What actually happens next? Housing and base rates?

[Lalalalawhitenoise]

renters and people who’ve bought their houses in the past 10 or so years, more so last 5 years, borrowed within affordability etc, all these rises, it will see people who’ve been in a position to save £1000 a month living pay cheque to pay cheque. Downsizing not really an option for most as stamp duty and then the general rise of house prices would mean what you paid for a 3 bed you’d need to spend for a 2 bed. Rental market has always been above mortgages in terms of what you get for your money… so those rises will hit private renters even harder.

what seriously Comes next? Mass defaults on mortgages? Surely that can be good for the banks? We don’t have enough social housing as is… seriously what happens next?

Wasn't everyone stressed tested up until 8%? I think mine was 7%. So while people lose serious spending money, unless they lied on mortgage applications about income (whivh is not easy) they should be able to withstand this. But will less left over?

And yes I guess there will be some defaults. But most will likely avoid default but have no spare money and a more miserable quality of life.

There will be people that are at their absolute limit and they'll default. They'll go back to renting or end up in very limited social housing or on the waiting list for this.

I would argue that there are a larger group of people who will prioritise keeping a roof over their head over everything else, have a very large shift in their quality of life, but will weather through.

There is also a sunstantial chunk of people who can cope, with relatively minor adjustments to lifestyle.

You don't hear about the last group as generally they won't be posting threads or raising their concerns. Rightly so, the conversation focuses on those who are likely to suffer the most.

I think it's important to keep in perspective.

Defaults. Crash in the property market. It’s all quite shit.

Stress testing isn’t a condition of your mortgage though. We had 7% and that was the mortgage rate not the base rate and I remember saying, well that’s unaffordable and it being a bit of a meh, doesn’t really matter. Plus you know, that was in the absence of COL and energy crisis so those people still would’ve had more disposable income because it wasn’t being gobbled up by energy prices and food inflation? Plus then factor in childcare.

what about private renters though? Lot of them around

It’s all awful

It’s shit for everyone.

Ours had already gone up by £600 per month before today. We can afford it but there’s gonna be some significant lifestyle adjustments.

I feel sorry for people who are far nearer the line than us.

We are in @DeedlessIndeed 's third group.

We had to renew our deal at the height of the Truss/Kwarteng madness in October.

We are now paying an extra £120 a month, not great but manageable. But when we bought in 2015 Mr Monkey insisted we stress tested up to 15%. (He remembers the nineties).

Surely most who got a house with the htb loan will be In a sticky wicket?

It will eventually settle down, probably within a couple of years. Having owned various properties since the early 90s, I think it will be horrible for some people, but they will struggle through and wages etc will eventually arch up. It’s not pleasant, I remember having to call our mortgage provider to ask for some leeway in payments. As long as people don’t ignore or act like ostriches, there will be solutions for most people. The media is whipping up a storm because it diverts from focusing on how shit the current state of politics is.

I mean HtB was a shit show waiting to happen from the start.

I have it and I don’t necessarily think so, for some it could work, it would’ve for us if we’d fixed a 3 and then a 5 year deal for instance

Can anyone explain how this will affect help to buy?

Surely if you are part renter with small mortgage you are going to be in a much better position than someone who stretched themselves to be a full owner with a massive mortgage?

What sort of leeway did they allow? I’m actually quite concerned about my payments. I’m very fortunate that I’ve had some inheritance to pay off 50% of my htb and I think I’ll be the interest on the rest and not balance. But still without all that my actually mortgage payments will double, and that’s with a 58% ltv and not a massive loan

That's shared ownership.

HtB is where you get a loan from the government for the deposit and you pay it back alongside the mortgage.

I was talking about the equity loan, im not sure how it will effect the shared ownership schemes

If it is like the late 80's/90's property prices dropped (often 25% or more depending on location). Many will default. It took about 6 or 7 years for things to recover. It broke some families.

I was lucky that I was in a junior role where I knew I could expect some hefty payrises so I was able to ride out the storm. I still lost a lot of money when I had to relocate (though arguably my new property was cheaper).

I remember viewing houses where the disgruntled owners had taken a sledgehammer to the bathroom/kitchen before handing back the keys.

It feels different this time round. I really hope that it is.

Oh sorry - I'm an idiot.

@Lalalalawhitenoise so if you genuinely cannot pay your lender can offer tempory Interest Only mortgage, extend the term or offer a payment holiday.

However housing is a priority debt so you do need to show that you are prioritising paying it above most other things.

I can't really see why people are automatically doomed with HtB. We bought last year with HtB, 5 year fixed, very affordable for the forseeable even if lost an income and I feel extremely lucky right now. I suppose I could worry about what will happen in 4.5 years time but seems like a waste of energy.

I bought my first house in 1990 so have seen interest rates climb much higher than this.

Going by what happened back then (which might not be the result this time) most people will push for higher wages to cover the increase. If they don’t get that, they have to cut back on outgoings.

Next phase was getting additional jobs. I think I had four at one point. If people do all of that and still can’t afford new payments, and have extended lending period, taken repayment breaks etc, they have to sell.

Most people who sell will hopefully have some equity and will have to use that to subsidise rents, or they will rent smaller property or in less desirable area. The above goes for those already renting.

It’s all very difficult, but it has been stressed so much over past few years that interest rates were unnaturally low and would go up. It’s another Tory shit show.

I meant if you got it about 4/5 years ago, so your rate would be around 2% and then house prices drastically rose, for instance my house has gone up by just shy of £100k so you’re 20% will have gone up too

@Agix I think, as with shared ownership it is about expectations.

With hardly any equity HtB owners are very vulnerable to negative equity coupled with the it was on new builds which are also vulnerable to price drops in the first few years. However if you don't plan to move soon then that is not really an issue as such.

We have high childcare costs that keep rising that’s the killer for us.

would you have to ‘prove’ you don’t have enough money to withstand the increase with a temp interest only mortgage for instance?

Renters will be most impacted and if the government does mortgage help it shouldn't include BTL landlords because renters won't see any of the help the government might give out