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.

They already have made it harder for repossessions to occur than in the late 80s/early 90s when lenders were acting with fewer regulations & repossessions were subsequently higher.
And if you think Labour would provide more protection than the current government then that’s even better because it’s almost certain that Labour will win the election next year don’t you think?

The Labour Party scrapped MIRAS in 2000 when the base rate was around 6%. Historically, 6% isn’t a particularly high base rate.

Imagine how much will go into private hands when generation rent retire.

Also note that I never said any government would make repossessing houses illegal. Of course they won’t and never would do because occasionally it is the right thing for a bank to repossess a property. Where the owners are making no attempt to pay the mortgage, for example.

And arguably 4-6% is where it should be to encourage people to save. People should be earning interest on savings.

I think interest only became more popular after the indemnity mortgage debacle.

Couldn't agree more, much as I don't want it IMBY we really need a massive building program. Just maybe, we will get that if Labour win the next GE. I hope so.

If rates hit 6/7% (they won’t) they would 100% bring in some sort of mortgage relief.

Why don't you think they will hit 6/7 % ? If they bring in mortgage relief won't they have to bring in rent relief, given that rents are so high and going up too ?

So mortgage relief would be like the energy subsidy we’ve had this winter? The taxpayer would top up mortgages?

People like OP and a lot of MN are not going to want to live in council houses, they are for other people

That’s a bit rude.
Council housing is for everyone. I wish there was more of it, like Singapore.

More for other people...

They simply can't afford to bring in either. Not without bankrupting the entire economy. The tool bag is empty when it comes to helping with mortgages.
Dymaxion is wrong, rates could hit 6/7%

People I know had interest free 95% mortgages in the 90s. I also know of people who got preferable rates because of their jobs. Do you have a link that they didn't exist

There were in the main two types of mortgage in the 90s. Repayment - you paid off capital and interest. Interest only - where you paid interest only but paid into an endowment which was designed to pays off the capital when it matured. The latter ended up as a financial disaster and millions of people claimed compensation.

There was no such thing as an interest free mortgage. Everyone would have taken them out if so!

I had a 100% endowment mortgage.

I'm talking about interest only! No idea why it says interest free as I realised I typed that! Sorry ☺️

The could bring back MIRAS. If I remember rightly it meant that you paid 25% less of your interest. So if your interest was £100 per month, you paid £75. It still didn't stop huge numbers of people losing their homes though.

I am massively procrastinating

all 25 years. No deposit.

1989 interest rate 14%
average house: £59,533
average wage: £12,353
multiple: 4.8

£716 per month mortgage
£214,932 total repayment
£155,399 interest amount

1993 interest rate 5.5%
average house £55,057
average wage £17,784
Multiple 3.1

£338 per month
£101,423 total repayment
£46,366 interest amount

2021 interest rate 2.65%
average house £272,000
average wage £38,131
multiple 7.1

£1241 per month
£372,168 total repayment
£100,168 interest amount

2023 interest rate 5%
average house £285,000
average wage £31,772
multiple 8.9

£1667 per month
£500,005 total repayment
£215,005 interest amount.

That’s the phrase. Endowment mortgage. Thanks @IClaudine
my parents had one, I heard it mentioned a lot as they were panicking a lot.

So glad I didn't give into FOMO during the pandemic and have stayed in my very low mortgage crappy house. Working on saving to move In 2025.

Mortgage interest rates were more than 5.5 in 1993! That may have been the base rate, but not the mortgage rate. I took put my mortgage then and I think it was about 7% ish.

They never let the market properly reset in 2008 as it was supposed too, they used QE to keep the debt bubble high and wages low causing asset inflation. This from the decisions from 2008 not just covid. Covid added another 500 billion to the debt , if covid had not have happened it would been gentler but it needs to reset and there will be many casualties. It's shit but if they try to prop again it will be even worse in 10 years time.

They really can't bring back MIRAS without also subsidising rent. We simply can't afford that. Government bond yields have just overtaken Italy, we are now officially the most debt soaked nation in the G7. That makes further borrowing to fund such schemes impossible as it would make servicing our current public debt unachievable.

I used the same stat supply for all of them. It’s not exact and is fag packet calculations as there are so many variables and so much different data. But as a quick comparison.

if you looked individually there was variation. So found one of the office of national statistics one for the year to use.

Our mortgage rate as first time buyers in 2001 was fixed for five years at about 5.7%. One part of our mortgage currently has a rate of 5.2% and the other (smaller, thank goodness) part is currently 7.74%. It would be great if the second part went back to 5%!

Government bond yields have just overtaken Italy, we are now officially the most debt soaked nation in the G7.

Wow that's depressing