Delphinho123 Posted October 12, 2022 Share Posted October 12, 2022 17 minutes ago, Genie said: This goes back a bit, but goes to show even today 2.25% is historically very low. Obviously the idiots we have in charge have spooked the market into pulling all decent value mortgages but I expect in a short period they will return. 5% for a 5 year fixed rate deal isn’t especially expensive imo. The issue is that people borrowed everything they could on a gamble rates wouldn’t revert back towards where they historically were. Similar to @lapal_fan we could have borrowed much more than we did but realised the risk was too high should rates rise, or we lost a salary etc. I said before, where I live it’s full of people in their early 30’s in fancy houses and leased Audi’s who I fear starting to panic. I agree with both yourself and Lapal, I just think it isn't always as cut and dried as 'borrowing what you can afford'. There are so many factors and variables at play in this and peoples circumstances change for the better (as yours have done) and for the worse. What you could afford 2/3 years ago, even factoring in a 3/4% interest rate increase, may no longer be what you can afford now. There are also a lot of people who would prefer to buy than pay off a landlords mortgage but in order to do so, those people need to max out what they can borrow. I have sympathy for first time buyers and people who have just got on the ladder. There are then people like myself who can afford the increase but it just means I'll go without when it comes to takeaways, meals out, holidays, nice cars (I have a very basic car as is) etc. Fine, doesn't bother me. Maybe I'm just angry at all the people on Twitter who talk about 'Interest rates being 15% back in my day'. The world has changed. Income as a percentage of house price has changed. It's going to be a tough old slog for a lot of people. 4 Link to comment Share on other sites More sharing options...
lapal_fan Posted October 12, 2022 Share Posted October 12, 2022 1 hour ago, Ingram85 said: It’s relative though isn’t it, 13% back then is different to 13% percent now based on wages compared to cost of living. People can barely afford it at 5-6%. Saying people need to look at their budget misses the point that even shithole run down places you wouldn’t house your worst enemy in are selling for £150,000 plus at the moment. We had to settle for a small, ok-ish terraced house in an ok/meh area and that was £185,000. Your trad basic 3 bed semi that your parents could always afford years ago is now £250,000 plus and out of reach for most working class normal people. I agree. It's the house prices which are the problem, not so much the interest rates. And I also agree with your house assessment. Whilst I could have gone for a 4-bed detached for 300k when the banks were waving $$$ at me. I plumped for a £175k traditional 3-bed semi (with a decent view, which is why we bought it tbh). That was 2016 - I had it valued when everything was mental with Covid and the guy said "I'd get you £285k for this within a week" - I laughed at him and called him a bullshitter and he was deadly serious. How can my house, which we only decorated and had a new bathroom fitted, go up £110k in 5/6 years? It's **** ridiculous. 2 Link to comment Share on other sites More sharing options...
VillaChris Posted October 12, 2022 Share Posted October 12, 2022 Guess it's a change in mentality needed perhaps, sure I read months back there's a much higher % of renters abroad and there isn't this dream desire to own properties in countries like Germany but I could be miles out on that. Maybe you need to tweak and relax restrictions on anyone who has serious ISA currently but then again many people really on Bank of Mum and Dad to help with owning houses and not everyone has endless savings in the race to get as many likes on your instagram/tiktok feed as possible. Link to comment Share on other sites More sharing options...
VillaChris Posted October 12, 2022 Share Posted October 12, 2022 1 minute ago, lapal_fan said: I agree. It's the house prices which are the problem, not so much the interest rates. And I also agree with your house assessment. Whilst I could have gone for a 4-bed detached for 300k when the banks were waving $$$ at me. I plumped for a £175k traditional 3-bed semi (with a decent view, which is why we bought it tbh). That was 2016 - I had it valued when everything was mental with Covid and the guy said "I'd get you £285k for this within a week" - I laughed at him and called him a bullshitter and he was deadly serious. How can my house, which we only decorated and had a new bathroom fitted, go up £110k in 5/6 years? It's **** ridiculous. Same here. Moved to current place just outside Sutton in late 2014 and was purchased for 191k. House five doors down went for 325k a month ago. Looking to move and was thinking Tamworth/Dosthill area is o.k to downsize to as has decent transport links to London, most on the market are on and off within a week and going for 350-375k! Link to comment Share on other sites More sharing options...
lapal_fan Posted October 12, 2022 Share Posted October 12, 2022 25 minutes ago, Delphinho123 said: I agree with both yourself and Lapal, I just think it isn't always as cut and dried as 'borrowing what you can afford'. There are so many factors and variables at play in this and peoples circumstances change for the better (as yours have done) and for the worse. What you could afford 2/3 years ago, even factoring in a 3/4% interest rate increase, may no longer be what you can afford now. There are also a lot of people who would prefer to buy than pay off a landlords mortgage but in order to do so, those people need to max out what they can borrow. I have sympathy for first time buyers and people who have just got on the ladder. There are then people like myself who can afford the increase but it just means I'll go without when it comes to takeaways, meals out, holidays, nice cars (I have a very basic car as is) etc. Fine, doesn't bother me. Maybe I'm just angry at all the people on Twitter who talk about 'Interest rates being 15% back in my day'. The world has changed. Income as a percentage of house price has changed. It's going to be a tough old slog for a lot of people. I agree with all of that bud and I hope you accept my apology for my previous post, it was snappy. You're absolutely right for 1st time buyers. I got my first house for £90k, for a shit tip in Cradley Heath, a proper doer-upper. I sold that 5 years later for £130k.. I've seen listed properties in that area are now pushing £190k for the same shitty house I left behind, but the tiny galley kitchens have been knocked into the small dining rooms, making a mid-sized kitchen/diner.. So you're absolutely spot on for first time buyers having to save up £20k deposits for houses which were worth roughly half of their value 6/7 years ago.. It's completely unsustainable and the housing market needs a huge reset. There will be bad days coming for some, in negative equity, but hopefully the interest rates remain relatively low.. Link to comment Share on other sites More sharing options...
tinker Posted October 12, 2022 VT Supporter Share Posted October 12, 2022 The real crunch is coming for the over mortgaged BTL landlords, total disaster if the interest levels go and stay high. The good part about it is house prices are going to have to come down, how much is the next question. 10% isn't to bad but the way this lot in charge is performing i would say 25% wouldn't be unbelievable. I do know people who are trying to sell now to rent and ride the interest rate hikes out then purchase once the market has adjusted. Link to comment Share on other sites More sharing options...
AlwaysAVFC Posted October 12, 2022 Share Posted October 12, 2022 7 minutes ago, tinker said: The real crunch is coming for the over mortgaged BTL landlords, total disaster if the interest levels go and stay high. The good part about it is house prices are going to have to come down, how much is the next question. 10% isn't to bad but the way this lot in charge is performing i would say 25% wouldn't be unbelievable. I do know people who are trying to sell now to rent and ride the interest rate hikes out then purchase once the market has adjusted. I don't know the exact situation but someone my Mrs works with has about 5 or 6 houses. With mortgages using the other properties. With some of those due for a remortgage. Sounds messy even without the interest rate rises. Link to comment Share on other sites More sharing options...
tinker Posted October 12, 2022 VT Supporter Share Posted October 12, 2022 5 minutes ago, AlwaysAVFC said: I don't know the exact situation but someone my Mrs works with has about 5 or 6 houses. With mortgages using the other properties. With some of those due for a remortgage. Sounds messy even without the interest rate rises. I know people in this exact situation and this interest rate rise is a complete disaster to them that can only echo through the housing market affecting house prices. Link to comment Share on other sites More sharing options...
Davkaus Posted October 12, 2022 Share Posted October 12, 2022 (edited) 22 hours ago, lapal_fan said: The average HOUSEHOLD wage is £37k?! Christ, @Xela spent that on bog roll last Tuesday Makes sense, the average full time salary is 31k, with single adult households, part time workers, and people who don't work for one reason or another, the average household is going to be well under twice the average income - I suspect these numbers take pensioners into account as well, which will drag it down further Edited October 12, 2022 by Davkaus 2 Link to comment Share on other sites More sharing options...
lapal_fan Posted October 12, 2022 Share Posted October 12, 2022 18 minutes ago, tinker said: I know people in this exact situation and this interest rate rise is a complete disaster to them that can only echo through the housing market affecting house prices. I guess they'll have to sell (at a huge profit most likely)? 1 Link to comment Share on other sites More sharing options...
tinker Posted October 12, 2022 VT Supporter Share Posted October 12, 2022 8 minutes ago, lapal_fan said: I guess they'll have to sell (at a huge profit most likely)? Who's going to buy them at the current prices, whoever it is has to most likely get a mortgage at the higher interest rates.......the market has to drop. 1 Link to comment Share on other sites More sharing options...
AlwaysAVFC Posted October 12, 2022 Share Posted October 12, 2022 My brother is having a stressful time as he works in an estate agent and there are lots of chains falling through. It's typically those at the bottom of the chain that are struggling to get their mortgage. I guess typically they have less equity other than a deposit and less income. Link to comment Share on other sites More sharing options...
Demitri_C Posted October 12, 2022 Share Posted October 12, 2022 5 hours ago, Ingram85 said: We had to settle for a small, ok-ish terraced house in an ok/meh area and that was £185,000. Your trad basic 3 bed semi that your parents could always afford years ago is now £250,000 plus and out of reach for most working class normal people. Man where do you live??? That sort of budget either gets you a room the size of a shack or a box. You aint getting anything close to a 3 bed with that budget near me. Add another 200 or 300k on top for something spacious Link to comment Share on other sites More sharing options...
ml1dch Posted October 12, 2022 Share Posted October 12, 2022 3 hours ago, tinker said: The real crunch is coming for the over mortgaged BTL landlords, total disaster if the interest levels go and stay high. The good part about it is house prices are going to have to come down, how much is the next question. 10% isn't to bad but the way this lot in charge is performing i would say 25% wouldn't be unbelievable. I do know people who are trying to sell now to rent and ride the interest rate hikes out then purchase once the market has adjusted. This is all correct. And the crunch after that is what happens when they are left with no option other than to (try and) sell. We're likely to see a scenario with huge amounts of houses hitting the market due to both residential and BTL mortgagors unable to manage payments. But the rental stock availability plummets due to the sales of the latter just as demand starts to skyrocket due to the sales of the former. Meanwhile all those properties sit on the market with nobody able to get a mortgage to buy them. Link to comment Share on other sites More sharing options...
bobzy Posted October 12, 2022 Share Posted October 12, 2022 21 minutes ago, Demitri_C said: Man where do you live??? That sort of budget either gets you a room the size of a shack or a box. You aint getting anything close to a 3 bed with that budget near me. Add another 200 or 300k on top for something spacious It sounds like you're in the absolute non-real-World of London? 2 Link to comment Share on other sites More sharing options...
lapal_fan Posted October 12, 2022 Share Posted October 12, 2022 29 minutes ago, ml1dch said: This is all correct. And the crunch after that is what happens when they are left with no option other than to (try and) sell. We're likely to see a scenario with huge amounts of houses hitting the market due to both residential and BTL mortgagors unable to manage payments. But the rental stock availability plummets due to the sales of the latter just as demand starts to skyrocket due to the sales of the former. Meanwhile all those properties sit on the market with nobody able to get a mortgage to buy them. Which is what eventually happens when you pull the ladder up too far for anyone to reach. 1 Link to comment Share on other sites More sharing options...
ml1dch Posted October 12, 2022 Share Posted October 12, 2022 2 minutes ago, lapal_fan said: Which is what eventually happens when you pull the ladder up too far for anyone to reach. Indeed. I imagine a lot of private renters will have watched the commentary of the last few weeks of "mortgage payments will soon be a third of people's monthly income" and be wondering what all the fuss is about. Link to comment Share on other sites More sharing options...
Demitri_C Posted October 12, 2022 Share Posted October 12, 2022 40 minutes ago, bobzy said: It sounds like you're in the absolute non-real-World of London? Exactly that bob. Get screwed out of our arses down here Link to comment Share on other sites More sharing options...
ender4 Posted October 12, 2022 Share Posted October 12, 2022 3 hours ago, AlwaysAVFC said: I don't know the exact situation but someone my Mrs works with has about 5 or 6 houses. With mortgages using the other properties. With some of those due for a remortgage. Sounds messy even without the interest rate rises. Yep, someone i work with who is on average UK salary and so is her husband.... in the last 4 years they have bought 4 houses for BTL. I don't know how they are doing it. But as interest rates go up, won't they just increase rent to keep the houses? Link to comment Share on other sites More sharing options...
stuart_75 Posted October 12, 2022 Share Posted October 12, 2022 5 minutes ago, ender4 said: But as interest rates go up, won't they just increase rent to keep the houses? I would imagine so if your contract has finished and you're just on a rolling term with the landlord. Link to comment Share on other sites More sharing options...
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