show. Core inflation is out of control- they have to keep raising interest rates- the bond market is setting the scene here.

I don't agree with helping out people in way too big or way too expensive houses though,that's just greed

The Government spends around £50 billion a year on in work benefits. Of course people working and renting get benefits.

Its ridiculous to think people downsizing because they cannot afford their mortgage will free up homes for younger people. Downsizing just creates more people wanting smaller homes. So they might well stay fairly stable in price. Bigger ones might be the ones to go down. It’s a fairly unkind position to launch into home owners as if they a despised separate breed of person. They did what they thought was best. People decide on priorities.

Some people will always earn more than others. Jobs and pay are not equal. Never have been and never will be. Why would anyone study for years and get professional qualifications for low wages? Many professional people, if they live with another professional, can afford a property. Instead of wishing people homeless, building more homes is a better solution.

Also, low interest rates came about to save our banking industry which is vital for all of us. No one could withstand a banking collapse in 2008. So we have had low interest rates. Mortgage holders saved money but house prices continued to rise. House prices are affected by supply and demand. We are woefully short of supply. This will always affect prices.

@Iris1976 Should everyone leave London then? And go where?

@TizerorFizz House prices are affected by supply and demand. We are woefully short of supply. This will always affect prices No they aren’t- they are affected by what people can afford to borrow. The cost of borrowing has tripled. Housing has to therefore come down in price. It’s basic maths!

I didn’t overstretch. I passed the affordability tests. But I’m a single home owner and a civil servant and my fix ends next year. My salary increase nowhere near matches an interest rate increase to possibly 6%. Add that to increases in utilities, council tax, food, petrol etc and I am utterly terrified.

It’s the end of a low interest rate experiment- it’s a huge shift. I saw one housing expert say it’s the end of a 40 year housing boom (with a couple of blips)

I agree & it's a huge mind shift. Even for the ones who can afford it getting your head around paying thousands more just on interest is a lot. Higher interest rates in the past came with lower prices, we don't have that now.

Agree. If the government don't step in to help to some degree then it is just going to create many more problems longer term. I believe they have changed the Universal credit rules recently though where people can apply for help with their mortgage interest even if working, so this may help some struggling families to some extent.

@Laughingstock1991 Its not just that we put more money into the economy. It’s the fee didn’t build enough homes. So the money wasn’t matched by goods available. Houses, Gas, food etc. it’s called inflation.

If house equity is off the table, why would anyone buy? You may as well rent and not be saddled with expensive maintenance, taxes, insurances, etc.

People will still buy but there's nothing wrong with renting. Switzerland & Germany have more renters than owners.

@TizerorFizz yes and as I said in an earlier post, core inflation is out of control so they have to raise rates. They have no choice. And this impacts borrowing capacity accross the board

800,000 fixed rate mortgage deals are set to end in the latter part of this year.
Many of these are people who rushed to buy to avoid stamp duty and often bought a more expensive property as a result.
They we’re paying roughly 2,4% interest.
It's not going to end well.

To those who say nobody would bother working if they couldn't buy a house and pass it on to their children. Many people have no choice but to work and to still have no spare money or ever be able to pass anything on to their children. Working is a requirement under UC whether or not you can pass a house on to your kids.

It is said that tax payers money pays for hosuing benefit for renters in some circumstances but a renters home is just their home. A homeowners home is also an investment for them, which can as always known go up or down. The government helping with a home to live in and not a personal investment is fairer.

Good point about the government already propping up landlords. This shouldn't be the case either.

The hosuing market has been propped up for far to long. The longer it takes for the bubble to burst with various schemes put in place to delay it the worse the fall out is going to be.

That's quite a strange take. My GP's owned their own house (council RTB), my parents do, my in-laws did. I assure you we are not some subset of the middle class.

The majority of the population do not end up in care homes - 4% of over 65's and 15% of over 85's.

Oh and fwiw my in-laws property was sold for less than 100k, you are just presuming that every house is worth over 7 figures.