6% mortgage rates

[spring33]

Old thread https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates?page=1

New thread, let's hope the next one won't be 7% interest rates or higher.

I see you think "space" means the air around them.

More to the point, there are no children mortgagees unless you're on the wrong thread?

You're being very literal.

I'm well aware there are no child mortgagees. The point is people don't listen if you lecture them endlessly using the same terminology. As pointed out by a PP who I was agreeing with.

You can carry on repeating the same stuff if you want but I doubt anyone's still listening.

You don't really think MN is a space that matters in the real world, do you? Or that I'm the slightest bit interested in how much an adult mortgagee is learning?

Others are saying the same thing in lots of different ways, so those who don't get it, despite it being said by many other posters in many different ways, won't get it anyway. It would be a shame for someone who has a chance of avoiding difficulties to miss out, because who's sad enough to trail through a long informal chat on mortgage rates? Not interested in those who refuse or neglect to learn, they're adults.

If my disinterest in "teaching" bothers you that much, @Twiglets1 surely there's some clever MN function to hide my posts so you don't get to not listen and post about your not listening?

yeah I'll look into that

To be honest @maryso I was just bored by seeing the same phrase repeated in nearly all of your posts, on multiple threads, without any additional commentary that may make it more interesting or open up a point of discussion. I’m not sure there is an ‘ignore poster’ button on here sadly.

House prices weren't anywhere near where they are now.

Our current rate is equivalent to the 90s and they're expected to keep rising.

You'll just have to rely on your brain, if there's no automated ignore button!

Back on topic, the latest article on the BBC seems to suggest these rates are here for the long(er) haul.

BoE seems to suggest they are here until end of 2026, at least.

That is a LOT of misery for a LOT of people - and there are plenty of people who will be caught up in that who didn't have much/any control over their circumstances. e.g. children.

It's going to be fucking heartbreaking to see it.

I agree some people will struggle. Some will struggle because they over extended themselves to get the huge house thinking that house prices would continue to rise on and on and low interests rates would go on and on. They didn't allow wriggle room and so will struggle.
Some will struggle due to loss of job, lose of income etc. These things always happen, sadly.

Lots of people won't struggle, some didn't over extend themselves. Some sit in smaller homes and wait until they can really afford to move. Some have help from family.

Maybe an upside is that house prices will stop rising so dramatically and people will think before borrowing more and more?

But it doesn't make sense
"pouring more than twice the price of two average UK houses down the drain"
Google says average UK house price is £285k so your colleague spent more than £570k in rent over 11 years (let's say £600k)

"They saved over three times what they spent on eleven years' rent in 2022's fantasy house money and paid what they should have paid in 2008 prices"

So they saved over £1.8million?
So theyve just bought a house that would have been worth say £500k in 2008, went up to £2.3million by c.2022 but the owners have now agreed to sell for £500k ?

A) bullshit
B) your colleague is clearly not anywhere near the "norm" if they can afford to spend that much in rent so their plan wouldn't be feasible for the vast majority of the population
C) Even if this all happened and worked perfectly well for them, they were still lucky in that they were able to stay in their nice rented property/s (probably because they were paying extortionate rent - £600k over 11 years is more than 4.5k a month!) - sadly lots of people don't have that security and have to move multiple times, which is why lots (not all!) of people appreciate the security of buying over renting

Perfectly put.

I suspect that they probably spent more than that on rent, given where they had to live for work and schools! And saved considerably more than that, based on their previous and new homes. Just scale it up or down as needed if that helps you "relate". The point is they did not have to compromise because a brief clear look at the negative rate world when they sold, possibly drummed home by inflated prices for mediocre homes, possibly "bad" luck, pushed or convinced them into renting until now. The real lesson is to live within your means and be sceptical over unsustainable offers. It may suit you to join a pyramid scheme, however expecting it to stay forever is just fooling yourself.

That's much longer than they've said previously. It's going to be very hard for many people. There was an tweet one somewhere saying how many children live in homes with a mortgage, can't remember the number, it was pretty high. It's going to impact on them and that is heartbreaking. It is going to impact people in the 30s-40s greatly, and many of them will have children.

I can't believe we are already at 6.7% for average two year fix. I thought they would go up from the lows of 1-2%, I was thinking it would be more like 3-4% over this timescale/a few more years.

I took out my mortgage 6 years ago and stressed tested to 8%, the figure recommended by a few places at the time, as I recall - we're getting ever closer to being above that test level.

The BoE's own rules required only testing to 3% points above the current fixed rate. For many on 2% fixes, that is a stress test of only 5%. We are higher than that now.

The old reply "didn't you stress test?" may no longer be appropriate - because rates may be higher than they tested to.

I agree that slowing house prices is a good thing. I'd agree that they could go down a bit, too. And that high interest rates are probably required to get inflation under control. And that I'll personally be fine with raises higher than my 8% stress test.

But it still makes me sad to think of how others will suffer with it - regardless of whether or not they had a hand in their fate by buying a larger house than they needed etc. It's still a awful situation for them; and for any children or others who will have to bear the pain without having any agency in their situation.

So they've just bought a house that would have been worth say £500k in 2008, went up to £2.3million by c.2022 but the owners have now agreed to sell for £500k ?

This requires the vendor to have been an idiot working in total isolation from market forces or someone operating some kind of tax dodge/money laundering scam. I can't believe it happened.

Thank you for plugging the numbers in. That was roughly what I had understood from it and it just doesn't make sense. Even scaled down, as the other poster later suggested, it makes no sense, and that's before you consider the fact average house prices were mentioned.

Where they are that would get a large studio or a modest one bed flat. So numbers are far too low, and also since they had to take stamp duty into account in their rentals and most people rent on income not assets, it also points these being ridiculously low figures. This conjecture is numerically idiotic. However it's interesting how the conclusion is of the seller and buyer being idiots or scammers rather than the most obvious one being the numbers are far too low.

ok but even if I scale it up with wider parameters to justify the potential discount on the new house.

a) It's still pretty flipping unbelievable - if you're now saying they spent 1million on rent over 11 years, and then saved £3million on their house - if said house was approximately £4million in 2008, went up to £7million c.2022 you're expecting us to believe the owners happily accepted a nearly 50% reduction less than a year later?

b) I can scale it up to help me "understand" but 99.99% of the population will never be able to "relate" to someone who can afford to spend that much on either rent AND saved sufficient extra money to put down on a £4million house while renting, or to even afford to buy a £4million house in the first place.

It also doesn't work if you scale down - as an example I've looked up houses that have just sold for the average house price (£285k) near me and found some that have sold prices in 2008.

None of them have magically reduced back down to that price or anywhere near- they sold for between roughly £130-140k then. So someone who bought in 2008 could sell for £145k profit today whereas someone who had been renting since then (or even "just" since 2012) would probably have spent well over £100k on rent and would have struggled to also save an extra £30k (for a 10% deposit) in the meantime.

So the fact it worked for your colleague is irrelevant as the vast amount of people will never make a saving worth 11 years of rent.

That's not to say that renting cannot sometimes work out better than buying - either logistically, financially, or just from a social/individual perspective - of course it can. But your specific example with the figures quoted, is completely unfeasible.

Wasn't this a story about your very sensible colleague holding out to buy at the right time? But turns out they were buying a several million pound house? It's not exactly a typical experience is it?

agree that those in their 30s/40s are really getting screwed over - they are less likely than older generations to own outright so will either be mortgaged or renting, so affected either way.

They are also more likely to have kids than those slightly younger, so have additional childcare costs on top of housing and usual bills, and don't even have the options to flatshare/move back with parents/more easily move to a cheaper area that are more easily available (though still far from ideal) than those without kids. Lots will still be paying back student loan deductions, which again those older will have paid off or not taken out, and those younger probably have a higher debt overall but (for those who started after 2012) also have a significantly higher repayment threshold.

They (we!) already lost out by starting uni just as student loans increased, and then graduated into a recession. Plus drastically increased house prices, covid and now cost of living crisis!

Unlike you, I'm not into making up spurious amounts to demonstrate my ignorance. I'd be surprised if they spent as much as £1m on rent, although they might have, I'm not privy to their finances nor am I interested, and provided a character reference at the start, presumably once they had a track record of renting they used their landlord/s tenant type reference. I think it's likely that they did spend a large part of that on rent because like most normal people rentals tend to be what you can live with rather than what you'd be prepared to buy, although they clearly didn't find something they felt worth buying for a very long time. It would have been something workable for them. Also I don't see why you're so obsessed with the 50% reduction? Arithmetically, a 50% increase requires only a 30% reduction to reset. The 50% reduction you keep using gives a 100% reset, which is either ludicrous or perhaps just incompetent. And places are being offered with about exactly that level of reduction, in the case of commercial property, it's not unusual for current prices to be what they were 20 years ago. Because that's how it works when interest rates go up. If you need to sell and hang onto totally false expectations in the current market, you really will need an idiot buyer to oblige.

I'm sure there are a lot of things that some people can never make work. This family couldn't make buying work and rented. Some people who bought under subsidy and are clamouring for more subsidy will find that they won't be able to make that work either.

don't forget stagnant wages!