5% mortgage rates

[SaturdayGiraffe]

Just read this article saying to expect 5%+ rates shortly.

https://www.theguardian.com/business/2023/may/25/uk-homeowners-and-first-time-buyers-warned-to-brace-for-5-plus-mortgage-rates

UK homeowners and first-time buyers warned to brace for 5%-plus mortgage rates

I just don’t know how people are going to cope, and it could go even higher.

We bought our first home in August 1988.
£52,00, a small Victorian terrace. It needed work which we couldn’t afford to do, but the market was rising quickly and we panicked we wouldn’t be able to afford anything if we didn't get on the housing ladder.
95% endowment mortgage, so mortgage + endowment payments were £510/ month, my take home pay was £520/ month. DH salary was £530 and paid our bills and other expenses. One whole wage spent on a rubbish cold damp terrace. I was miserable and depressed about how we would ever be able to afford something better or afford to have a family.

Prices crashed soon after we moved in, and with such a small deposit we were in negative equity. Eventually sold it for £43000 in 1992 and took the hit by using savings and a £5000 loan from my parents.

Interest rates had fallen by then and our salaries had risen so we were able to find a new build in budget.

The original endowment turned out to be a poor investment which was never going to payoff the mortgage so eventually switched to a repayment mortgage.

Each generation has its challenges, but those early years were a struggle. One car and I walked to work. We budgeted for every single thing. Furniture was second hand or donated by relatives. We did our own diy (badly). On the other hand I know how lucky I am to have benefited from free university education and decent public sector pensions. We married young at 22 and 23 so had more years to get established in our careers and build up some equity before having children in our early 30s.

There have always been ups and downs in the housing market. We’ve had an unprecedented period of low interest rates which has artificially increased house prices. Lifestyle expectations have also risen. There will be a period of market adjustment which is incredibly painful and stressful for those who are left with loans higher than the value of their homes. The trend for settling down later means so many financial pressures get compressed into a few years.
I have no answers, but now see my own children going through the same problems to get on the housing ladder.

Yes, each generation has its challenges and indeed mine and my children's has had a massive benefit my parents and theirs did not have - no world war. My parents had bombs falling on the UK etc, my uncles were in the navy fighting Germany. All I had was cold war real risk of nuclear war and some IRA and more recently ISIS trouble on home soil. Anyway financially I agree it is hard to buy a property in the SE at present. Even in 1984 when we first bought my husband's school could not get teachers as house prices were so very much higher in London than elsewhere so had to provide a school flat where I slept on the floor until we could buy a house later that year. The local nurses home had all the nurses living in by and large and even policemen and park keepers have accommodation (and there were on.ly just getting assured shortholds - before that there was very little to rent as rents were fixed at ridiculously low sums - some even today are still so fixed from those days - google search regulated tenancy and your own part of the UK and you will see a list with the addresses of the places and rents about half market rent.

The chart someone linked above is useful as it shows the very hard to work out sums of higher house prices with lower interest rates and % of salary spent on a property. It still shows we older ones had to spend more in 80s/90 actually but it certainly illustrates things are getting difficult again for those with a mortgage as rates rise and house prices are so high.

Childcare is very expensive too, though in 1984 ours was 50% of each of our net salaries (we had 3 under 4 at one point and both worked full time). These days it can be £24, 000 per baby at a good London nursery so 3 of those is £48k - forproper full time working hours of dual full time working parents who need 10 hours a day of cover. Employing childrecare at home is even worse in terms of cost.

For us and for my parents and for my adult children it has been having two professional salaries (my parents were teacher and doctor, I was lawyer and husband teacher) and buying the first place before we had children that was the secret formula. However appealing certain exciting jobs like acting or painting might be the more stable boring careers where wages tend to rise over the years are usually fairly wise which is why parents tend to want their children to go into them.

It's this kind of thing that reminds one that things could be even worse than they are already.

Be afraid of more fair and even wealthiest distribution ? Oh yes, your average Mumsnetter it will be absolutely shitting themselves that they’re three bed semi in walthamStowe could be under threat 🤣🤣
not to mention that Terrace in Coventry that Darren ‘s been working hard for 25 grand a year to pay for. Labour are coming for you 🤣🤣🤣

Never vote tory. If you follow this rule, you wont go wrong x

HSBC and Santander have pulled some mortgages from offer now.

I read it as Santander have pulled ALL new mortgage products for re pricing (everything to go higher).
In other news I see the Bank of England base rate is now predicted to only go higher until 2025 !!

Please rename the thread ‘6% mortgage rates’

Fantastic savings gaining 5% whilst mortgage is 2 ….. winner winner. Inflating that debt away 💨

Where are you getting 5% on savings?

My Barclays account pays 5% but only on savings up to £5k

Believe me there is every chance that a '3 bed semi in walthamstow' would cost upwards of 1m. It's a hardly a leap to think that 1m is a nice round number for a govt to start imposing additional property taxes, whilst at the same time spouting that it will only affect the 'rich'

In other news I see the Bank of England base rate is now predicted to only go higher until 2025 !!

Wtf? Where did you read that?

It's meant to stop at the end of 2023!!

Exactly! 5K not really going to buy you a house!

Username is appropriate.

This is so frickin depressing.

Oxford Economics latest forecast. Grim reading, hopefully wrong but they have form for getting it right..

One positive is that many economies are starting this new cycle with a relatively strong employment market.
Across the G7 economies the average unemployment rate was 5% using latest statistics, down from almost 6% a year ago.
Although the headline rate is likely to tick up in many economies as growth slows, or indeed they endure a recession, there is not expected to be a dramatic rise in the number of jobless people. The consensus is that the rate will rise from an average of 5% in 2022 to 5.6% in 2023 and 5.7% in 2024.

6% was always on the cards, the point being with unemployment, so low you’re an incredibly strong position to negotiate an inflation busting pay rise. If your current organisation wont or can’t find someone who can.

The average BOE base rate from 1971 to 2023 was 7.11% so as far as I’m concerned 8% has always been on the cards.

They just don’t want the geneal public to know this all at once, gotta spread it out to stop the protests and panic that would otherwise ensue.

The likelihood is that unemployment will rise much more than 5.7%. Indeed, it has already ticked up and the figures are manipulated so that we have masses of people on UC now so they aren't counted as unemployed.
I've always expected 5-5.5% personally. If we get to 6%, things will break. The BOE know this.

Where are all these 5% rates on your savings? Obviously, it's still lower than the rate of inflation but still.

Oh so the Oxford economics are right about interest rates but wrong about unemployment? Rightyo 🙄

Where did I say that? Someone else referred to the report, they may or may not have an opinion on it. I haven't read it myself.
Imo, we will have a large recession. That will mean higher unemployment.
Aren't you going to tell us about your savings accounts?

We're not due to remortgage for a while yet, but I'm starting to get very nervous already - just crunched some figures and we could manage up to about 5.5% - what I'm worrying about though is what level they will stress test us to if rates are that high as I'm pretty sure we won't pass that additional amount!

It’s really not comparable to 2023 cost of living

Given what happened today with mortgages being pulled and gilts still rising maybe the title should be changed to 7% mortgage rates…

No WAY are they 7%?! Really?? Been at work all day so haven’t been following the news