[Finance] What should the government do about the coming base rate mortgage hike time bomb?

[Mustafa II]

800,000 people up for renewal next year.

I personally know people who simply won't be able to afford the increase. They're ones of many I'm sure.

Tax breaks? Government subsidies? Or should they just allow the crisis to play out?

 

[Justice]

Bring back self cert mortgages

 

[CaptainDaveUK]

As much forward planning as possible. I locked my fixed 5 year mortgage with Santander in March at 4.19% and had been regularly checking since January even though it only renewed in June, when it would be more like 5.5%. You can change to a better rate nearer to your renewal date, if it gets better up to two weeks before renewal, but if the rate gets worse you’ll have locked in at the better rate. No real risk, apart from you are committing to a particular lender, but they are all fairly similar rates. If you need to renew in 3-6 months time lock in now on a shorter 2 year deal. If interest rates come down you can switch to the better rate up to two weeks before renewal. The worst thing to do is wait until your renewal date because then you are then literally stuck with whatever the markets offer at that moment in time, currently this will probably be higher than it is now. Hope this makes sense and is helpful.

 

[happypig]

Introduce a right-to-buy scheme for private tenants with a government-backed mortgage scheme. Allow private tenants to buy the property they live in for, at most, whatever the landlord owes on it.

 

[BBassic]

I've got the larger part of a split mortgage up for renewal in April.

I'm concerned but am, thankfully, one of the lucky ones who can afford to stomach a higher rate for a couple of years.

It's a scary time for many.

 

[Reddleman]

Introduce a right-to-buy scheme for private tenants with a government-backed mortgage scheme. Allow private tenants to buy the property they live in for, at most, whatever the landlord owes on it.

So a landlord who has owned a property for twenty years and diligently paid the mortgage off is now forced to sell it for buttons to the current landlord? Have I got that right?

 

[pocketseagull]

The tenant(s), not the landlord have been paying off the mortgage tbf.

 

[beorhthelm]

Genuine question - not trying to be goady

Many people are struggling with rent increases imposed by (often greedy) landlords - should private-rental tenants also receive government support if they struggle with higher rents?

Problem is, any support or financial aid for either mortgage-payers or renters is tantamount to taxpayers subsidising the profits of mortgage lenders and landlords.

it certainly makes it more complicated. another side is what to do about those that missed by all those already re-mortgaged or on longer fixes.

BoE is effectivly bound to do what it can with monetry policy to lower interest rates. what government could do, and im surprised they have not, is ask the bank to suspend the target 2% inflation. but that means you cant beat on them (either Chancellor or BoE) if inflation doesn't fall.

 

[Reddleman]

The tenant(s), not the landlord have been paying off the mortgage tbf.

Yeah but over a twenty year period you might easily have 10 different sets of tenants, so it’s the one at that particular moment that wins the award.

Also there’s no guarantee that the rental income fully covers the mortgage payment especially on a buy to let mortgage.

It’s an insane idea that is literally the state stealing private property to give it to others.

 

[KZNSeagull]

Introduce a right-to-buy scheme for private tenants with a government-backed mortgage scheme. Allow private tenants to buy the property they live in for, at most, whatever the landlord owes on it.

I like that idea. That would mean a free house for me

 

[Springal]

We appear to be fast heading to a world where there is no personal responsibility. As far as I can remember mortgage offers always had illustrations which showed what the payments would be at 5%, 7% , 10% kind of thing so it should be factored in at that point

 

[happypig]

Yeah but over a twenty year period you might easily have 10 different sets of tenants, so it’s the one at that particular moment that wins the award.

Also there’s no guarantee that the rental income fully covers the mortgage payment especially on a buy to let mortgage.

It’s an insane idea that is literally the state stealing private property to give it to others.

Thatcher did it in the 80s to much acclaim (from some quarters)

 

[Live by the sea]

I’m not sure you can expect the govt to get involved . We have been used to very low Interest rates in England for a long time , but everyone knows they can go up .

 

[Pevenseagull]

Not sure what they should do but have a rough idea what they will do

Blame immigrants, Putin, Corbyn and remoaners.

 

[Si Gull]

I had a mortgage in the 80s/90s and, whilst I remember the high interest rates being a worry, it never felt overwhelming. As others have said, wage increases were higher and the mix of capital/interest payments helped. Also, I'm not sure there were so many fixed rate deals. I was on variable so at least the increases were incremental and could be managed to an extent. We are now seeing the problem with fixing at a low rate just as rates take off. It's a cliff edge for some who will now have to find £X + £400-500pm. I imagine we'll see a level of repossession like in the 90s. Not great.

 

[Weststander]

I am sorry if this sounds harsh and I wish anyone facing challenging times all the best but we can’t keep expecting the govt to bail people out everytime things gets tough.

Since Covid it seems to be the go to solution, people will have to make sacrifices until the interest rates stabilise. I was too young to really understand it all but talking to my parents about interest rates in the late 80’s early 90’s they were horrendous and people found a way to deal with it. The same must happen now.

A third of a million families had their homes repossessed at that time, with an adverse financial effect for endless years afterwards.

 

[Official Old Man]

Interest rates when I purchased my first property in 1988 was 16%. There are a few things to take into account though, weekly wages and cost of property. I seem to remember my mortgage was about a third of my income.

 

[Is it PotG?]

Any such 'hand-outs' would be available for everyone, including the wealthy?

Another concern would be a similar situation to furlough, where a plan designed to help folk out might be abused by the criminally minded for unlawful benefit.

 

[luge]

This I agree with, the Bank of England needs to hold its nerve and keep interest rates at current levels. MIRAS could work but it brings its own issues like increasing the wealth/benefit gap between homeowners and non homeowners which is already at record levels. It also disproportionately favours the middle classes which some will find issue with.

No government could survive the repossession deluge that will happen if they arent seen to be doing something. I'd be surprised if MIRAS would be set at levels that would be beneficial to most mortgages. From memory it was 30k single / 60k Joint limit in late 80's. this would have to be hundreds of thousands with current prices and that's probably untenable. I guess it would be token.

Most people will have to ride a house price drop for sure and 10% drop on the rates from when this started spiralling only really takes us to pandemic prices. And it depends where you are in the country. I'm in haywards heath and things are increasing in value. House on my estate went for nearly 1.1 million 2 weeks ago, it was priced at 850K in 2021. The reason is that even with price drops, people can sell up in London and buy these outright.

 

[HeaviestTed]

The government aren’t responsible for the current mortgage rates rises and if you truly believe they are then I suggest this thread isn’t for you. And by the way I am no Conservative voter but that’s just factually wrong.

Market intervention always comes at a huge cost and should be avoided here.

The government are absolutely responsible, inflation was caused by the increased energy costs - the government could have slashed tax on energy which would have a hit on tax takes but would have stopped inflation before it started.

Everyone could see inflation was coming because of the increased energy costs and the government did absolutely nothing, nada, zilch.

 

[WATFORD zero]

I am afraid that interest rates and mortgages aren't going to stop increasing unless we can stop inflation increasing and certainly recently, the Government seem to have other priorities occupying them. Even with immediate changes to the major inflation drivers, the effects won't be felt for a couple of years yet

It's shit, but I can't see anything changing for at least 18-24 months yet, and even then any improvement will be frighteningly slow