Govt and mortgages

[Madeyemoodysmum]

I know this will be unpopular but it's driving me mad

Ok, the recent mistakes by truss have been monumental and they have lost
My Vote which was teetering Anyway

But interest rates
We're NEVER EVER going to stay this low forever

The govt can't protect you and bail
You put on everything

If you are over stretched then you need to Be honest with yourself.

Rant over. And feel
Free to pile On.

Prices were high because interest was low. People had no choice but to over extend themselves in order to live in very basic homes.

I’m afraid I agree. How did anyone genuinely think that interest rates would be at this level forever.

Yes but they have many years for our country to be self sufficient with regards to gas/electric,one of the main reasons for high inflation,high inflation = high interest

Had

plus there is a cost of living crisis!

Well, you're not wrong that interest rates were always going to go up at some point, and that a lot of people have overstretched themselves, but it's inevitable that a lot of people are going to be very worried right now. When calculating what they could afford to borrow, people might have considered the impact of rising interest rates etc, but not thought about the impact of high inflation, rising energy prices etc. The government has handled this whole situation terribly, so I can hardly blame people for wanting help. Their homes are at risk ffs - have a little empathy.

BTW, I speak as someone who definitely didn't overstretch on my mortgage and paid if off in full 13 years early.

Agree. It was ridiculous how high house prices were allowed to rise. We had a 15 year mortgage between 2011-2016 and I don't remember ever paying interest rates much lower than 5/6 %.

Another one in agreement. I'm certainly no mortgage expert, but when I bought my first house in 2010 I made sure we could afford a dramatic interest rate hike if (and when) it happened.

Really and truly though this advice should be given by lenders and brokers, especially to younger people who aren't old enough to remember the situation in the 70s and 80s.

Sorry that should say 2001-2016.

I don't think anyone expected them to go from 2% to 6% quite at this rate, though. We have been paying through the nose for houses because low rates enabled this. A perfect storm has been created, low wages, cost of living rises ie. Energy, food, petrol, and now interest rates. You can't expect the average person to have foreseen this.

We are very fortunate that I got a better job this year and we had some inheritance so we should be OK. But things could have been much worse for us if we hadn't had those two things on our side. We have a chunky mortgage and pay for childcare so there isn't tonnes of wiggle room in budgets.

The govt have helped with gas
And electric already

I'm willing to cut back in my home gas use to help My Own purse on that as welll.
Appreciate some people Need a warmer home For medical reasons.

Plus huge covid bail outs which have partially caused this inflation

The country can't afford to bail out
People's mortgages too I'm afraid.
But Every Thread I read is someone saying the govt need to step in.

a mortgage is a personal risk and it's down to the holder

It’s very easy to sneer at those making ‘poor decisions’ but bear in mind many house buyers a) have never experienced these huge interest rates so it’s unfair to expect them to know they could easily just return and b)they have absolutely no choice but to stretch themselves to the max just to afford a modest house that 30 years ago would have been a ‘starter home’ or ‘stepping stone’ and is now mortgaged to the hilt for 35 years and they will never be able to move from.

It’s the speed of the escalation that’s the problem. Yes they were never going to stay low for ever and expected to gradually creep up. Whilst at the same time property prices calmed down. But this has been a huge cliff edge. Modern mortgages are stress tested. There used to be so many people renting on MN saying how unfair it was that they couldn’t get a mortgage because the multiples were too low. That was done to protect borrowers from interest rate rises. Add of the hike in fuel and food none of which was predicted no wonder some people are worried. You can only plan so far. Did anyone really see this coming?

There's a whiff of 'I'm alright Jack' going on here.

We are going to struggle because a huge mortgage hike comes on top of massively increased energy bills, food prices and soaring childcare costs when struggling with real term pay cuts. All made worse by the Tories and Brexit. (Did you vote for them before by any chance?)

It's so patronising to suggest that people have been living naively and beyond their means - it's not just mortgages. We could have swallowed an additional £500 but not on top of everything else.

And yes I do think the government needs to do something to support people. There will be big trouble if it gets to the point that a large proportion of the country lose their homes - there's no one who can buy - big housing crash... Looking forward to the next GE 👍🏼

I can see why some might hold that view and things certainly don't last forever.

However house prices have risen continually since those high interest rates and a mortgage is a much higher proportion of someone's take home earnings than it was previously coupled with the fact the rates have risen in such a very short space of time, it's no wonder people are feeling the shock.

It's always good to be able to save what you can and plan for the future but this is often a luxury which many people simply don't have, frequently for reasons outwith their control.

Well we have had "emergency rates" for over a decade & barely any wage growth. In that time houses have got even more expensive & renting was often more expensive than a mortgage. Also people have bought into the narrative that you try & buy however difficult that may be because that's the only way to build wealth.

When did the OP get on the ladder?

Agree. It was ridiculous how high house prices were allowed to rise.

It was & yet plenty of people celebrated this & were quite happy to cash in.

I don't think anyone expected them to go from 2% to 6% quite at this rate, though. We have been paying through the nose for houses because low rates enabled this. A perfect storm has been created, low wages, cost of living rises ie. Energy, food, petrol, and now interest rates. You can't expect the average person to have foreseen this.

Exactly even the people in the know didn't predict all this.

Bank rate at year end (%) since high in 1979 (source Bank of England)

1979 17
1980 14
1981 14.375
1982 10
1983 9.0625
1984 9.5
1985 11.375
1986 10.875
1987 8.375
1988 12.875
1989 14.875
1990 13.875
1991 10.375
1992 6.875
1993 5.375
1994 6.125
1995 6.375
1996 5.9375
1997 7.25
1998 6.25
1999 5.5
2000 6
2001 4
2002 4
2003 3.75
2004 4.75
2005 4.5
2006 5
2007 5.5
2008 2
2009 0.5
2010 0.5
2011 0.5
2012 0.5
2013 0.5
2014 0.5
2015 0.5
2016 0.25
2017 0.5
2018 0.75
2020 0.25
2020 0.10
2021 0.25
2022 0.5
2022 0.75

It’s very easy to sneer at those making ‘poor decisions’

I also find it quite ageist & Im not young. No one tells a pensioner struggling that they should have made better decisions & saved more, worked more etc.

@User84 what's the point of your post? interest rates alone tell us nothing, you need to factor in prices vs wages.

Apparently 5/6% today is the equivalent to double figs of the past in terms of impact on disposable income.

Rates have been rising steadily for a while. They rocketed suddenly last week because of the mini-budget and its effect on the markets. That's why people are angry.

Looking at that I think I should of bought 5 years earlier. Generally people are most vocal about what they are really worried about. Energy and food costs to me as mortgage has 2 years left on a cheap fix. Obviously concerning but need to be able to heat and eat for right now.

I think one of the issues is that a large number of people on this site (and elsewhere) have been saying for the last five or so years that

• House prices don't fall.
• Interest rates won't go up much.
• It's different to the 1980s.
• Demand means house prices will continue to rise.

Anyone saying the opposite or suggesting cation has been ignored or mocked. All the above has the mark of a classic market bubble. I'm very sorry for the large number of people who will get burnt this time. I'm not smug or enjoying this, I knew several people in the early '90s whose houses got repossessed.

If you go on the property thread now people will still be saying the below.