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.

@Twiglets1 quite agree. And every variation within the UK housing market has pros and cons.

I live in a pretty affordable area where house prices have barely risen despite what was happening elsewhere. I don't mind that but I've never benefitted from a house price rise in gaining equity when moving, just what I've paid off the mortgage. If I pay to have work done it will cost way more than the house will ever rise by, unlike in the s-e where work is pricey but you are more likely to add value.

Similarly I can't up sticks and move elsewhere taking advantage of a strong market and buying in a weaker one.

I gain affordability but it's at the cost of choice.

That's okay for me but lots of people bemoan the massive s-e rises but are also happy to use the advantages they bring.

I personally hope this is the start of a very long plateau in house prices. If things don't go up for 10-15 years and wages catch up a bit it will be a good thing.

A massive crash isn't necessarily helpful to first time buyers as it's still difficult to know where the bottom is. Stable is better.

@maryso Great points well made.

No repossessions yet. Yet is the word. I have friends panicking who can't afford the new rates. We are still on our fixed for another 12 months - I know many others who have 2 or 3 years grace but are terrified. Several are saying they will forced to sell up and downsize - if of course they can

I follow Zoopla regularly in my local area and there's a very definite shift in the last few weeks.

It's a highly sought after area, expensive by County-wide averages, best schools, coastal etc, but not millionaires row standards...plenty of 'normal' income people, teachers, local GPs, high up civil servants etc. I've lived here for nearly 5 years and there's always, always been a distinct lack of properties on the market. Not regular at all. People fight like hell to buy a house here then hang onto it forever basically.

In the last 3 months, more houses have come onto the market locally than in the past 3 years before that put together. No obvious inheritance properties, all large, relatively pricey, desirable 3/4 bed family homes with nurseries and kids stuff visible in photos.

I think it's clearly people trying to get ahead of the game and get rid of houses they know will be unaffordable for them in the near future. The people who went all out to grab a house here in the last 10 years and managed a decent mortgage - that they know they won't be able to manage at 6/7/8% rates.

But the sellers aren't realistic yet and are asking for prices similar to 2021...so not much is selling. Houses are lingering. Unheard of, for here.

These are the more savvy sellers trying to think ahead and the way the markets looking I think a number of them aren't even going to manage to sell at the prices they need or anywhere close.

But for every forward thinking seller trying to save their finances now, there'll be another panicking one with their heads firmly in the sand who will meet a sudden, huge wall of financial shit in 2024/2025 when their fix ends and be even worse off.

I think there will be repos, definitely. Or sales at massive reductions /large price drops. But I think this is only the beggining and it's going to take a good while to filter through.

A massive crash isn't necessarily helpful to first time buyers as it's still difficult to know where the bottom is. Stable is better.

I agree - best outcome would be to let inflation eat away at the real cost of property while the nominal prices stay the same. No one goes into negative equity and in ten years with higher wages youngsters will actually be able to afford housing.

That's not good for people with savings in cash though.

Sellers will price according to need and extent of insight. All other asset values including commercial property have already fallen in nominal terms. Houses priced in 2008 money will invite substantial competition and most likely an optimal outcome, while those offered at 2018 let alone 2022+10% money are shall we say optimistic and unlikely to attract much interest. Buyers have ideally to act according to need and insight, rather than just starting from the asking price. Auctions remove clouded views on prices, as well as stress about aborted transactions. If house prices do not fall in nominal terms then let's hope that the likes of John Lewis are good landlords and there are enough of them as well as more state landlords.

Yes I agree with all that.

The plan is to let inflation eat away at the date in real terms that is clearly the plan. Wages are increasing. I’m not gonna go into details, but mine have gone up significantly in the last three years.
If people need to up skill in order to be able to command higher salaries, I seriously suggest you get on with that now.

I think you must work in the private sector if your wages have increased significantly in the last 3 years.

This is not the case in the public sector. Not the case in the education sector for example, which is where I have been working for the last 3 years. Now school staff are striking they may eventually end up with pay above inflation but this has not been the norm.

I mean, yes of course I do work in the private sector as do most people statistically.

It frustrates me, believe me I do see it all over Linkedin people whingeing about the fact that people would like pay rise is that reflect the cost of living. Apparently it’s not employers job to keep up with inflation linked pay rises. Naturally those same people are of course benefiting from increasing their prices in line with inflation. So basically they just don’t want to share the love.

but equally frustrating is people not realising that they hold all the cards right now. And if you are half decent at your job, it’s very much now or never in terms of negotiating or moving jobs.

Nobody will be commanding higher salaries if there's a recession. They will be lucky to hold on to their jobs.

But currently there isn’t a recession, so make hay while the sunshine’s position yourself to ensure that even in the event of a recession you’ll be fine. That’s my strong advice. Some people had a really really good pandemic. Just as some people had a really really good war back in the day. Try and be one of those people.

Fair enough just pointing out that your "wages are increasing" comment isn't the case for everyone.

You may say people don't have to work in poorly paid sectors like Education which is true but it's also true we need teachers, teaching assistants, etc. There's a chronic shortage at the moment which isn't great for our society but that's a whole other thread!

Statistically you are correct, most people do work private sector. The issue is however we have a lot of people, myself included who are public sector and have had years of pay freezes, renegading government departments and being shat on by the media. To put it in perspective i am earning 10k more than i was 4.5 years ago.

I like many other PS workers have a very unique skillset that in the private sector is ‘worthless’ as the skillset is completely different. If i upskilled, it wouldn't matter due to wage stagnation across the board at ‘entry level jobs’. I have been looking, trust me…

And as a result of the stagnation and poor wages despite being essential, the whole of the public sector is in crisis as we have no staff. Privatisation to drive wages to the bottom anyone?

It is indeed a whole different theead and I’m absolutely horrified that one of my children wants to go into teaching. Hopefully It’ll be very short lived.

The fact that there is a shortage, and the government is not reacting to that tells you have valued they are by society. That isn’t my problem. It isn’t the banks problem. And it certainly isn’t the house builders problem who will just sell to those who can afford it. (Disclaimer I know they do offer of 5% discount to anybody with a blue light card, etc)

@StayAnonn I live in a similar area and notice that houses that would previously been bought off market are now appearing for sale. The developers are holding back as their costs will have risen and higher selling prices are no longer a given.

Previously estate agents gave first dibs to their friends but now even those houses are on the market, so there is definitely more supply.

Yeah the government doesn't value teachers/teaching assistants or NHS staff either or many public sector employees. I wouldn't recommend teaching as a career to anyone either these days, though I think you should try to contain your horror as it's up to them within reason. Maybe they have a well developed social conscience. Maybe they just yearn for the long holidays.

Labour may put more value on the public sector when they come to power next year, which I personally see as inevitable. Public sector salaries may increase to be more comparable to private sector equivalents. Then people will start whinging about that as well😂

My main point was that "wages are increasing" is not necessarily true for large amounts of people in society.

@Twiglets1 sadly, I think she’s just got a bit of a talent for it. However I will be redirecting it towards the private sector as fast as possible so she can monetise this skill properly. As you say, the government doesn’t value teachers, and her particular forte will be right at the bottom of the list in the public sector, arts and languages.

She'll probably get sick of teaching quick enough anyway unless Labour pour a huge amount of money into it and they won't realistically have loads.

My initial post that we paid 6.5% in 2007 definitely is out of context and yes, I think the squeeze today is very tough because the salary multiples and the difficulty of getting a deposit together make life so very hard.

It is undeniably hard right now, I think the older posters are saying it ALWAYS feels hard getting that first flat or house. That absolute terror of a rate rise; that sinking feeling when the car needs work done and there is no cash; that positive pregnancy test which you want to be excited about but, oh my, the income cliff edge - all those months with virtually no income and NO benefits to help you return to work when Mat leave ends, that long gap of three years when you work just to pay the nursery bills and to keep your fingernails clinging on so your mortgage lender is satisfied and your pension is topped up and there’s still a good job when the little one starts school.

And yes, we took a lodger even though the mortgage said we couldn’t.

My dh and I guessed we were buying at the top of a bubble so the 2008 crash just made us grit our teeth and sure enough the house prices rose and the interest became a non-issue. Our house cost £300k then and we earned a very healthy £78k pa between us due to overtime. We rented tiny shared double rooms until we were 31 to buy - ten years of scraping by and saving deposit - so we were in a good place to buy.

That house would now cost £500k to buy according to Zoopla. When I look at salaries for the job I was doing then, they have kept pace. The deposit - that is hard, especially once you are paying off student loan.

I do think, Generational mortgages and a different way of finding deposits would be a good way forwards.

I am not saying it isn’t hard now - it’s horrific - but I am saying, we won’t all necessarily sink and fail. As usual there will be winners and losers, the ones with luck and the ones with none.

I will say a little prayer that all of you with financial woes now, are the ones in 10 and 20 years saying, “well, I was there in 2023 and look it turned out ok…”.

Surely generational mortgages would just increase the amount people have available to buy houses so keep house prices high. They wouldn’t help the issue.

My first mortgage in 2007 was at 6%, was very average and normal at that time, the property is only a third more now, if a buyer had same deposit the amount extra for the mortgage than what we had really wouldn’t be that much more proportionately, particularly when same jobs we had then now have doubled salary than we had at same level

Appreciate not same in all areas but it is in many others

This ^.
I think this trend has started in lots of area especially those with more younger families.
As you say, this is only the beginning of the significant falls and will take some time to filter through. The penny still hasn't dropped for many agents/ potential sellers but it will in time.

We have a combined income of just under 60k. This time last year we didn’t have the deposit ready but were told we could borrow in the region of 240.

Fast forward to now, if we borrowed 200 we would be stretched to the max. That would get us at best a small 2 bed here if that, possibly a 3 bed in a bad area/one in need of massive renovation. With increased materials and labour costs we would have to have a lot of free cash or the skills for a Reno project, we have neither of those. Most the two beds round here have either no parking, or are extremely small. It’s no good as we would like a family and I’m being realistic, if we bought this year then TTC our fixed rate would be up by the time our child was in nursery. We’d be crippled by nursery fees and possibly unable to remortgage as while ever the country is teetering on recession/continued high rates, there is a risk house prices are going to fall and we could fast find ourselves in negative equity and unable to move anywhere bigger. I don’t want to be trapped, even if that means not owning a home. Whatever, honestly! Our rental is secure and I just can’t justify buying right now, when rates alone would mean we were paying 500/600 more a month for a mortgage than our current rent. We’re really going to need that in our budget over the next few years not sacrificing it to the bank as interest.

Sad state of affairs as we are in good jobs and we can’t even confidently buy a smaller than average house. We will watch and wait. Wish we’d bought a year ago. Even if rates return to 3.5% in 2025 that is so, so much better than now. I really feel for everybody right now particularly those coming to remortgage who have possibly since dropped their hours at work, changed jobs, lost their jobs even. It’s an awful time