If 5% rate is here to stay

[JustAlice]

I've read yesterday that average 2-year interest rate is now 5.4%, and a 5-year rate is 5.9%, meaning that banks think the rates will be growing long-term.
As a FTB I'd like to stay optimistic - ME conflict without NATO support can't last forewer, right? The banks change their forecasts all the time. But I've made some calculations in another thread and still can't get over how jump from 1% to 5% interest rate in a relatively short time means we have now 100K less to spend on a property.
The properties we're looking at are fairly modest, and now I'm not sure we'll be able to afford them, even being high-earners.
Am I the only one who was unaware that higher interest rates impact borrowing power so badly?

This is the calculator I used, with 60 month fixed rates, and the term of 20 years. www.themoneycalculator.com/mortgages/calculators/mortgage-payment-predictor/#!/dealfinder/mortgages/

You get benefits straight away to pay your rent, not so with a mortgage, rents are falling, it is cheaper to rent in many areas now, there is nothing more restricting to your financial well-being than a 30 year mortgage debt in volatile bond markets at today"s asking prices. You can leave a rental, you can never leave a mortgage debt until it is paid off.

And you can be booted out of a rental with eight weeks notice if you ever want to rent another one
Or you can do what the council tell you to do and stay until the Bailiff comes and then find yourself in a shitty little bed sit with your children
What a choice

"you are at the mercy of the landlord entirely."

Not really.

https://www.propertyreporter.co.uk/what-the-renters-rights-act-means-for-tenants-from-may.html

That’s not the flex you think it is
Landlords are selling up in droves
They’re only letting people rent when they have guarantors and immaculate credit history
Other landlords are following through with CCJ ‘s where previously they might not have bothered for a few hundred quid they’re doing it now just to protect other landlords from Bad Tenant’s
I would leave a property that I inherited empty now rather than rent it out and I think most people feel the same way. It’s just not worth the hassle so it could just sit there.

Yes, I agree. The RRB will be (on the whole) favourable to tenants in the private sector. Like a PP said, if mortgage payers hit hard times, lenders will generally work with the mortgage payers to avoid repossessions (extending mortgage if you can, mortgage holidays, going to interest only) but none are ideal. Your huge debt (and a mortgage is the biggest debt you can take in) just goes on for longer. It’s worth pointing out also that the number of mortgaged repossessions is the highest it’s been for a long time.

It costs to keep a property empty, double council tax on top in many cases, lots of people inheriting are struggling to pay their own mortgage, the last thing they want is a money pit hanging around they want to sell ASAP. The last I looked at the media landlords were cutting rent to get tenants not "selling in droves".

Then maybe they sell rather than rent it out as they might have previously that’s less supply with an ever-growing demand.

And That’s absolutely not the narrative in the Facebook Landlord groups that I’m in
They might cut rents to get the best Tenants and I think they’re definitely will be a lot of competition for the best tenants but that will just mean a lot of people are locked out of renting altogether. Where are they meant to go?
I would happily pay the extra Council tax and Insurance versus having some Cunt move into my property and stay there rent free for a year whilst I try to evict them
And with the guarantors now having limited liability as well, people are going to need to have perfect credit to get through the front door.
Funny story about a friend of ours actually ended up buying a house because it was easier for them to get a mortgage than it was a rental

And of course any half decent house that could’ve potentially been a family home around here has either been converted into a HMO with all the problems that come with that
Or it’s an Airbnb
We’ve got two of those on our road
Cummings and goings at all times of the night and day as people presumably catch early flights
Fricking nightmare for the community but better than renting under the new reform act I presume

There was an article in The Times the other day about landlords increasingly turning their rentals into HMO's. I think it's too early to predict what the ramifications of the RRB will be. I did read somewhere that there hasn't been a landlord exodus...not surprising since the property market is terrible, especially if you're trying to sell a flat. Competition for rentals is the lowest it's been for six years, but we'll see how things play out later this year.

Flats never were and never will be the problem. It’s houses and homes for families.

I’ve been having to deal with old paperwork of my parents. Found the letter from solicitors and bank of the purchase of their second home in 1979. I am STAGGERED at how well
they lived on their blue collar, working class jobs. And what their annual salaries were able to buy them. And their extremely young ages and they were buying their second home at age 24. And how their mortgage balance when buying this nice spacious three bed semi with kitchen extension, two gardens and drive is the equivalent today of £39,000. People talk about it and many of their generation try to gloss over it - but when you see the original dusty paperwork from that era and you hold it in your hands it’s next level wild. Neither had high responsibility jobs. They both had jobs for life. It’s unbelievable.

And yet we keep whacking the cost upon the younger generations

My grandfather never earned more than five grand in his life and our house that’s photographed with me in the garden in my pram so I’m guessing 1976
Was knocked down a made into two separate blocks of flats of 16 with communal grounds
Sadly, the grandparents were not the beneficiaries of that but it just gives you an idea of the share of friggin size of it

Exactly and @bagsandmags

No one is saying that life wasn't hard in some ways for late silents/older boomers but property was a tiny fraction of the cost relative to wages. Why can't people just be honest about it? I'm sick of older people pretending that it's all young people's fault that they can't afford a home because they buy expensive iphones and package holidays and writing a long list of moans about how hard their lives were in comparison. It's pure gaslighting.

I'm not sure sitting wrapped in a blanket afraid to put the heating on was any easier in 1988 than it is now but fine if you think that's the case.

Were you wrapped in a blanket in 1988 or 2026 ?

Actually I frequently wrap myself in blanket as I learnt in my early home owning days that it's a cheaper way to keep warm than putting on the heating.

As a public servant in the last 15 years I have had several years where pay rises have been much less than inflation.

mate, I work a professional job in a huge private firm and have had one payrise in 6yrs. Inflation meeting payrises are not the norm. I’m sick of boomers with their heads in the sand. My parents are the same. They say, ‘when I was your age we had to scrimp and save.’ I’m in my 40s. When they were in their 40s they had a 4 bed house with a decent mortgage. All paid off by 60. My mortgage is currently over £300k for a 2 bed. Mortgage runs until 75.

Anyone going back to original question, I locked in a 4.84% rate last week and I see they have dropped again so may reapply.

Blankets, we never had blankets
Luxury 😂

What happened before was prices fell but people were driven into negative equity so couldn't afford to sell at all because they couldn't pay off their mortgage from the expected sale price. That may also have been when close to 100% mortgages were available and very high multiples of income allowed. It all gets very messy when rates change quickly. I remember 15%+ mortgage rates back in the day.

What has changed now is that the Estate Agents and the banks wouldn’t get away with the behaviour that they got away within the 90s
I was working as an estate agent and we sold repossession properties for less than 50% at times of what people paid for it. That just wouldn’t be allowed now it would just have to sit there on the Bank’s books until they achieved near asking
You’d actually get less of a bargain with a repossessed property than you would a normal one.

Our first house in the 70's was £7,000 and was a huge stretch we had nothing left at the end of each month, of course no central heating or double glazing, we didn't even have a tv for several years, my DGM bought us a fridge, we got a second hand bed from a friends parents and a second hand twin tub from my mum, we didn't go on holiday at all for years. Boomers had it all so easy!
.

Yes you did. You dropped in just cleverly avoiding the war, benefitted from free university, cheap housing, a functioning NHS, early retirement for women at 60, and had a ROOF over your heads that you could call your own. I was the same as you except it was 2007, the house was in the top tenth percentile for deprivation in the UK, the market crashed and it didn’t recover its purchase value for 20 years, it cost me 5 times my salary to buy it, and I’ll be working until I’m 67. I had £10 left at the end of every month and was forced to have lodgers for a decade to meet essential bills. I was senior in my role and way more qualified and educated than either of my boomer parents and still they afforded a much better life than I ever have. Or ever will.

As if to prove my point....