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?

The solution I see is banks offering remortgages with extended terms. I'm coming round to the idea. Homeowners get affordable repayments again, taxpayer money doesn't need to bail out mortgage-holders, large-scale repossessions are avoided.

I think it's already possible, but if the government has half a brain they'll lean on the banks to make it more common.

Although, it likely means that 50 years from now people have less equity in their homes to pay for care costs.

Where’s “the council” going to get properties for those people from? There are people who have been on social housing lists for years, people who have been repossessed will have to join the queue.

That’s the point I’m making.

there’s a massive queue for all sorts of housing, except purchasing when base rates are high. It would make sense for those struggling to be helped to manage with mortgage holidays / interest only etc rather than repossession.

Yes, our smaller (£42k) of two mortgages came off if its fix, taking us from paying 1.73% to 6.99% overnight.
For those with bigger mortgages, the difference will be enormous.

And therein lies the problem, but it seems that houses being somewhere to live rather than a way to make money is an old fashioned view.

If you had a cheap fixed, tracker or SVR rate you could have switched months ago. Why would you have waited until now as rates were only going one way and that has been common knowledge for quite some time.

Because of the ERC which in some cases is thousands. When the rates started climbing the story was that inflation would be coming down sharply this summer and towards the end of the year

If you come out of a fix early there is a penalty to pay.

People will have to rent smaller properties than they would like, in less favourable areas. Assuming they can’t buy a smaller property in a different area of course.

Most people who have to sell will have some equity and that will act as a cushion to contribute to rent. I know of one family who couldn’t cope with high rates and sold their house in early nineties to a landlord, on the basis he would rent back to them, so they didn’t have to move. I don’t think many people even knew they had sold it tbh.

I don’t think it will lead to a massive increase in homelessness, which is one good thing I guess.

That’s all well and good, but London rents are expensive in all areas. The difference in cost per month between expensive areas and cheaper areas sometimes really isn’t much. With renting there is an even bigger variance of prices too, with some flats going for £300 a month more than a similar one on the same road because of a) greedy agents b) time of year c) luck.

Where our daughter lives in London they rent a 1 bed for £1,800 a month in a posh area in Zone 1. They have friends in a rough area of Z1 South London, ex local authority, paying £1,750. Sure these people could move out to Zone 2 or even 3 into the boundaries of London proper but even then I’ve seen ex-LA flats for £1,700. So for many people, saving £600 a year in rent really isn’t worth it for the cut in daily quality of life.

I get that London is a different beast altogether though.

@Lalalalawhitenoise
just read two things which support my way of reading the increase for htb

https://www.moneysavingexpert.com/mortgages/help-to-buy-equity-loans/#:~:text=Remember%2C%20you%20pay%20interest%20on,to%201.97%25%20and%20so%20on.

https://taylorsurveyors.co.uk/help-to-buy-interest-calculator

@traytablestowed You seem to forget National Insurance was paid in 1979 too. Very few people went to university then and quite a few people with mortgages wont be paying 9% now, because student loans have only been at that level since 1995.

Interest rates in the 1970s went from 5% to 17% - considerably more than the rise now.

We bought 8 years ago for a reasonable price (house complete mess!). We both had well paying full time jobs. Since then, we’ve had two children which we could afford although I dropped to part time because childcare was more than our mortgage - double our mortgage!

After that, the government allowed businesses to fire and rehire on worse contracts which forced DH to take redundancy and a lower paid job.

With the increase in living costs, it was really tight for us and having 2 in nursery but now one is at school I’ve increased my hours and the childcare bill has improved (most days we juggle one end of the childcare so little after school club needed).

The government has treated people so badly - they keep changing the goal posts but aren’t taking any hit themselves!

We are lucky to have only one more year of nursery to pay for although our fix ends just before that which won’t be fun.
I will just increase my hours more to live a worse and worse standard of life.

I do agree in part with the amount of people who are buying luxuries on credit like fancy cars etc and have lots of credit cards and I don’t know how they will cope with these increases - I feel stressed enough without that extra debt.

It’s not fair to say people shouldn’t live or have children because their circumstances might change. We need people to keep having children as that will be the next issue anyway!

This is where we are
No spare money for anything
Just keeping head above water
Constantly googling for free/low cost things
We have a roof over our head food in the fridge and freezer and clothes on our backs
But not much spare for the fun things on life at all.

It's simple. % rates rising means mortgage payment increase fort home owners, and also this increase will be passed down to the tenants of private rents.
The BoE are trying to reduce influence by ensuring Joe public have less disposable income.

Personally I think more of the pain is going to be felt by private renters. As if things weren't enough of a shitshow for them already.

A lot of landlords have mortgages, they are going to be looking to get those increased costs from renters - or selling up altogether. I think quite a few will be looking to sell so more housing on the market soon and that means price drops.

There’s the added shit show of the looming energy improvement requirements for rental property which means older houses will start to be offloaded by landlords who won’t want the expense of improvements. Other landlords won’t want to buy them. So possibly may contribute to a fall in prices if less demand.

I read the MSE one and your reading pretty much aligns to theirs so I definitely read it wrong when looking up on it.

at the mo there is no point me adding that on to my mortgage, it’s a kick the can down the road job, as things stands it would add £300 on but if I pay the interest it’s about £85. Maybe your son could do the same, just kick the can down the road for a bit, fix into another deal (if he can to maintain equity) and when rates start to comes down and house prices have a fallen look at additional borrowing? Then port it all at a later date?

@Lalalalawhitenoise it definitely seems that postponing moving might not be such a bad thing cost wise. The house isn’t big enough or where he ultimately wants to live so paying off the htb on moving is the preferred option but there’s no major rush. If prices do fall it’s a win win, less to pay back and the house he buys will be less too. There’s two incomes to take into account now rather than just his