[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?

 

[Uncle C]

Look at an option of extending the mortgage term if possible, lenders go to age 70 generally but some go to age 75, look at reverting part to interest only if you can, look at a 2 or 3 year rate, or a rate with no early redemption penalties and review again in 2 to 3 years and revert back to repayment or reduce term back then if ratees are more afforable. Not ideal but better than defaulting on your mortgage payments. This is generic and each case needs a full factfind to give appropriate advice

More sensible than expecting a hand out

 

[Jim in the West]

you say that, missing the question of fairness. why do you expect government to support a small group that made a particular economic choice over others? at least consider how it looks for many others who took a longer view.

main reason anyone took such a short fix at the obvious market bottom was to get the lowest possible rate and payment. a prudent view would be to take as long a fix as practical, pay a bit more for secured outgoings next 5-10 years. now its suggested that those facing a remortgage in next 6mth get a tax payer backed extension to their fix, while no one else does? this is difficult to balance fairness and look at providing help.

I also subscribe to this view - it's obviously very unfortunate for many who are on fixed rate deals which will expire in the coming months. But those people have benefitted from the certainty of a fixed rate, no doubt at a much lower rate than many are now paying. With a little foresight, most should have been saving extra over the past year or more, in the full knowledge that they faced a significant hike when the fix came to an end.

The best option for the government is to focus on getting inflation under control, then interest rates can come down FOR EVERYONE. Artificially supporting homeowners by subsidising their mortgage would be the exact reverse of what the government wants to do.

I'd be really surprised if Sunak did anything for those whose fixes come to an end soon. Their only hope is if it can be proved that the vast majority in that position are Tory voters....

 

[drew]

I also subscribe to this view - it's obviously very unfortunate for many who are on fixed rate deals which will expire in the coming months. But those people have benefitted from the certainty of a fixed rate, no doubt at a much lower rate than many are now paying. With a little foresight, most should have been saving extra over the past year or more, in the full knowledge that they faced a significant hike when the fix came to an end.

The best option for the government is to focus on getting inflation under control, then interest rates can come down FOR EVERYONE. Artificially supporting homeowners by subsidising their mortgage would be the exact reverse of what the government wants to do.

I'd be really surprised if Sunak did anything for those whose fixes come to an end soon. Their only hope is if it can be proved that the vast majority in that position are Tory voters....

Is it cheaper to support homeowners now or, once they've lost their homes, to pay for them to be rehoused?

 

[Uncle C]

As a home owner many years ago I went through a period of morgage rates in excess of 15% as did many others. There was never a thought of bleating to the Government. Like many others I made ecomonies and took on a number of additional jobs.

 

[drew]

As a home owner many years ago I went through a period of morgage rates in excess of 15% as did many others. There was never a thought of bleating to the Government. Like many others I made ecomonies and took on a number of additional jobs.

Good for you. Did you have the bonus of MIRAS?

 

[drew]

Duplicate post

 

[Uncle C]

Good for you. Did you have the bonus of MIRAS?

My circumstances are irrelevant to todays lenders.
The take home message should be 'dont take on more than you can manage,' and if you do, get off your arse and do something about it. The default condition should not be 'lets blame the Government for everything' and feel entited to hand outs

 

[portlock seagull]

As a home owner many years ago I went through a period of morgage rates in excess of 15% as did many others. There was never a thought of bleating to the Government. Like many others I made ecomonies and took on a number of additional jobs.

Problem with comparison to yesteryear is the ratio was different. Of course plenty of people over stretched (brilliant story in Telegraph yesterday about some poor lamb who won’t be able to keep up payments next year on his £5m mansion, what with the children’s school fees £45k p.a….). However just to get on the market you’ve got to get 10 x £30k pa earnings etc etc (don’t come back at me quoting exact numbers, you get where I’m coming from) and many already have 2 jobs / need 34hr days to make ends meet. So they have my sympathy, it’s not as easy as saying Tory Style you have to work harder and longer. The market is absolutely corrupt, it can’t be right vast swathes of our housing stock is owned by people who don’t live in them or have even set foot in this country for one. But there are many many other contributing factors, and I don’t think one of them is people aren’t working hard or long enough to keep a roof above their heads. Far from it.

 

[Paulie Gualtieri]

We come off of our very low fixed rate in November but have booked a new 5 year fixed rate which will cost £360 a month more

We did have the foresight to plan our fixed rate maturity dates around life events. For example our energy fixed rate also ends in November but then equally our monthly child care (£600) ends in September as school starts for the youngest.

I don’t think you have to be a boomer to be of the view that the state shouldn’t help, I am also of the view point yet am directly affected by everything increasing.

We need to put this notion that the state should interject when any grievance occurs to bed before it becomes accepted as the default for the younger generation.

Personal responsibility and accountability should be paramount in the mindset.

Plenty more luxuries are available these days which are viewed incorrectly as essentials.

Cut your cloth accordingly if needed and live within your means with a buffer for such events, it’s the responsible thing to do

 

[Seagull27]

We come off of our very low fixed rate in November but have booked a new 5 year fixed rate which will cost £260 a month more

We did have the foresight to plan our fixed rate maturity dates around life events. For example our energy fixed rate also ends in November but then equally our monthly child care (£600) ends in September as school starts for the youngest.

I don’t think you have to be a boomer to be of the view that the state shouldn’t help, I am also of the view point yet am directly affected by everything increasing.

We need to put this notion that the state should interject when any grievance occurs to bed before it becomes accepted as the default for the younger generation.

Personal responsibility and accountability should be paramount in the mindset.

Plenty more luxuries are available these days which are viewed incorrectly as essentials.

Cut your cloth accordingly if needed and live within your means with a buffer for such events, it’s the responsible thing to do

You've done very well to only have an increase of £260, ours will be going up £500 in September, and that's with a rate fixed a few weeks ago before all the recent raises.

I understand the sentiment of living within your means, but the sort of rises we're talking about are taking people from living pretty comfortably and saving a good few hundred a month, to losing money each month. How much contingency is one meant to plan for?

And ultimately the decision of government support won't come down to what's fair or not, it'll be down to the best outcome for the country as a whole.* And it's certainly not a good outcome for a large number of people to default on mortgages.

*And probably more likely down to politics, if the mortgage situation continues to be challenging close to the election next year

 

[Paulie Gualtieri]

You've done very well to only have an increase of £260, ours will be going up £500 in September, and that's with a rate fixed a few weeks ago before all the recent raises.

I understand the sentiment of living within your means, but the sort of rises we're talking about are taking people from living pretty comfortably and saving a good few hundred a month, to losing money each month. How much contingency is one meant to plan for?

And ultimately the decision of government support won't come down to what's fair or not, it'll be down to the best outcome for the country as a whole.* And it's certainly not a good outcome for a large number of people to default on mortgages.

*And probably more likely down to politics, if the mortgage situation continues to be challenging close to the election next year

Thanks for highlighting the typo I meant to write £360!

I’ve worked in the lending industry for 25 years and even back in 07/08 repossessions were an absolute last resort with the key de working with the borrower to restructure temporarily or permanently the mortgage be it rate, term, type.

Forbearance measures are even stronger today. I don’t see significant repossessions but expect unsecured debt default levels to increase, driven by my reference to todays luxuries / essentials

 

[deletebeepbeepbeep]

You've done very well to only have an increase of £260, ours will be going up £500 in September, and that's with a rate fixed a few weeks ago before all the recent raises.

I understand the sentiment of living within your means, but the sort of rises we're talking about are taking people from living pretty comfortably and saving a good few hundred a month, to losing money each month. How much contingency is one meant to plan for?

And ultimately the decision of government support won't come down to what's fair or not, it'll be down to the best outcome for the country as a whole.* And it's certainly not a good outcome for a large number of people to default on mortgages.

*And probably more likely down to politics, if the mortgage situation continues to be challenging close to the election next year

We're told all it will take renters to save for a mortgage is to have a few less cappuccinos, cancel their Netflix and eat less avocado and they will be well on the road to saving £500 month towards a deposit. Maybe it's time for mortgagees to do the same.

 

[Mustafa II]

We're told all it will take renters to save for a mortgage is to have a few less cappuccinos, cancel their Netflix and eat less avocado and they will be well on the road to saving £500 month towards a deposit. Maybe it's time for mortgagees to do the same.

You do realise that many of these are the same people?

Under 40s with early mortgages are the ones that will be most affected by this.

These are largely the same people that had to save hard into their late 20s, early 30s, to get that deposit.

.... And these are the same people that are on the verge of losing everything.

 

[dsr-burnley]

Maybe the government could purchase at a very reduced rate off the landlord and tenant stays. Then the government actually gets an asset which can be sold for profit. So the landlord loses out but the tenant stays out and the government gets something for its money rather than just pumping up a balloon. Or maybe tenants can get first refusal? Lots of different options. I just can’t see why people who think they are genius by getting other people to pay for their assets should be saved the moment it gets difficult. If people did not spread themselves so thinly to maximise returns then they could absorb this. Whatever happened to living within your means?

I don't think landlords should be subsidised either, but I wouldn't agree that they should be in effect nationalised at a discount. There's been a lot of talk of corruption on this thread, but if the government (local or national) was to buy assets for less than market value with a view (even partly) to selling at a profit, that would be corrupt.

If a landlord were to sell at market value, then in practice the tenant would get first refusal as it would be easier for both parties. But many tenants wouldn't be able to get, or in some cases to cope with, a mortgage. Should the government help out there? Not IMO. They've been driving up house prices for decades, deliberately or otherwise, and everything they do to help people buy will keep the upward pressure on prices.

 

[pocketseagull]

But many tenants wouldn't be able to get, or in some cases to cope with, a mortgage

This'll probably vary around the country but certainly down here rents are almost always more expensive than a mortgage, it's just impossible to get a mortgage without a hefty deposit.

 

[Paulie Gualtieri]

This'll probably vary around the country but certainly down here rents are almost always more expensive than a mortgage, it's just impossible to get a mortgage without a hefty deposit.

Skipton have this product, hopefully others will follow suit

Press Release Article - Skipton Building Society

www.skipton.co.uk

 

[drew]

My circumstances are irrelevant to todays lenders.
The take home message should be 'dont take on more than you can manage,' and if you do, get off your arse and do something about it. The default condition should not be 'lets blame the Government for everything' and feel entited to hand outs

So you refuse to say if you benefited from the Government handout that was MIRAS. It is relevent, as everyone else can see, to your comment.

 

[Uncle C]

Dont be so nosey.

 

[mile oak]

Just curious to know as I have known some people down size but obviously for some thats not really an option. Is cloth cutting likely to see many from the South move to cheaper Northern places? As more (obviously not all jobs can) work from home, if you cant afford Brighton or Lancing or Polegate or Lewes etc what about Hartlepool? Middlesborough? Blyth? Shildon?

 

[KZNSeagull]

Just curious to know as I have known some people down size but obviously for some thats not really an option. Is cloth cutting likely to see many from the South move to cheaper Northern places? As more (obviously not all jobs can) work from home, if you cant afford Brighton or Lancing or Polegate or Lewes etc what about Hartlepool? Middlesborough? Blyth? Shildon?

There are lots of lovely places to live up here at a fraction of the cost of down south. Not sure that you have listed any though