6% mortgage rates; trouble a'ht Mill

[Twiglets1]

This is a new 6% mortgage rates thread as the last one is almost full.

Thanks to KievLoverTwo for suggesting the second part of the title to reflect all the squabbling these threads are causing. Which could be a thing of the past of course. But realistically, it won't be.

Actually, on reflection, I take that back.. I should have said a house is a home - not an investment. Of course it's an asset.

But as an investment. It's useless. Poor liquidity.

I feel like Crashy goes rather further than you in his negative attitude to homeowners, very possibly because you are one and he isn't.

I see my house primarily as a home to live in not an investment, though by lucky accident I have "made" money overall from my properties over the years. Nevertheless, of course you can lose on property in the short to medium term and property can't be relied upon as a pension.

Still, I'm not happy to hear of anyone's investments crashing - whether property, stock exchange or other investments so I can't see eye to eye with you on that.

Why do you object to anyone saying their house is their pension? If they are putting all their spare income in a home for themselves and their family/kids such that they cannot contribute to a pension, why should they not view that family home as an asset to be sold when they are older and the kids have left home, to release cash to supplement their old age? How is that any better or different to living overcrowded in a small flat while the children are growing up in order to be able to contribute to a pension? I don't understand why the former is a matter for criticism and the latter is not. Or is everyone expected to survive in old age on the state pension and nothing more?

Cross-posted, thanks for that clarification!

Glad I did snap up that 3.89% as it has disappeared from the Santander app and lowest is now 4.03%

@XVGN I can't control your opinion of course but to have 'very low opinions' of anyone who says their house is their pension isn't quite fair as there are people who for many reasons have not been able to afford a private pension but have just about managed to pay their mortgage and might be relying on that in later years hoping that their equity will enable them to downside and retire. Self-employed people, women who have prioritised kids and been screwed over by a higher earning husband and many other people who are not high earners or were not financially educated in the realms of pension investment may not have been able to put money aside in a pension.

Of course equity isn't guaranteed but statistically if someone has had their house a long time the value will have overall gone up. To say that 'you're happy for their investment to crash like any other asset can do' also feels a little harsh. I know you've posted to clarify the use of the term asset but not everyone is in the fortuitous position that they can afford to pay into a private pension as well as afford mortgage repayments. In fact I don't think I would ever be 'happy' for anyone's investment to crash unless it was something completely hideous like war or arms dealing or human trafficking etc.

Yay 🙌🏻

Agree with all that

All I've ever wanted in life is a decent modest home that I can't be turfed out of at a moments notice and is affordable . After years of misery in rented

And - thank god - I now have that. If that makes me a smug debt junkie then so be it !! 😅😅

I'm sure you're not smug at all @janicegarvey

Why are we being called smug debt junkies? Surely people who say things like that are just jealous.

Quite 😎

Trust me I'm not

I have had way too much hardship in my life to ever be smug about anything x

Because houses aren’t pensions, they are ‘homes’ and fulfil the basic need of shelter.

Figuratively other basic needs like food and water are similar. If those resources lasted forever (and didn’t spoil) Those at a generational advantage with greater capital could hoard those needs from the younger generations, pushing up the price and accounting for greater portions of their income that would otherwise be reinvested into society.

To rely on a house as a pension you need growth and the perpetual cycle to carry on. You need someone to buy your house off you for more than you paid.

More children, more consumers, more workers, increased productivity/development, better way of life. Growth.

By cutting off the younger generations, the boomers buying up BTL (and it is the boomers as their parents were never in the same position) have shot themselves in the foot by restricting the younger generations.

Those that say they never had money to put aside into a traditional pensions and rely on unearned gains through property are foolhardy. Pensions are linked to the stock market for a reason, they are tied to actual price discovery and incentive. If the company does well, it grows, creates profits and share price increases which rewards the shareholders and compounds. You can then buy a guaranteed annuity for stability in retirement.

Houses aren’t like that. You rely on someone to take out higher debt to buy it for more. That can prove disastrously bad at the wrong time in a cycle. See examples like Westlife in 2008 who went bankrupt investing in vast swathes of new builds in Ireland or even those that bought at the top of the market in Westminster in 2021.

https://www.standard.co.uk/business/soaring-interest-rates-london-property-bank-of-england-mortgage-prices-sales-house-home-b1140052.html

Pensions being linked to the stock market means their value can go down as well as up also @Lightscribe and I do know people who invested heavily in a private pension that didn't perform as well as they had anticipated. There are few guarantees in life and pensions are no exception to that rule.

Also, you say it is "foolhardy" when people say they never had money to put aside into a traditional pensions, and I don't necessarily disagree with that statement. But I can also relate to people who say it because as a part time, female worker myself for many years I also made what I now see as a mistake in not prioritising my own pension when younger. It often is the women in families who give up work while the children are young or work part time and this does have a negative impact on their ability to build up a decent pension. When money is tight the woman's pension often seems a lower priority than paying the bills and yes, the mortgage. Maybe this attitude is changing now but I don't know. Difficult choices have to be made when juggling all the financial commitments of bringing up a family so what may appear as "foolhardy" to some will seem as a necessary choice at the time to others.

Exactly you’ve just underlined my point.

The reason in a nuclear family unit, why one parent didn’t need to work is because the traditional roles were that one would stay at home, look after house/kids etc and one would be the breadwinner.

We have a situation now where those that worked part time/stayed at home didn’t have the opportunity to build a pension as they relied on the breadwinner. Those people now have turned to BTL or released equity in their own homes for an ‘income’.

Pre-boomer years large swathes didn’t even own property, rented off the council and relied on state pension.

Problem is now with the younger generation is that you need two breadwinners (and they have to pay for childcare). Excellent for the government (almost by design) as you now have two tax bases incoming. Then the last couple of decades were even better with importing cheaper labour and exporting cheaper manufacturing.

How are those younger generations going to afford their own pensions by that metric? More and more living costs are swallowing their income which means the economy grinds to a halt (we are now in recession which I’ve previously spoke about for years on here)

Property is based on credit and money supply, which doesn’t generate growth. It relies on more and more debt to keep the party pumping. It’s excellent when the times are good but the bad times could come within the next decade when you reach 60 and want to retire. Then what?

As I’ve said before this will have to revert to mean (as per the chart below) and that maybe at just the point when you don’t need it to, so yes, to not have other provisions is foolhardy.

I don't know why you assume that just because someone is part of a nuclear family they turn to BTL? This is my background but we haven't turned to BTL or turned to our own homes for an income. All our money until recently has gone into paying our mortgage and supporting our adult children, not enough left over for BTL even if it appealed!

We live in our house and it will never provide an income for us. We will release equity when we downsize to a smaller house which we are planning to do in our 70s so it's an asset but it doesn't provide an income. My husband has a good NHS pension, I have a rubbish pension but as noted before, there are reasons why women tend to fare less well than men in that regard.

My husband and I both needed to work throughout our relationship to support our various mortgages but are at the stage of life now in 50s (me) and early 60s (him) where the mortgage is almost paid off. We always had to pay for childcare so that's no different to the younger generation now. I very much sympathise with people struggling with mortgages and childcare and life being barely affordable because I've been there, done that.

They will, the value of the asset their debt is secured against is heavily affected by how much it costs new borrowers to borrow, the BOE won`t be cutting rates if they are rising globally, that would be a Truss Moment on steroids.

Some nice price drops there, good to see that trend starting to take off.

Im not directly assuming anything about yourself, you maybe well provisioned to support yourself in retirement.

I have no issue with landlords owning houses to rent out, although as above I think it disadvantages the younger generation.

Ones that take on excessive debt and overburden themselves to do so, passing rising interest rate costs onto the tenants is another matter however.

Over leveraged BTL is non productive to the economy, and was only a phenomenon due to ZIRP and QE over the disinflation cycle. Now we are in an inflationary cycle so the ball game has totally changed, which will send many under water.

Simply because a house isnt a store of wealth, in a property crash your money disappears ( the debt on your house doesnt disappear though, you still owe the bank ) the house doesn`t keep it intact like a savings account, "my money is in the house" is one of the stupidest memes of all time, and guess what, the bankers and mortgage lenders love it! In fact they probably started it!

I don't think you read my post - I was talking about people who have just secured a new fixed rate mortgage

"the ball game has totally changed, which will send many under water."

Which leads to more supply and more price drops, so not all bad.

They have secured a fixed rate on a pile of debt, if the house drops in value (due to the reasons I outlined) the house is losing value while the pile of debt stays the same (or gets more expensive if rates rise)

You may not be assuming anything about me personally but you did say "We have a situation now where those that worked part time/stayed at home didn’t have the opportunity to build a pension as they relied on the breadwinner. Those people now have turned to BTL or released equity in their own homes for an ‘income’".

Fail to understand why you think "those people" who stayed at home or worked part time will "now have turned to BTL or released equity in their own homes for income"?

What you see as a "pile of debt" other people see as their home so they don't really care if the property technically loses value for a period of time because if they aren't selling what does it matter?

And if they are selling the next house will be cheaper too.