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.

And that's fair enough, but not working is still a massive luxury many can't afford now. If you had 2 under 3 now, you'd not get free hours either and would be looking at around £2k in childcare. Lots of people work for nothing for a year or two so they have a job to go back to. I'm another one who can pay my mortgage just fine but I think comments like your original one about the 90s, cutting back to levels anyone nowadays would have expected well before the COL crisis on one salary, are tone deaf.

Also, the 'free hours' that people talk about cover 2 working days year round. Hardly a lot. I get the impression a lot of people past that stage think the whole cost is covered.

£2k for two would be cheap, it’s over £3k here!

Many people managed in the early 90s but thousands didn't. Not just because of mortgage rates but also because there was a massive recession.

In 1989 15k houses were repossessed. In 1991 £70k were repossessed!!! And there continued to be 40k+ repossessions every year until the early 2000s

There's lots of talk about banks not repossessing as quickly any more but they never did, it was always the last resort.

It looks like mortgage rates are staying up for the foreseeable future, so if someone can't afford the payments, mortgage holidays and extending the term aren't really going to help in the long run.

No free hours or UC top ups then.

Plenty of people don't get UC top ups now...
My parents got the equivalent of child benefit because it was universal, it's not now.

I don’t understand how that is relevant? If someone made a decision to borrow five times their salary that is a decision they made. They’re also part of the problem of ever rising house prices.

In the 90’s our first house was twice our income and I wouldn’t have dreamt of borrowing more. I thought that was high enough as it was.
A housing ladder was a ladder because you started at the bottom. Our first house was a tiny ex-council terraced two bed house which was an absolute tip so we started at the absolute bottom.

If someone made a decision to borrow five times their salary that is a decision they made. They’re also part of the problem of ever rising house prices.

I'm not sure buyers are the problem! Plus for many borrowing 5 x your salary (which not everybody does) is cheaper then renting. People just want security.

A housing ladder was a ladder because you started at the bottom. Our first house was a tiny ex-council terraced two bed house which was an absolute tip so we started at the absolute bottom.

The concept of a ladder doesn't really exist now for many reasons. The bottom rung is now very £££, people are older when buying & buying/moving costs £££.

A two bed house, tip or not, is not the absolute bottom of the ladder. That would be unobtainable for many nowadays as a first step. We did manage to get a two bed house as our first house but that was 8 years ago now and was still 5 x our income. 2 x our joint income wouldn’t even get us a run down one bed flat.

There's a very good article on the BBC News site by Faisal Islam on why repossessions are not happening, by and large.

And why that might actually be a factor leading to even higher interest rates.

https://www.bbc.co.uk/news/business-66133116

I doubt the arguing on this thread is helping people coming up to a mortgage renewal.

everyone has different circumstances, if you don’t/ didn’t have a pot to piss in there’s no point arguing about your non existent pot and who is worse off.

There is going to be a very difficult period for people adjusting to higher interest rates which likely won’t ever come down to the record lows. Have a whinge yes, it’s rubbish but then think about what you’re going to do to lessen the blow.

So if you’re looking at an unaffordable rise you have several options (not all great)

Look at extending the years on your mortgage it will cost longer over the years but more affordable payments. I did this and don’t regret still having 20 years on my mortgage.

Generate more income - take a lodger. Do air bnb. Work in a pub in the evening. Go on the extra income boards.

Move abroad. Before everyone shouts me down I did this during a recession and came home with healthy savings that have never depleted. I had a nine month old at the time so it is doable!

Reduce other costs. Be ruthless. No sky, no hairdressers, nails, no new clothes. Sell old stuff on vinted.

Think long term don’t assume that this will be a short term issue. If it corrects itself great, but that will be a bonus.

Agree with that BBC article that we won’t see mass repossessions. We are going to see the haves and the have nots get further apart. Pensioners who own their own home (and have triple lock pensions) and young people who can live with their parents will carry on mostly as normal. Large chunks of people with decent fixes and who have seen good pay rises lately will be okay too. I think the fraction of people really hurting will be much smaller than previously.

That said, the second hand car market will be interesting. I wonder what the overlap is of “people who are struggling” with “people with expensive monthly car payments”.

PSA: this board is regularly spammed by faux naïve posters shilling for the moving home with Charlie YouTube channel. No idea why my post is in italics, either.

✔️✔️✔️✔️✔️👌🏻👌🏻😅

Then you shouldn’t have bought a two bedroom house in that area at that time. How hard can it be? . You should have started with something like a studio flat. If that was still several times your salary look in another area. Stress test your mortgage before you commit so that you are sure you you’ll be able to service a larger mortgage if interest rates go up. If that is still too much you’re not in a position to buy a to property.

These threads should really start with a pinned comment saying ‘if you purchased your house in the 1980’s or early 1990’s read this from Leeds Building Society before commenting’ Read this

i mean nobody will read it and still say the same old BS but its eye opening when banks agree that those who purchased in the 80’s and 90’s were actually better off on 15% compared to the rates we have today.

I'm all good with my mortgage, stable and not a house market crashy or boomer, I just want to point out the facts

Why? We could afford the mortgage and now we’re on to our next house we can still afford the mortgage now. We’re luckily not affected by the higher interest rates but I can see how others are.

Yes you could at that time pay your mortgage. Would you had been able to if the interest rates had doubled or tripled as have happened now? If not you were lucky because the interest rates could have sky rocketed already 2018 if the BoE had not intervened.

Everyone should be reading this. People have no idea!

No where near boomers. Sick of the self indulgent whingers who have had it so good for so long and most also had handouts from bank of mum and dad for deposits too busy thinking about how impressed all their friends on Instagram will be with their big house and car that they forgot to educate themselves financially before committing.
And now they are the only generation in the history of all time that are struggling to make ends meet. As if 😄

I’ve been making this point for years. Even if people did have mortgages of even let’s save 15% which they actually didn’t for more than a couple of days but anyway, let’s call it 15%.

If you had any savings whatsoever, they were also attracting 15% as a minimum. I remember open an account for my daughter in 2000 and getting 10% on that.
The mortgage was 6% at that time.

But let’s at the images for those that won’t click on the link.

That's a tiny percentage of people. There's going to be many more who have bought a small house that wouldn't have been considered extravagant in the past. Rates may have been low, the income multiples were high and that's why it is hard now they have risen to more "normal" levels.

It was hard in the 90s, the rates were very high. The multiples were much lower. It wouldn't have been easy - look at the repossession levels in the early 1990s. It isn't easy now.

It's very hard for people who have bought recently. Luckily I bought ages ago, I empathise with recent buyers because it's a shit situation to be in.

I'm glad it worked out for you in the end. I'm amazed the AO salary was £16,000 in the 80s, I looked up the 2023 ones and they are around £21,000 - 22,000!

It's when people start spreading them on toast that the problems begin

Let's hope not. It was brutal during the 1990s and even worse if you had negative equity.

@Proudboomer

Your £16000 starting salary:

£16,000 in 1989 is equivalent in purchasing power to about £50,930.75 today, an increase of £34,930.75 over 34 years. The pound had an average inflation rate of 3.46% per year between 1989 and today, producing a cumulative price increase of 218.32%.
This means that today's prices are 3.18 times as high as average prices since 1989, according to the Office for National Statistics composite price index. A pound today only buys 31.415% of what it could buy back then.