Mortgage hike misery 😔

[Bexbiscuit]

Hello,

we met with our broker today to look at our options as our fixed rate is about to expire.

the cheapest we can get is 2k a month. 2 fucking K. I cried in the car on the way home.

this is an increase of about £710 per month. We will manage it but it’s going to change our lives significantly.

we both work on good jobs with a joint income of 100k but this increase, coupled with nursery fees, utility bills etc etc we are going to be very close to the wire

just how is this situation sustainable?

But anyway. Congratulations to us all.

All low rates did (apart from ruining the economy) was cause rifts between generations or even within generations. A divided society is much easier to rule than a united one.

As a FTB I’ve always been told to eat less avocados. So that’s all the advice I can offer the OP.

A divided society is much easier to rule than a united one.

This is very true. And while we argue amongst ourselves about who has it worse, the rich are sitting pretty and making a fortune out of this.

Double nursery fees will be brutal and that has been the case for years. It is very normal for people in that period of life to have no money for anything fun/getting some debt. This has been the case for years.

it seems odd that the OP isn’t eligible for 30 hours as assumed the £100k joint income was gross but should definitely be getting 15 which would help a bit. The discount is often not that massive though in many settings. I couldn’t use 30 hours but did have 15 this last year and for 4 days a week I was still looking at £1200 a month. Some people also have birthdays that fall badly re the term. Eg a child they turned 3 on 18 April this year wouldn’t get any free hours until the September term. August will always feel an expensive month re childcare as at nursery age no subsidised hours and obviously school has you’re looking at holiday care.

Even if that’s the case for OP she should be eligible for tax-free childcare. A 20% discount on two sets of full-time fees is a decent chunk.

Think you need to reconsider your username

The “rich” you talk about are generally also very mobile, and won’t hesitate to simply move elsewhere if that happens, taking all their tax payments with them. It’s not a race to the bottom, even though I think a lot seem to want that.

Mortgage rates need uncoupling from the BOE base rate. Using interest to curb inflation by stopping people taking out car finance or putting holiday on credit is feasible, hitting people's homes is not! It should be two rates one for finance and one for mortgages.

We've got 3 years left on our fix so it doesn't effect us and we will have made a considerable amount on the house. So this isn't coming from a place of concern for us.

Let's run the numbers

Neighbours house 2007 - 250k - interest rate 5.75% - 14375 per year interest

Same house not extended or anything 2022 425k same 5.75% so- 24437

Loads of house have been built locally however people are living longer so demand our strips supply.

As for the savers I strongly believe you shouldn't be able to make money off money if you want it to grow its should be through investments so I have no sympathy that they have missed out over the last few years!

hi, I'm so sorry you're experiencing this. If it's any consolation, you are not alone, a lot of my friends are feeling the pinch. These mortgage hikes are quite drastic and not even a gradual increase to help people cope and have some time to save and cope. How long is your term for - is it 2, 5 year fixed? If it helps, try to see it as a temporary thing. 24 months... 23 months.. 22 months.. it will fly by and I'm hoping for everyone the interest rates will come down by the next time there is a re-mortgage. Good luck

Old farts like me have been saying that for years.

We can remember double-figure interest rates for much of the eighties and at the end of the 70s. And on Black Wednesday in 1992, I can remember one of the secretaries at work sobbing her heart out when the news came in that the base rate was going up to 15%, which would have meant a mortgage rate of around 17%. (And actually feeling a bit unsympathetic, as she was a Thatcher loving Tory and if Thatcher hadn't been a Europhobe and refused to join the ERM, it would never have been necessary).

Rates were very volatile then, but I've never known a period where rates have stayed at around the same level as they have for the last few years, or been as low.

Also, I hate to say it but A lot of people may think, well you're on £100k income, albeit joint, that's a lot of money. For me, £100k doesn't get you far these days and puts you in a higher tax bracket, leaving you with just over half that at the end of the year (to spend, not even save!!). I totally understand that there are people far worse off and who don't even make joint £50k in a year, and while I have so much sympathy for them, these mortgage hikes affect people relative to their income because that's how they valued the house they bought in the first place. When interest rates were 1-2% you were deemed higher affordability, but now at 5-6%+, it's going to hurt. The system is broken. Sometimes, I feel our country is broken. I hope you can get through the fixed term period, and for all of us, I hope this gets better over the year or so. Wishing you the best.

As for the savers I strongly believe you shouldn't be able to make money off money if you want it to grow its should be through investments so I have no sympathy that they have missed out over the last few years!

Investments are making money off money...

Yup, I'd love to know how many people are complaining about their pay and mortgages but voted Tory. 13 years of this. I know doctors who supported Tories and now they're on strike. It makes me laugh, cry and angry all at the same time.

The “rich” you talk about are generally also very mobile, and won’t hesitate to simply move elsewhere if that happens, taking all their tax payments with them. It’s not a race to the bottom, even though I think a lot seem to want that.

Forget the global elite. However there should be alignment between taxing income & taking wealth.

Yep exactly. And private renters certainly don't constitute any kind of privileged or moneyed group.

I speak as someone whose household income is around the 70th centile and who, due a combination of choices, region and lucky timing, isn't affected by mortgage rate rise. Despite being a millennial and having bought fairly recently. My mortgage will be wee buttons by the time the 10 year fix we sorted in early 2022 expires. This is very much not my problem.

Those ultra low interest rates were never going to last forever, no. But some of you don't realise how privileged, ignorant, naive and sometimes just plain obnoxious you sound whilst lecturing people who are shouldering a disproportionate share of the pain.

I would run the number and see what it looks like adding 4-5 years on.. you can always overpay once you are free of the nursery fees.

Its shit.. totally shit. Life is just so bloody expensive at the moment. I’m just about to give up my hairdresser and do it myself and contemplating whether I can trim the dog myself, because this is the last place I can cut costs..

This! And the idea that we should all suffer high inflation just to keep mortgage interests rates low is insane. Bluntly put, high inflation destroys economies, a percentage of people losing their homes, or downsizing, does not.

it's unpalatable & I am a mortgaged homeowner but inflation is the worst option.

But salaries were a lot lower then, too. I was earning £5k a year when I bought my first house in 1982. And that was relatively good pay for a 20-something then, many of my friends were earning a lot less.

Iirc, basic rate income tax was 30% then, so we kept less of it, too.

Plenty of people with savings are rejoicing at the current interest rates as they're making thousands of pounds each month in interest. Swings and roundabouts.

Saving rates aren't keeping up with inflation so you're still losing money.

The problem here is that the advice is simple.

1. Drastically reduce your spend,
2. see if there is anything you can do to increase your income. But generally the OPs on threads like this don't want to hear that. A magic money tree pass seems a much better solution. I've been on threads like this before where an OP then drip feeds that they have a BTL in addition to their house... Call me a miserable old bastard if you want, but I'm amazed that a generation living off high debt and low interest rates didn't actually think it might be useful to reduce their debt by paying off capital when interest rates were so low. I lived through 17.5% mortgage rates in the 1980s. Believe me 17.5% on a £60k mortgage (on a salary of £15k) wasn't a fucking doddle particularly when my flat (zone 4 London) dropped in price from £65k to £38.5k in 7 years. But oh yeah - I'm an old fucker who had it really easy, and I should now be taxed more to support the irresponsible debt of a generation? Oh and my eldest son rents a room in London in a shared house for £1250 a month. So £2k for a four bed with a 'shitty kitchen' sounds a pretty good deal to me. And as an aside, I have NEVER voted Tory in my life.

@LakieLady the key factor about salaries is what was the ratio of salaries vs house prices? You think it was higher then?

The rich wouldn't be as 'mobile' if we said 'no tax havens', removed most of the loopholes like trusts and other wheezes they use to avoid paying tax, and said they either pay full tax on all their income here wherever that income comes from or lose their citizenship.
In the US, citizens have to pay full US taxes even if they live and work abroad- even taxes on selling property that is itself abroad. They just get credits for any tax paid elsewhere. We should do the same.

Yes, it's plain fact that house prices are higher in relative terms both absolutely and in relation to wages than they were in the 80s. Why people try and obfuscate over this is beyond me. Nobody's saying it was a picnic or whatever other strawman anyone wants to come up with. It was just easier than now.

Don't downsize op there are associated costs and don’t pay your entire savings towards your mortgage. You should always have money if you can for emergencies. I would ascertain that you had a very comfortable life before children for a long time. This is the huge adjustment regardless of the mortgage hike which is brutal it’s the huge shock at just how much those little people cost and you have just unfortunately hit early motherhood and all those extra costs at a bad time that you have no influence over.

Just by the accident of the timings of our own births we can be winners and losers with money. We can make good and bad decisions but those economic situations are far more complex and we have no influence. It is not as simple as just getting the Conservatives out in the next general election either. Most people don’t look at life in simple economic terms their hearts often become enmeshed in decisions.

the key factor about salaries is what was the ratio of salaries vs house prices? You think it was higher then?

I brought in 96

Salary £12K
House - 3 bed / garden / new kitchen £34K

Salary now £30K O/S morgage on bigger but average house / kids etc £150,000

I could not afford to buy my own house on my salary in todays money.

That says more about salaries over the las 30 years than it does about house prices

I would be inclined to get a tracker rate for the short term and lock in a fixed rate when interest rates fall