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?

He needs sacking. He has got just about every prediction he has made wrong. Honestly it would have been more accurate to toss a coin.

This is true, however a lot of people once they've got their dream house will want their dream car, or will want to do home improvements etc and will borrow to do so. Their mortgage they got a year or so ago may not have been approved if they had a loan at that stage. That along with cost of living and massive increase to their monthly mortgage will hit people hard.

I think a lot of people were tested for higher rates but they weren't tested for everything else going up by 18 %. In London that means that most homeowners in their 30s are going to be hit with a few people in their early 40s. Thats a lot, a lot of families with little kids.

Rates went higher than that, and at one point we had a "bargain" fix for a few years at 12%. When we applied for the mortgage, most people had 25 year mortgages on a variable rate. At that time the variable rate was I think about 7%. When the building society ran through the figures with us, I asked what the repayments would be at 15%, to be told that it was unlikely that we would see rates in double figures again.......well we jolly well did. And had to blooming pay them.

Well that's fair enough, but more fool you if you think it's even remotely sensible to borrow more for cars and home improvements when you're in hock up to your tits.

I have zero sympathy with that.

We’ll still have an erc, it’s only 3 months before that we don’t, it’s tiered though so less than say 15 months before the end which is when we saw the 3.5% offer

These base rates are more typical, it’s the last 12 years that have been outside the norm, I remember rates of 15 percent but lending used to be stricter in terms of income multiples
i read that uk interest rates have averaged 7.7 percent with a low of 0.1 in 2020 and a high of 17 in 1979.

Lots of people also once they have their house then decide to get cars on finance, home improvements on finance, go part time when they have kids an didn’t factor in potential interest rate rises whilst doing it. Obviously people should have kids and childcare is expensive but it’s a temporary cost so most can weather through it for a few years, but stay part time much longer and banks would never have lent the money if they had assessed their current situation. I include myself in this, however if we were struggling I would be straight up to full time to cover additional costs.

The Bank of England has raised base rates in the hope that those that have a mortgage and are remortgaging soon have less money to spend. They also hope more people will put more money into savings cause rates are better. How about raising VAT instead of base rates. It will actually hit all those that can afford to spend on luxuries, rather than totally hammering the very few people who have a large mortgage and have recently had to remortgage. Currently a large burden is being placed on a small strata of society while others get away with minor ill effects, and the interest rate rise policy doesn’t seem to be working.

Lots of people also once they have their house then decide to get cars on finance, home improvements on finance, go part time when they have kids an didn’t factor in potential interest rate rises whilst doing it.

But there's no one whatsoever to blame for that other than the muppets doing it.

If people can't see beyond their own nose to what could happen in 1,3 or 5 years they deserve all they get.

So how do you suggest doing life? Childcare, having kids, buying car is an option but if you didn’t do any of these things how would you have a life

gawd, as someone who’s job it is to oversee tax policy, the UK government is doing what it can to clamp down on these firms but it is an international issue and they are limited in what they can do.

the sad fact of the matter is that overseas corporations won’t fund our social services for us - we have to

People won’t go on holidays , drive new cars, eat out as much, take their children out . They’ll spend all their money on food and shelter and few if any luxuries. It will be like going back to the 70’s. They’ll survive but it won’t be fun.

"Doing life"???

If you honestly think that new cars and a big kitchen on tick are the only way you "have a life" then I can't help you.

Good luck.

If people don’t have a buffer they could have less maternity leave, work full time even if it means only a couple of hundred extra a month after childcare (which could be put into savings), buy older cars, not do home improvements unless it’s essential, not go on holidays abroad. Build up a buffer of earnings and decent savings then comfortably manage to do some of those things. Lots of people want everything ant once and unless rich it’s just not possible.

what a spiteful way to think

its short sighted getting an expensive lease car, but that can be given up. What about people who have had kids in that time? Yes childcare costs are temporary but they are still substantial especially with everything else rising. PP upthread said it’s the 30/39 age range that will be most affected aka those more likely to have youngish kids, do they deserve all the get too?

its short sighted getting an expensive lease car, but that can be given up.

No, a lease can't just be "given up". This is the sort of stupidity I'm talking about.

Take on a 3yr lease and you're paying for that car for 3 years, like it or not.

PP upthread said it’s the 30/39 age range that will be most affected aka those more likely to have youngish kids, do they deserve all the get too?

Yes. If they've prioritised new cars and home improvements on tick instead of improving their LTV.

And if staying at home "because they're only small for a little while" is more important than financial security, then that's a choice that might well bite you on the arse too.

Working people should be able to work hard, afford a secure house that they can raise their families and put down roots in. Should also be able to afford a holiday, cars and childcare out of the family budget if both parents are earning. End of. It’s basic

social and affordable housing will benefit. I work for a HA and we are being contacted all the time by private builders wanting us to buy up houses off them for cheap and flip them to affordable tenures.

In the 90s recession my DH lost a house and a flat
He went bankrupt
his ex wife didn’t
so the mortgage companies came after her for the shortfall of what the house and flat were sold for

They were given 2 bed HA house as they had two kids
when they split up my DH was given a three bed council house in what was then a really crap area and now it’s so trendy a one bed flat is around 270 - 300k

back then if you weren’t fussy about areas you could take your pick

he eventually got discharged from the bankruptcy
sorted out his credit rating and he eventually bought his council house for peanuts

when we met he rented out his house and moved in with me

No chance of this happening now

@Lalalalawhitenoise loads of people will think like this because they had to struggle in the 80s and 90s with no one helping them. Then you couldn't get a 100% mortgage and people were scrutinised about what they could afford. Its all gone wrong because people have thought low interest rates will last forever and have over stretched themselves.

Part time working, holidays, new and/or multiple cars are not basics, they’re luxuries. Yes it would be nice if we could all afford everything all the time but that’s not reality. Savings and paying down the mortgage should come first before luxuries.

I have 4 houses with mortgages on them. I was today working out fixed rate expiries and how much they could all go up by.
luckily as Im risk adverse and took out 5 year fixed deals, the first doesn't expire until 2 years, then 3 then 4 years. Fingers crossed things go back down then else rents will be increasing for tenants or I sell.

In 1990 my staff nurse salary was £10k. My mortgage was £550 a month and I couldn’t afford it so moved back in with parents and rented it out for £550 instead.

That house is currently rented out by a BTL landlord for £750 a month.

The landlord bought it for £130k 2 years ago, so if his interest-only mortgage rate is 7% it is the same as his rental income.

The point is, in large parts of the country rents are far more affordable than they were in the 90s as the same staff nurse salary is now £30k.

And unfortunately this has led to huge price increases. The average mortgage now is so large that even a (relatively) low interest rate increase has huge implications.