Base rate just hit 5%

[LisaP1215]

Is there no end to these rises??!!

And also that families are more highly leveraged all round, facing higher fuel bills etc. Perfect storm conditions.

I have two bedrooms at three times that price - in Zone 3!

Save your energy for figuring out what you're gonna do to afford the new increased payments

I wonder if the govt will discourage fixed rate mortgages now - I'm sure they will if they have the power to do so. Fixed rate mortgages have made base rate increases a very blunt instrument against inflation.

Come to the grim North, I paid £130k for three bedrooms about eight years ago.

We bought our house in 2007 for £165k it's recently been valued at £390k our wages sure as hell haven't more than doubled in the last 16 years. You are talking bollocks.

And a stupidly big corner plot lawn that kills lawnmowers.

Lol. Someone's out of touch with reality aren't they?

I think its quite reasonable to expect mid 6 to 7% with it stabalising in the longer term around high 5's.
Inflated property prices will react slower but will trend back down but not as low as they were and wages will reluctantly rise.
Pain will be felt.
Its a cycle, the bubble has burst, all be it deflating at a rate of knots as opposed to a pop!

Surely people didn't think they would stay very low for ever, hopefully savings rates will increase

I took out a mortgage of 6.2% in 2007 (just before the crash). I was locked in for 10 years (seemed like a good idea at the time!). The crash happened, and the base rate plummeted. I was stuck on 6.2%. Met my now DH and moved in with him. Rented out my house, as could not afford to get out of the mortgage because of the massive exit fees. Ended up renting it for 4 years, but it became more hassle that it was worth. Sucked up the exit fee on the extortionate mortgage and sold the house at a loss. this was in 2014.

The house now is worth about £20k more than I paid for it in 2007.

What I’m trying to say is that actually, it wasn’t ‘the 80’s’ or ‘the 90’s’ where the interest rates were as high as they are now. Some people were still stuck on what the rates are today as little as 9 years ago.

I live in the land of flat caps and pigeon fancying and whippets.

Probably not for some time. Like a pp poster said same interest rate as usa and their inflation isn’t as bad. I can see it going to 7 or 8% easily.

I actually quite liked the north, spent four years there, but the career opportunities in my niche just aren’t there yet.

I bought my house as a fixer upper low in the market, but it’s now an example of why the “people in mortgage difficulty are stupid and overstretched themselves and should have considered high interest rates when taking out their mortgages” view isn’t accurate. Very ordinary homes in very ordinary parts of London owned by very ordinary people now cost huge amounts of money - and most people have the option of stretching themselves to the hilt for a mortgage, or stretching themselves to the hilt on rent. One of the two means they have a secure home and something to show for the money leaving their bank account each month. That’s the reality for a lot of homeowners.

It’s a combination of everything atm. My fixed rate is until July 2024 so I’m hoping things will have calmed down slightly then. At the moment I’m paying £150 extra for gas/elec plus easily £100 extra for food per month in the past 18 months. I’m potentially looking at a £400 per month mortgage payment increase so that’s easily £650 extra per month I will have to find. Fortunately, DC2 will go to school in September 2024 but I was looking forward to no having to pay nursery fees and being able to replace things like my 15 year old car but that won’t happen now unless I have to.

To be fair the average salary in 1990 at your ages then was approx £11k for males and 9K for females, so you were on pretty high salaries, double the national average adjusted for age, so not sure why you're comparing to minimum wage earners today?

Double the average earnings (combined about £70k) would be able to buy a £250k house now.

FWIW I don't disagree with your point that that house price affordability is harder now, but I'm afraid you've posted some very inaccurate anecdata.

Here's the source for historical age adjusted average salary https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/adhocs/006810newearningssurveynesagegroupgrossweeklyandhourlyexcludingovertimedata

A 6% rate today feels the same as 13% did in the 1989s due to the level of borrowing, so if you don't think 13% is high crack on telling people they're being drama llamas.

My first mortgage was 7% BUT my first property cost around 2 times my annual salary. We have our mortgage fixed at 4.75 now but our house would cost 4x our joint salaries
Its not the rate itself that’s the only issue

Does anyone have any thoughts on whether house prices will fall? We are in the fortunate position of nearly having paid off our modest mortgage but always imagined we'd up size to accommodate growing teens and older relatives. It now seems we would end up having to sink an extortionate amount of money into a mortgage, mostly interest to do so because house prices are so high. What we want is top of our budget and we don't know if it's better to keep our savings and wait or to buy with a 5 year fixed rate and hope they don't go any higher.

@WonderingWanda
if house prices fall so will the property you want to buy so will balance out if you are buying and selling.

The one problem as a northern resident is getting jobs. If you can get a good job, you can live like a king. You'd think that the internet and regional airports would allow employers to leave London now. Some have, Michelin moved to Stoke and Sage have always been in Newcastle, so why don't others follow?

After COVID, I think it's inevitable that businesses will slowly leave London and spread out. They know they don't have to be there, but many are locked into onerous long leases, and at the moment, they wouldn't even have the capital to move because everything costs so bloody much.

Give it 15 years and I think we will have an entirely different work landscape.

The treasury are about to open a massive office in Darlington.

I'm starting to think it's going to hit 6% much quicker than people expect.

The notion that £250k would buy you a 2 bed house in zone 1 😅. It wouldn't buy you a 1 bed flat there

I don't think you'd even get a one bed for 250k in London zone 1...