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.

What don’t you get?

I never said middle class have only bought houses the last 20 years, you seem to wildly veer away from points. I said only a small demographic will be able to get help from parents with continuing mortgage payments.

You said that parents will pay people mortgages for them. How are they going to do that exactly whilst facing cost of living rises themselves? One off help for a deposit out of savings is one thing, ongoing mortgage help for the foreseeable is another.

That’s why I said it would only be the likes of retirees with index linked pensions who are best positioned to do that.

You seem a bit angry about rate rises. Why didn’t you fix for 10 years during the lowest rate period we’ve had in history?

Oh itll be itll be ongoing support for the foreseeable will it 🤣
Everyone in their right mind is angry about the rate rises.

I mean, I’d feel gutted if my mortgage was still 23% of my income, after overpaying £40k-£50k, and the joint income had increased 73% in 4 years.

Also, most normal people have absolutely not over paid that much, salaries have not increased 73%. And are definitely not in their early 30s with a household income of £130k.

You are not the average person!

These threads always end up being a platform for people to boast how much they earn

There’s is a lot of stealth bragging on MN.

Well good for you. But if you think MOST people are in the same situation as you, you’re wrong.
Our income has decreased since we bought our house in 2017, as we had a child who is disabled. There is no appropriate childcare for him, so I’ve had to change from my high pressure, highly paid career to a job more suited to family life. So when we bought our house it was 20% of our income, it’s now 35%.

When I got my mortgage in 2004 the fixed rate was 5.9% for 5 years. The variable rate one was about 4 I think and they really urged me to look at whether I could still afford the mortgage payments at 8% or even 13% which they said it had gone to before. I wonder if they still did that when mortgage rates have been artificially low in recent years or have they just been letting people borrow the max they can.

@HelpMebeok a decision was made in the early 2000s that the only way they were going to keep people in work was to encourage them to borrow, because too many people have the ability around about now to retire. So they allowed people to use their house as cash points and keep remortgaging the reasons other than moving house.

It is a pyramid scheme.
It is a complete con
However, the decision has been made globally and they cannot reverse it.

Even when rates were low banks stress tested mortgages. However as has been pointed out repeatedly in this thread, they didn’t it alongside taking into account the tripling of gas/electricity costs, steep increases in food prices and everything else we’ve had to contend with in the past year or so.

We don't earn much by London/se standards. And those are the people who have the big mortgages. Our household income was far below the average London FTB which was around £100k in 2019. I think it still is, in a way, which actually means housing has become more affordable for this (assuming it's a 2 bed starter flat they are buying) on London salaries though I guess rent and mortgage rate rises have balanced this out.

I mean, some people may have continuously remortgaged to take cash out of the house but I don’t know many who have done this. The only time we have remortgaged is because our mortgage rate was ending, and we’ve never taken additional funds out of it. We haven’t been encouraged to either.

I don't mean to be rude but you seem to exist in only in your London bubble.
You are absolutely not average in terms of earnings nor pay increases.

I am also not gutted because we are not particularly high earning or high achieving. We still earn far below most people we know who have managed to buy houses and flats (or they had really huge cash gifts)..when we bought, we knew our income was very low by London millenial home owner standards so it has to be beefed up. We had a bit of imposter syndrome cos it felt weird we could buy in London when most people our age on our kind of incomes couldn't . Now I feel like our incomes are at least aligned to most people who typically buy flats in London. We are hoping to buy a bigger 3 bed flat and hopefully that comes down relative to our flat so we can upgrade in 2 years time.

But that's where I live..what is the use of me comparing to someone who lives in Lincoln, I might as well compare to someone who lives in Malaysia. But someone in Lincoln on a lower than average salary in Lincoln wouldn't have a large Mortgage.

And the thing with London is that it has a very large transient workforce/large percentage of new immigrants. The former do not stay in London for long (so while their rent isn't high, they dont need to sustain it for long if they don't have a breakthrough) and the latter just arrived (while I have been here for 10 years and DH was born and bred here so how can we compare ourselves to them). They also don't tend to buy property unless they are HKers or perhaps expats from a rich country. The local graduate born and bred Londoner earns much more than the official average which is £40k

@Lightscribe -unfortunately, that particular poster makes lots of assertions which are simply incorrect. I suspect they pop up every now and again with name changes too because their style seems familiar.

Rates were always going to rise and we were always going to have high inflation after the pandemic period. The UK economy is also particularly badly placed.

You see it on this channel relentlessly, funding work to house’s borrowing against them, which is entirely sensible.

The “damage” if it is that is done, the uk is a low income economy, they have no interest or intention of changing that. This is where we are. House prices will remain as they are relative to income and the debt will be inflated away.

We got new mortgages starting the 80s because of moving house and as my salary rose (as I was in career where it did) we took out a bigger mortgage each time. People's situations do differ however so it is hard to compare. I then needed another due to divorce and buying my lower earner husband out and then finally one to help the last of the children buy a property.

High inflation (now - although not like the 70s where we had 20% a year for 3 years or so - so 60% in that period) and very low savings rates certainly means there is little incentive for people to save and a lot of incentive (if there is any spare money) to pay back mortgage. That is one reason, despite penalties, I paid my final one off in April. However I am not showing off. I am 61 with no savings and no pension and will work until I die and I solely support 2 children.

Have to agree @socialmedia23 are not giving an average example. We have owned several properties over the years including in London, and not overpayed on any of them until our current house, because we couldn't have afforded to.

Only overpaid on this house after an inheritance, otherwise we still would not have had a spare few thousand £££ to use for that purpose.

@socialmedia23 has some very very odd ideas about London and what people living their earn!

With respect @Xenia you shouldn't feel the need to still support your children if they all own properties themselves now. Maybe it's time to look after yourself now.

I'm a bit the same so I sympathise (still feel anxious about helping daughter despite she is a home owner now and I'm mid 50s with most of my money in my property so not loads of disposable income or a big pension).

Nothing like seeing an average person comment.

Average houses for average people.

I mean well done. But you’re in the top 5% income. That’s clearly not normal or average

Malaysia is irrelevant when looking at UK housing costs and interest rates. Lincoln and all other parts of the UK, not just London, are relevant.
You obviously move in a very wealthy peer group, people who have been gifted very large sums of money and even houses. This is absolutely not typical or average within the UK. Your salary is well above average for London and so is the rapid increase in your earnings. Everyone is telling you the same thing but you don't seem to be listening.

so are most of the people who bought in London?! top 5% nationally means nothing when we live in London. the reality is that the average FTB in London earns 100k (combined or single- perhaps some singles on 70k buying the 1 bed flats) and average FTB property is 450k. Yes this excludes lots of people from the london house buying market (and also in parts of the SE where prices are basically london style), but that has been the case for the last 10 years. The london housing market is called an inheritocracy for a reason. The only reason we managed to buy while not being on 100k combined was because we lived rent free with family for 3 years. if you are on 100k combined, it is very likely at least one of the partners would have had scope for growth in their careers.

I mean of course lots of people are not on those incomes in london but they would have either bought with a lot of help from family (so small or no mortgage) or not bought at all (rental crisis is different issue!)

You really aren’t getting it are you. Your little bubble is not representative of a city of 8million people. You are talking about one subset of people, no where near a universal experience in London. You were on another thread wanging in about how people on 100k in London are poor, you have very skewed ideas

its a city of 9 million people. Yes I have a young single colleague who is going to be sharing a room (in east london) to pay rent but yet i also have another colleague (from HK) where the interest on savings basically pay his mortgage of £800 per month. I also have another colleague who married a guy who owns his house in East London and told her that he doesn't need her help with the mortgage (she can keep her pay for her own needs). So of course if he needs to remortgage, i don't see they would have much of an issue as basically he would now have her income to help as well. I also have another colleague who is an only child and his parents own a london house(so he lives with them and they help with childcare), he is now considering buying a property for investment purposes. Another colleague i know who owns her property (3 bed flat) bought it with her husband and her sister in law who also works lives with them so they basically have 3 incomes in the house.

As you can see, the people who own either have higher incomes, more assets or circumstances that would allow them to be more resilient. They wouldn't have been in the place to buy in the first place!