Mortgage repayments are terrifying

[LemonAda376]

My mortgage is up for renewal and I've had some quotes from my mortgage advisor.

My payments are going up by £400 per month.

I work part time and my husband works full time. We are barely scraping by just now and are in some debt as it is.

We can increase our term which will lower it but we will still be paying £200 more per month and adding a other 8 years onto our mortgage.

Any advice :( is this just the ways things are going just now?

If he wasn't on the side of big business he would have put in place a proper windfall tax on energy companies.

I don’t disagree with that, but would that have kept the prices we pay down? Increases in energy prices were one of the main drivers of high inflation.

Just pointing out that you saying they're helping us normal people with mortgages to pay, doesn't actually help anyone.

If it contributes to lower inflation, hence reduced interest rates, of course it does.

Maybe in the south east they may have risen this much this much but not generally. We bought in 2001 just before prices really started rising and paid 97k. Our home is now worth around £300k but that is with a significant extension added on.

Ok I know of a house that was brought in 1998 for 80k ,the houses in that road are worth around 600k now. Fair enough this is near Croydon , London.

I know salaries were lower in the early 90s but they haven’t kept up with house prices for example.

For instance, a police officer starting their job 30 years ago probably stated on 18k? They start on about 26k now. So about 8 k a year more in 30 years.

Wages are higher now but not really in comparison.

Re: interest rates and inflation. Inflation isn't going down as quickly as hoped because people are spending more money on essentials such as food and energy because they both cost more.

But there is a far bigger problem that the government simply cannot control.

33 million homeowners have mortgages, 30 million now own outright. With mortgage rates being so low for the last fifteen or so years, there's a whole generation who have been able to pay off their mortgages and are now very wealthy.

So the government has to convince 30 million pretty wealthy people not to spend money they would have otherwise spent on mortgages on pretty much anything that isn't food or energy (core inflation is the issue, that strips out 'volatile' elements like food and energy).

So, good luck with that. You tell those wealthy people they aren't allowed to spend their money.

They have no incentive too anyway. All the while inflation is high and the BoE keeps hiking up interest rates, they see their savings nicely increasing at the same time.

The only way I can see this slowly down is when these mortgage free folks are begged by their adult children to stop spending money, thus increasing inflation, making mortgage rates higher, and leading to their children having to take third or second jobs in order to pay off their own mortgages, or face losing their homes.

Good luck getting your relatives to listen to that argument when they're used to spending what they like when they like.

@KievLoverTwo

Interesting point. I have never thought of it like that. 30 million people own their homes outright...never knew that. A lot of that will be inherited eventually.

If it's a problem, I don't know how you solve it ever.

Sorry, I got percentages confused with millions. Actual numbers attached.

I've only had a mortgage for 4, almost 5 years. I was mid 20s. I was naive but never knew the rates were low. I'm about to go from 1.63 to 6%. Thankfully my bank was prepared to lend me 190 on just my wage and I took a mortgage for 125
K so I can afford it but I do feel I'm paying a lot for my crap house.

But if the 33 million who have mortgages, there are a large number of people unaffected by the interest rates and will not be for some time due to low fixed deals. I know a few people who have over 8 years left on a mortgage just over 1%. These people will not be worrying about interest rates and cutting their spending for a few years, and by then things may have calmed down anyway.

The interest rate hikes are only affecting a proportion of mortgage owners at the moment - those on trackers, variable rates, and those coming out of fixed rates.

My 1.99% rate ends February 2024. I'm kicking myself - if we had taken a 2 or 3 year fix five years ago, we would have had a new deal during covid when rates were on the floor. I remember seeing the 1.12% rates a few years ago and thinking about how much money we would save if our fix was ending. If it was 10 years, there would be another 5 years of a low rate. Going for 5 years was the most expensive mistake I've ever made, but of course no one knew the future.

Yes of course. I got my numbers wrong (posted this pic further up). Most people are on fixed rates, but from this graph, it looks like about 20% are on 2 year fixes. That means 1.4 million people. Most of the people who took out 2-5 year fixes will have been on 2% or less, so even if it takes 18 months or so for the BoE rate to peak then fall to 5%, it’s going to double a lot of mortgage payments.

My point re: inflation is that outright homeowners have no reason to care so will continue spending.

People with ten year fixes seem to be quite rare.

The only way I can see this slowly down is when these mortgage free folks are begged by their adult children to stop spending money, thus increasing inflation, making mortgage rates higher, and leading to their children having to take third or second jobs in order to pay off their own mortgages, or face losing their homes.

The mortgage-free older people I know are spending mainly ON their adult children! Paying for family holidays so they can afford to have one, giving them money for deposits/extensions/cars/DIY etc. I don’t think those adult children will be begging them to stop doing that.

I also think there are lots of people who don't understand how economics/ inflation works. My retired friends believe they SHOULD be spending money to 'boost / put money into the economy', which indeed we were all told to do after lockdowns.

It is horrific. I think interest rates have been excessively low recently and have edged back more to where they used to be. However, house prices were so much cheaper. I’m extremely lucky to have a fairly small mortgage now, otherwise I’d be homeless, quite honestly.

Its all scary tbh... our rate jumps to 4.1% from Nov. Thats a near £400 increase a month. - Fixed for 5 yrs.
Meaning we go from 33% to 40% of income on Mortgage.
So pretty heavy!gulp!

My friend got a job shelf stacking at the supermarket (night shift). It meant she could still do daytime childcare but she had more money coming in and, as a bonus, was able to access the staff discount on her shopping.

OP’s not coming back. I guess the thread didn’t go the way she’d hoped.

It’s so hard, isn’t it? Mine went up £300 a month, and I extended so will now be paying it off till I’m 70. Otherwise it would have gone up even more. Plus things are really tight month to month. My hope is that as DD gets older, some things will get cheaper, and I will eventually be able to reduce the term so at least I’m not still trying to pay it after retirement! I am definitely overextended, but still only to buy an tiny house, which actually needs a loft conversion to make it liveable - aaaah!

@KleineDracheKokosnuss

it was 6pm to 11pm @Milkkbottles .

she did it until Covid/furlough (during which the child started school anyway)

I think people are getting a bit off topic, but understandable I guess.

Probably not the most healthy advice but you do get used to it quickly. Could you and your husband cut out a meal a day? I usually don’t have breakfast and then have a massive lunch and a tiny dinner/ snack. It saves loads when you don’t have to eat three meals. Obviously this would just be for the adults

That’s unnecessarily harsh. The OP came back loads of times earlier in the thread and then it got a bit repetitive.

@PeachesoutinGeorgia I don't think skipping meals is good advice here. Unless you are having extravagant breakfasts it wouldn't save much anyway as you would probably end up having more for lunch and dinner..... breakfast is the cheapest meal of the day. For example a loaf of bread is 75p so if you are having toast for breakfast everyday everyday for a week, cutting this out is hardly saves 'loads'. You can also get own brand weetabix for a couple of quid, as well as other cereals. Cutting this out would only save what, a maximum of £10 per month and that's being very generous. It's hardly going to help when your mortgage has gone up hundreds of pounds.

We are mortgage free and spending any excess money on helping two kids through Uni at the same time. barely have anything left to eat out, buy non essentials etc let alone expensive clothing or ' luxury' items.