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.

They’re currently over 1 million vacancies in the UK. If you’ve got two arms and two legs, you can get a job. Most people could cover the interest on their mortgage on minimum wage.

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

And yet there are still people insisting there couldn't possibly be a housing crash/large-scale repos etc. Which is very optimistic imo.

That Leeds Building Society link is an eye opener. Clearly explained and an easy read. I feel for renters and first time buyers.

It’s irrelevant what people paid in the past. This is not a discussion of what you can afford then, but who’s the biggest victim.
What matters is what you can afford when you bought your house and how you calculate what is affordable in a reasonable way to make allowance for a worst case scenario.

Just as an example, a quick look on Rightmove tells me that you can buy a one bed flat in Bromley from £125,000 and £95,000 in Cambridge, £75,000 In Huntingdon.
People may not want to start with a one bed flat but this is now what is the lowest cost properties in this market and it is what it is.

I agree and banks have recently agreed with the government to take measures to keep people from losing their homes. For example, allowing people to extend the term, allowing them to switch to interest free, giving them a minimum of 12 months from the first missed payment before instigating repossesssions.

I don't think we will see the record high repossessions we saw in 1991 return (75,000) - the affordability checks were far more lax back then too.

Still going to be tough for people not on good fixed rates though.

The fact that the likes of the Yorkshire bank are recognising it and offer support is a very different climate from 80/90’s.

I remember being under 18 in 1992 and going overdrawn on a bank account so not able to enter into a credit agreement legally but being charged £30 for everything that went over my authorised overdraft on a weekly basis. I ended up nearly £300 in Debt until my father went down to the bank and demand they dealt with it. I was only earning £20 a week as a society person. The charges and the additional interest was what pushed people into repossession.

That doesn’t happen these days

I think I am miss remembering the amount I was earning as a quick google tells me it was more in the line of £8k. Long time along and I might me remembering my total income with my extra job. I left the civil service in 1997 as an EO and was earning about £21.K . My husband was a EO and when he died his salary was about £26.5k nearly 6 years ago. Unfortunately the wages in the civil service haven’t kept up with inflation at all.

I've just applied for a 2 year fixed at 5.77%. My broker reckons it'll go down in 2 years and advised going for 2 over 5 years.

With all these things the answer is somewhere in the middle.

Assuming your interest rate would always be 1% was foolish. That was a complete anomaly and never going to be sustainable. I had limited sympathy when people were complaining about having to go up to 3% because overall that's still quite low. But the speed of recent increases coupled with everything else is undoubtedly hard.

The comparisons with the 1990s are the speed of change. People similarly found what they had expected to pay and now had to find were totally different. Dismissing this as 'but your mortgage was tiny' is unfair. Lots of other things were relatively more expensive. Have a look at an old Argos catalogue and some of the toys/items were almost as much as you'd pay today.

In the same vein saying 'you should have planned for it now' is unfair when so many other costs have increased.

Regional differences are massive. Those in the south east have the biggest mortgages but have also benefitted from the biggest gains in equity. I haven't seen any sympathy for the poor folk who bought flats in Aberdeen and have never seen their value recover since 2008. It does seem to many like these things only matter if they affect certain areas.

It's also very middle class to say things were affordable on one wage. As a child of the 80s I'd say my mum stayed at home, as in she looked after us during the day. But she also cleaned the local supermarket every morning and had a Saturday job. My mother in law gutted fish at the crack of dawn and did a few evenings in the chipper. I don't know anyone whose mother didn't work in some capacity.

Today's standard of living overall is better than the 80s and 90s. People have holidays, meals out, treats that simply didn't exist. However it is built on much greater levels of debt.

what do you mean? Are you saying people should get a second job to pay the additional interest on their mortgage, so have two full time jobs?

I’m saying the even if they lost their jobs tomorrow, they’d still be able to cover the interest. In the majority of cases. However, it’s highly unlikely that they will lose their jobs. Given there are 1 million people missing from the workforce.

How many of them are full-time, though?

I've just checked vacancies in my city, population around 390,000. There are 618 full-time jobs advertised, most of which call for specific skills - plumber, electrician, accountant, various kinds of engineer.

The minimum wage jobs with no skills (though they all require experience) are almost all part-time, very rarely offer more than 20 hours and often don't guarantee more than a few hours.

I haven't seen any sympathy for the poor folk who bought flats in Aberdeen and have never seen their value recover since 2008. It does seem to many like these things only matter if they affect certain areas.
same for my old house in the NW of England. Bought in 2007 sold in 2021 for 10k less than we paid. not everyone had house values increasing.

Interesting, thanks for posting

As I say the likelihood of you losing your job without gross misconduct at the moment is minimal. There are certain sectors that are struggling at the moment. And single people as always disproportionately. However, if you’re single without children, you could do two part time roles. Where there’s a will there’s a way

But they have more than mortgage interest to pay out in a month. There are other bills, food, travel to work, insurances.

I’m with respect, rightly or wrongly unskilled people are pretty unlikely to have ever had the capacity to pass a mortgage affordability test in the first place, certainly since 2008.

My house cost £72k in 1989
My mortgage was £900
I earned £65 a week and my husband £300 and we struggled for a few years.
The equivalent today according to the calculator is a mortgage of £2400
with my wage at £250. So, I would struggle today on my own

I don’t think people will be worrying about any of that. The priority is Keep in the roof over your head that’s it. If it’s beans on toast for seven nights a week then so be it.

Two part-time roles is often near impossible as it is more likely to be different shifts each week, often over the full 7 days, and only known a week in advance.

What I remember from my parents and their friends in the early 80s, was that they would buy an absolute shell of a house, do it up, sell it on and buy the next do-er upper.

My parents did this 4 times before we landed at our final family home.

That isn't really an option now either. There are so few houses needing that sort of work and the cost of materials - even if you did most of it yourself - are so high that making a profit with value-added is almost impossible too. Plus, who has the time when people are working longer hours than ever and everyone is all hands to the pump, with the children in expensive childcare all the time?

So it's multi-faceted. You can't compare.

Some costs we have now are unavoidable. You can't point at mobile phones and internet and suggest we could live without them. We can't. They are part of how we live now and it is complete exclusion from society to not have those things. They are the equivalent to a water bill now. They are part of the cost of living. That is not pampered entitlement, it is the way the world has changed.

You seem very determined to be defeatist, so you probably will be oh well.

You sound very privileged. Is your wage just spending money?

how can people only worry about paying mortgage interest and not any orher bills, food or even how they will get to work.

You honestly sound like a nob head. Oh well.

When i saw you put you were an AO in the 80’s on 16k I nearly fell off my chair. I think the 8k is more like it and tell me about civil service pay……I'm an HEO and even 6 years after your husband died I'm only on circa 35k a year. All the pay freezes has well and truly killed the civil service. But its ok though, the daily mail readers think we all get final salary gold plated pensions (we dont) to make up for it. The only thing keeping most of us there is the slightly better pension than private sector.