[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?

 

[dazzer6666]

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.

They‘ll be alright - can now wait for the upcoming price crash/correction, followed by lower interest rates in a couple of years and then make their move. Problem is the BTL lot will be all over it again at that point.

 

[dazzer6666]

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

Daughter is looking around Galashiels……..very affordable…….

 

[Harry Wilson's tackle]

I'm not sure what to do right now. We got our first mortgage 18 months ago so we need to get looking at a new one.

As it stands it looks like we are going to have a £300 a month increase.

And that money is basically our disposable income right now per month. And only because our mortgage was £250 cheaper than the rent we were paying when we got it so it's going to be back to how we were.

I was tentatively hoping I could buy a new (used) car this year as my car is now 17 years old and has cost me £2k over the last 2 mot's just so I can get to work.

Nervous times for me.

Just trying to figure out if we should fix for 2 or 5 years.

It's a shame that first time buyers are only offered a 2 year deal when they take one out.

Best of luck Spongy. I remember how much buying a place meant to you

 

[warmleyseagull]

Well as long as you and your sons are okay, screw the millions of others who are in serious risk of losing their homes (mainly young people, under 40).

Wonder if your opinion would be different if your sons were up for a renewal which they couldn't afford the repayments....

Guess I asked for this sort of OTT inane response.
So much of finance relies on timing; one is fortunate, had to remortgage for new house; other decided to pay penalty to take advantage of lower rates. Cost him 4 figure sum. All others who have fixed rate mortgages could have done same.

 

[keaton]

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.

Weren't they only 15% for a few hours?

 

[Machiavelli]

Weren't they only 15% for a few hours?

They were, but that won't wash with Uncle C, who thinks he's had it tough and the rest of us are a bunch of lefty snowflakes, and will trot out plenty of suspect statistics to make his case.

 

[Herr Tubthumper]

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.

Okay boomer

 

[Herr Tubthumper]

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?

Brighton or Hartlepool …I hope people like @Uncle C, with their flippant comment, can see how desperate some are.

 

[mile oak]

Daughter is looking around Galashiels……..very affordable…….

37k for a flat on Rightmove. You cant get a beach hut down here for that! Ok just checked and 30k for Beach hut in Hove but 40k for a garage.

 

[Live by the sea]

I thought the whole point of mortgage approval nowadays is to stress test to check whether someone can comfortably afford a rise of 5% in their mortgage rates .

We have been extremely fortunate over the last 10 years or so but very low mortgage rates were never going to go on forever.

 

[Live by the sea]

Brighton or Hartlepool …I hope people like @Uncle C, with their flippant comment, can see how desperate some are.

I doubt whether anyone would move from Brighton to a deprived northern town , not out of choice anyway .

 

[Harry Wilson's tackle]

Brighton or Hartlepool …I hope people like @Uncle C, with their flippant comment, can see how desperate some are.

Uncle C you say?

Been on ignore for many, many years.

 

[Randy McNob]

Not being funny but everyone knew the days of cheap borrowing would end at some point and people should have prepared, it is easy to calculate what your repayments would be if the base rate was 5% back when the rate was 0.25%. borrowers should have saved the difference and paid back capital then the rate rises wouldn't have hurt so much - and if you're one of those buy-to-let parasites you'll get no sympathy from me

 

[dsr-burnley]

I doubt whether anyone would move from Brighton to a deprived northern town , not out of choice anyway .

It may be understood by some that Brighton's worst slum is better than the poshest house in Lancashire, but that view is based on pure prejudice, not based on fact. Maybe £250k for a 4 or 5 bedroom newbuild with a countryside view is overpriced to you, but they seem to sell.

On the other hand, if anyone from Brighton is thinking of coming up here and driving the prices up, then ey up, wait on while I put mi flat cap on and get mi whippet.

 

[Arthritic Toe]

Forgive me if I struggle to believe the dinosaur of the BoE governor who STILL believes raising interest rates will fight inflation

Thing is though - its the only tool in their toolbox. The BoE was made independent by Gordon Brown with the remit to set interest rates to keep inflation at or below 2%. Whether it works or not - its all they have.

 

[Bodian]

I doubt whether anyone would move from Brighton to a deprived northern town , not out of choice anyway .

Moved north in 1997. Entirely my choice.

Thanks.

 

[dsr-burnley]

Weren't they only 15% for a few hours?

Base rates were 15% or more for 6 weeks in 1976 and for 3 weeks in 1981.

But from July 1973 to April 1992, base rate was over 10%for all but 50 months, and for nearly all of those 50 months it was 8 or 9%.

And as a very rough guide, a £50k mortgage over 20 years at 12% would charge £60k interest over the term on a repayment basis, while a £300k mortgage at 2% over 20 years would also cost £60k.

 

[Berty23]

Surely no one is still pretending that 12% in the 70s/80s on 2.5x one income was as hard to absorb as 6% on a 6x combined income are they?

 

[dsr-burnley]

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.

It's also impossible to get a mortgage if you're too old, have a bad credit record, or don't earn enough. None of those people would be comfortable with their landlords being driven out of business.

If you are in a slum and there is a good supply of private accommodation available, then you could move. If you're in a slum and council housing is all that's available, you are stuck, because there will never be an oversupply of council housing.

They need to build more houses. It's the only way to get prices down.

 

[Bodian]

They need to build more houses. It's the only way to get prices down.

Or ban second/third homes and holiday homes. In my avenue of 14 houses - when I moved here 20 years ago 13 were lived in full-time. Now only seven are. That's six houses that could have been bought by people to live in taken out of the market. So, those that are available in the area to still live in have gone up in price.