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?

H2B never helped anyone but a house … it helped them buy a bigger house. People with H2B loans could have afforded a smaller .. none new build … house.

I'm sure I read somewhere that something like 60% of home owners dont have a mortgage. On the news last night they said the hardest hit will be 30-39 year olds.

I was a child when interest rates doubled to 16%, my parents lost our farm and we ended up in a tiny run down cottage, just grateful for a home of any sort, many were not so fortunate.
The ultra low rates we have all been enjoying for a decade had to end at some point, this was stressed by mortgage brokers and banks and the media. many ignored it and continued borrowing to the max for a kitchen or car.

People need to prioritise the roof over their head above everything, l have lost count of the amount of times l have seen/heard of people baulk at a second weekend job to help ease bills, of a lodger in the spare room or no holidays/outings/takeaways.....
I and all of my contempories did all of these things and still felt lucky to keep our flats through negative equity, etc.
I am sure l will be flamed but it is true.
The people l feel sorry for are family renters, those with caring responsibilities, long term serious health issues and the disabled, the able bodied amongst us should really consider ourselves lucky to have a home even if it takes every penny.

Two of my kids bought houses about four years ago and the amount their houses have gone up in value is nuts. Very similar Houses are SELLING (as in actually selling) for nearly 20% more currently. If you are in a position to realize this increase by down sizing or moving to a different area then the increase in interest might be more manageable.

There will be defaults, mostly due to change in circumstances since they applied for the loan eg childcare fees, down to single income, illness/disability. Mostly people will manage on a far lower disposable income (eg no holidays, no new cars on finance, cancel subscriptions, reduce food budget etc and/or extend the term of the loan to reduce the payments.

I am involved in debt counselling and the issue with most of our clients is not high mortgage payments, it's the large amount of other debt they have accumulated without adding up how much it is per month cumulatively, and those rates have increased of course. It not uncommon for clients to have higher monthly payments on their other debt than their mortgage.

For anyone who is likely to be getting close to being unable to afford their mortgage, start looking at all your other outgoings now, don't wait, and check the interest rates on any debt paying off the higher ones first of course. There's a template you can print off on the stepchange website which can be helpful for some.

Pre COL and rises and I’ve had a mat leave and a redundancy, pretty much back to back so finally hit a good place of saving and then COL hit and during Mat leave needed to dip into savings

The interest rate rises won't affect most people. People in my parents generation have most of their mortgages paid off.

Most people I know who are my age will just pay off their mortgage when their current deal expires. It will only affect a tiny minority of people who have brought recently and borrowed way too much.

Every other country has a problem with inflation and interest rates so we are not alone and I would say it isn't the government's fault. It's sad that they will take heat from something outside of their control.

Also it was 60k at the time of buying house, closer to £80k now, managed to get 40k

It's a nightmare for those coming out of 1.5-2 percent 5 year fixed. Millions will be affected and some will probably lose their house but they should try to ask to go on to an interest only for a short period up to a year or possibly remortgage over a longer period.

Both the Conservative government and Labour have said they won't help home owners. So that won't happen.

People have had babies since 😬. Everything else has gone up. Pay rises have not been matching inflation.

Is the issue that you can’t afford the new repayments? Or just wondering about others? If you’re going to struggle then there are options you could do.

Basically me, advisor talked us out of getting a 3.5% fixed rate at the start of truss gate because the erc would’ve been £3k… right now I’m starting to think that was the wrong advice

@caringcarer If somene has been on a 1% - 1.5% interest deal 5 year and has stayed employed hopefully the capital part of their mortage is signifcantly less than it was 5 years ago. So their payments may be more but it does not follow that lots of people will start to default mssively.

@gogomoto makes a good point.

I am rather old and lived through friends giving back the keys in the early nineties.

The big issue back then wasn't just the huge mortgage rates, it was that many of my contemporaries just didn't cut back when rates rose. They used credit cards to continue their lifestyle, thinking it would all be short term. You could get a credit card so easily back then, with huge credit limits. Some people I knew had 8 or 9 cards on the go. I'm not being smug about this. We would have lost our house if XH hadn't been relocated through work, and their company scheme paid off any negative equity as part of the deal.

Then they got into trouble trying to balance all the repayments eventually, and had to sell or be repossessed. I don't think that is as likely this time round. People are far more savvy about credit cards.

Those who cannot balance their books by downsizing or moving to a cheaper area will have to sell and use up whatever equity they have on renting, then use their income like all renters do. House prices are ridiculously high and hopefully we will be left, in time, with a period where prices are low and buying a house is more affordable for young people. Then I suppose the whole cycle starts up again...

Yeah

I'd finally paid off my student loan so thought I'd have some more disposable income🙄

I agree with some PP regarding expectations. A friend was a debt advisor for people on benefits and she said it was surprising how many people couldnt budget, thought that their personal wants were first before council tax, utilities and often rent. Or that people really didnt know how much they spent because it was on various credit cards, borrowing from family etc.

My DD is in a 1.7 per ent fix and has another 14 months on it. They have a child in nursery now they didn't have when taking out 5 year fix. They have some savings but my DD told me she looked last week, before today's rate increase of 0.5 percent and said she could see mortgages for 4.8-5.2 percent she thinks they'd be paying an additional £800 per month. After today's rates possibly more. I'm expecting I'll need to help her out if she can't get a better rate in 8 months when she can officially apply. I'm hoping the rates don't go up again and very very thankful my DS has over 3 years left on his 5 year fix. Luckily I finished my mortgage this month so have capacity to help DC if necessary.

An additional £800 a month - that must be a stonker of a mortgage!

That's more than my entire monthly payments ever were.

Bristol prices are very high.

I have realised that it could look like I am picking on people on benefits! I think lack of budgeting is rife now for lots of people. There is so much that we think is necessary, mobiles for every family member (how on earth did we manage 30 years ago?), going out, take aways, and my big worry - going to university because everyone now goes and incurring all that debt. There are people who go to uni knowing they will never earn anything like enough to pay it all off.

I’m sorry to anyone who has H2B but I completely agree with this.

People were drawn to shiny new-builds in ‘up and coming’ parts of London, but there was a minimum 20% mark-up on price because they were H2B properties. I don’t know how so many people fell for it tbh. They’re the interest-only mortgage of the 2010s.

£250-300 more with current rates than it would’ve been 8 weeks ago on a 220k mortgage. What can you honestly buy for that?

I have several BTLs that I should have sold by now (at least that was the plan) but they all have cladding/fire safety issues so are worthless and can't be mortgaged and are on SVRs. They still are housing people though which is good but I'm now subsiding by £2k a month which isn't sustainable. But I can't sell them!!!!!