Mortgage struggles

[jim8flog]

Sorry was this type of inflation IE caused by energy bills around?

No it was caused by unions striking for massive pay rises prior to Thatcher

and huge jumps in food costs when we joined the Common Market

 

[Aztecs27]

We've just had to renew our mortgage...we're now paying £400 a month more than we were - which is going to be a struggle, to be honest. I earn an OK amount of money, but my wife is part time and the rest of the time has our daughter to look after (because it's pointless her working full time and then just having that wiped out by nursery fees).

We don't spaff money on alcohol/tobacco every week (don't smoke and barely drink), so short of switching off the internet at home there isn't much more corner cutting we can do.

 

[PJ87]

No it was caused by unions striking for massive pay rises prior to Thatcher

and huge jumps in food costs when we joined the Common Market

So not energy..which backs my statement

The inflation has not been seen in UK before. The banks aren't sure how to deal with it

 

[SurreyGolfer]

Uncomfortable is the wrong word, but we'll have an outstanding balance of £380k with 20 years left when our 5 year fix at ~2% is due up at end of 2024. The plan was to take a 10 year fix next year but that's unlikely now. If rates stay as is, it's probably an extra ~£600 a month give or take. Plus fix on gas/electric has ended, and and and across other bills and general inflation, and it's looking like we'll have to find an extra £800-1,000 a month. We're 'lucky' in the sense that my middle child is starting school next September so we'll get some money back from that.

I don't begrudge rates going up from historic lows but the speed and severity of increase was something I didn't account for and figured we'd be able to get a fix next year at ~4%, maybe 5% max. We didn't max our budget when buying this house by any stretch, so I've got a lot of concern for people who did, it's about to get even more painful for them.

 

[TimShady]

Why is there always a need for older generations to say they has it as bad?

No, you didn’t.

 

[PJ87]

This is the thread I was referencing.....

https://twitter.com/x/status/1572975530722627584

"So for instance, take 1980. Back then, official BoE interest rates were on average 14.2%.But because people were much less heavily indebted, because their incomes were much higher vs their repayments, that was, in affordability terms, EQUIVALENT to 3% in today’s interest rates."

Yes thank you! That's the one

Anyone borrowing heavily at a very low rate was taking a risk, given the fluctuating nature of interest rates. Would it be a good idea to oblige lenders to fix the monthly repayment amount (not the interest rate) for the entire duration of the mortgage? This would have the effect of protecting borrowers from rising rates, while the risk posed to the lender would encourage less reckless lending. This would also have the effect of curbing property price rises, fuelled by low interest rates. In reality 6% is not terribly high. Like many others, I remember the days of a 15% interest rate, but I was lucky enough to be working for a bank at the time & enjoyed a subsidised rate.

Not entirely true tho. My mortgage is 250k. That's small potatoes now days in my area but to my parents? They paid 120k for their house.

My house was 300k it's 550k now ..

My kids will need 500k mortgages no doubt ..

 

[Aztecs27]

Why is there always a need for older generations to say they has it as bad?

No, you didn’t.

haha! exactly. My mum and dad were all "ooh I remember when interest rates went from 8 to 13%! We know how you feel"...you don't though, do you? because the house prices weren't 5-6x the average salary and could be afforded on one wage. The two aren't compatible. Sure, they would have had higher payments, but the jump would not have been as extreme as it's been for most now.

 

[TimShady]

haha! exactly. My mum and dad were all "ooh I remember when interest rates went from 8 to 13%! We know how you feel"...you don't though, do you? because the house prices weren't 5-6x the average salary and could be afforded on one wage. The two aren't compatible. Sure, they would have had higher payments, but the jump would not have been as extreme as it's been for most now.

There’s a weird stupor on this country that seems to make a lot of people to want others to have it as or more difficult than they had it; like you’ve not truly lived without hardships. This attitude generally comes from those with no idea what it’s like to be in the generation they scorn.

 

[PJ87]

haha! exactly. My mum and dad were all "ooh I remember when interest rates went from 8 to 13%! We know how you feel"...you don't though, do you? because the house prices weren't 5-6x the average salary and could be afforded on one wage. The two aren't compatible. Sure, they would have had higher payments, but the jump would not have been as extreme as it's been for most now.

Yeah my parents accept it more than it's harder now because they know both have to work...


Even on my wage I have to get my wife to work to pay for the nice things in life otherwise it would be a struggle.

 

[Tashyboy]

Why is there always a need for older generations to say they has it as bad?

No, you didn’t.

That’s an opinion, although I would love to see why One would think that It wasn’t as bad.

At one time I worked in the medical centre at a pit. Part time as a care assistant in Kings Mill hospital when I was on days. Fridays was a cash in hand £40 for doing first aid examiner.
Missis T worked as a nurse part time, Fridays was testing for Vibration white finger and Sundays was in a Care home. We did 6 jobs between us for a while. It was bad. We did six jobs between us.
My point still remains as per the link underneath. Why are a small minority of the UK having to fund the inflation rate. I like the idea where tax increases so everyone takes a smaller hit. Put tax back when inflation drops.

Mortgage payments set to jump by £500 for one million households

Bank of England says higher interest rates are yet to hit many homes but lenders are proving resilient.

www.bbc.co.uk

 

[road2ruin]

Uncomfortable is the wrong word, but we'll have an outstanding balance of £380k with 20 years left when our 5 year fix at ~2% is due up at end of 2024. The plan was to take a 10 year fix next year but that's unlikely now. If rates stay as is, it's probably an extra ~£600 a month give or take. Plus fix on gas/electric has ended, and and and across other bills and general inflation, and it's looking like we'll have to find an extra £800-1,000 a month. We're 'lucky' in the sense that my middle child is starting school next September so we'll get some money back from that.

I don't begrudge rates going up from historic lows but the speed and severity of increase was something I didn't account for and figured we'd be able to get a fix next year at ~4%, maybe 5% max. We didn't max our budget when buying this house by any stretch, so I've got a lot of concern for people who did, it's about to get even more painful for them.

I think that's the important bit especially when you get people arguing that those that borrowed at low interest rates should have been aware that they were only ever going to go one way. I think the vast majority (I include myself in that) always enjoyed being able to borrow on a mortgage that was at 1.59%, it enabled me to do things that wouldn't have been possible otherwise. We did our sums when we bought in November 2020 and were happy that we had headroom for when rates started to rise. What we didn't account for was them going up to the present level in the space of 12 months or so, I'm not sure anyone planned for that. In the area we live house prices are expensive and my mortgage reflects that, the positive is that we've got (on paper) a significant price increase since we bought and also a decent amount of equity so if the worst happened we could buy smaller and probably be close to mortgage free.

 

[TimShady]

That’s an opinion, although I would love to see why One would think that It wasn’t as bad.

At one time I worked in the medical centre at a pit. Part time as a care assistant in Kings Mill hospital when I was on days. Fridays was a cash in hand £40 for doing first aid examiner.
Missis T worked as a nurse part time, Fridays was testing for Vibration white finger and Sundays was in a Care home. We did 6 jobs between us for a while. It was bad. We did six jobs between us.
My point still remains as per the link underneath. Why are a small minority of the UK having to fund the inflation rate. I like the idea where tax increases so everyone takes a smaller hit. Put tax back when inflation drops.

Mortgage payments set to jump by £500 for one million households

Bank of England says higher interest rates are yet to hit many homes but lenders are proving resilient.

www.bbc.co.uk

Anecdotal Fallacy — Critical Thinking | Intelligent Speculation

An informal fallacy where personal experience or a singular example is used instead of compelling evidence. People often gravitate towards using their own experiences or those of people around them as evidence in arguments. It's natural to do so as citing scientific evidence to craft a good argumen

www.intelligentspeculation.com

 

[IanM]

No it was caused by unions striking for massive pay rises prior to Thatcher

and huge jumps in food costs when we joined the Common Market

And you need also to add the massive jump in fuel prices at the time of the Yom Kippur War. I guess folk forget that and it won't be taught in schools.

I have bad news for everyone.

There's always "something" that causes aggro.

 

[Voyager EMH]

I cannot see how increasing interest rates will do anything to curb inflation when it's not driven by consumer spending. I only have to look at my own monthly incomings/outgoings to know that we're paying considerably more now than we were 12 months ago once you factor in energy costs, food costs and a rapidly increasing council tax.

On the mortgage front we were always aware that interest rates were only ever going to go one way however we hadn't planned or budgeted for 13 increases in a row and when I sat here last September doing the sums paying a mortgage rate of 6.5% would have meant over £1,200 additional money going out of the house every month which wasn't ideal. We weren't able to look at new deals until May this year so we took the decision to pay the ERC of £11,000 to fix for 7 years at 3%. This wiped out all of our savings although we were in the fortunate position to be able to do it in the first place. At long as interest rates stay at 4% or higher for the duration of the mortgage then we'll get that money back although as much as anything we've bought ourselves 7 years of peace of mind as the increased payments are about £370.

Raising the base rate has little (possibly only to a tiny amount) to do with consumer domestic spending.
Money spent on mortgage, rent, fuel, food etc does not disappear. It remains in circulation.
Curbing the amount in circulation can be achieved to some extent by making borrowing less attractive. This is the theory of controlling money supply to control inflation.
This has only a little to do with domestic borrowing and spending and more to do with large scale borrowing and lending by financial institutions and businesses.

Positive balances and negative balances are both the money supply.
Money lent out is money in circulation. Control this by raising the interest rate.
Money in the bank is also money in circulation, merely temporarily waiting to be circulated.
The only way to control the "money in the bank" in the same way would be a wealth tax.

 

[PJ87]

Id say it's my kids generation which will have it roughest

Crumbling public servics

High energy bills

Ridiculous house prices and now high rates again

House down my road went for £750k last summer ..

https://www.rightmove.co.uk/properties/125071109#/?channel=RES_BUY

I mean it's nice but who would pay it here? I bet your house are worth less and a lot bigger

 

[chrisd]

Why is there always a need for older generations to say they has it as bad?

No, you didn’t.

Were you there?

 

[Bdill93]

Id say it's my kids generation which will have it roughest

Crumbling public servics

High energy bills

Ridiculous house prices and now high rates again

House down my road went for £750k last summer ..

https://www.rightmove.co.uk/properties/125071109#/?channel=RES_BUY

I mean it's nice but who would pay it here? I bet your house are worth less and a lot bigger

You'd be surprised in Worcester... I reckon you get a bigger garden, slightly bigger rooms and maybe an extra bedroom for 750k but not a lot more.

 

[Neilds]

Id say it's my kids generation which will have it roughest

Crumbling public servics

High energy bills

Ridiculous house prices and now high rates again

House down my road went for £750k last summer ..

https://www.rightmove.co.uk/properties/125071109#/?channel=RES_BUY

I mean it's nice but who would pay it here? I bet your house are worth less and a lot bigger

Apart from the loft conversion, that is fairly similar to my house which we got valued last month for £350K. Glad we live in the 'cheaper' SW

 

[Alan Clifford]

House prices are so high, particularly in the South East. It doesn't cost £ ½ million to build a house. This is excess demand over supply and reflects a shortage of land for building rather than construction costs.

I have no idea why supply is restricted - planning rules, greenbelt?

I do know it is made worse by stamp duty. There is no real reason for me to remain in commuter Surrey but I do object to paying £30k in stamp duty to move. The opposite would be economically sensible A subsidy to old people like me to move would free up lots of housing in high demand areas.

 

[Fade and Die]

And you need also to add the massive jump in fuel prices at the time of the Yom Kippur War. I guess folk forget that and it won't be taught in schools.

I have bad news for everyone.

There's always "something" that causes aggro.

Every generation imagines itself to be more intelligent than the one that went before it, and wiser than the one that comes after it.

George Orwell