[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?

 

[Weststander]

Reintroduce MIRAS.
Reintroduce credit & currency controls.
Look at the Gold Standard mechanism.
Nationalise building societies and clearing banks.

 

[Mexican Seagull]

Just let it play out.....

 

[Peteinblack]

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.

 

[Reddleman]

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.

 

[deletebeepbeepbeep]

That's the risk you take for getting a very large long term loan, people are just going to have to suck it up.

 

[kevo]

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.

What an awful, callous post. "People found a way to deal with it". Really? Presumably not the thousands that had their homes repossesssed. The mortgage spike started because of Truss and Kwarteng's disastrous mini-budget. The government caused this, it's not unreasonable for some measures to be introduced to prevent people from losing their homes.

 

[Uncle Spielberg]

Most people will have an average £ 400 - £ 500 pm increase in the South on an average mortgage. Best option now may be a 2 year fixed rate or a rate with no early redemption penalties to enable a switch if rates reduce. Review your mortgage options 7-8 months before your rate ends to find out your position and the options available with your present lender and the market. Happy to help in anyway. There is talk of being able to offset mortgage payments again'st tax liabliltiy, a petition has started on it

 

[luge]

Tricky as market intervention causes further problems down the line - and this is partly as a result of one of them. House prices are so high because of market interventions in the late 00's and continued cheap money.

The easiest and safest way through this, and I hold little economic knowledge, is probably to stop raising interest rates. There is alot of inflation that will drop soon enough as China is opening up again, and energy prices are down.

The UK will continue to see stubborn inflation, at a lower level than now, because of brexit. If there are no renegotiations on trade deals with the EU, expect to see higher everything here in the UK as the cost of importing/exporting is now so high.

The days of 0-2% base rates are probably gone. So everyone who has a large mortgage, like me, should adapt to that reality as a new norm if possible and anyone on a low interest rate should if they can, try and overpay now to help alleviate the problems coming down track.

Easier methods to deal with this is to extend mortgage terms and government would be wise to open up regulation to do that (I think they have already).

I worry so much for many who have been placed in severe trouble through no fault of their own and I hope that a new government will take sensible steps to reintroduce confidence within Britain and our economy.

 

[drew]

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.

Very different time. Pay rises as i remember, we're quite often double digit percentage.

 

[Reddleman]

What an awful, callous post. "People found a way to deal with it". Really? Presumably not the thousands that had their homes repossesssed. The mortgage spike started because of Truss and Kwarteng's disastrous mini-budget. The government caused this, it's not unreasonable for some measures to be introduced to prevent people from losing their homes.

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.

 

[Daddies_Sauce]

Just let it play out.....

I'm not sure that is a valid option. My son is just getting a mortgage, even with the deposit that he and his girlfriend are putting down, the amount they are having to borrow is scary. House prices have increased so much over the years, maybe the reintroduction of MIRAS (short term?) is an option, scary to think that at one stage we were paying 16% interest, I doubt interst rates will go that high this time, maybe 6% - 7.25%?; but I can see many in trouble defauting and handing back their keys, lulled by the years of very low interest rates.

 

[luge]

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.

I'd be very surprised if any of the parties intervened at an actual give money to people level.

The Bank of England is independent but it is also not. Halting this madness of rasing interest rates is step one. MIRAS is a good shout for another step. Being more lenient with repayments another.

 

[Reddleman]

What an awful, callous post. "People found a way to deal with it". Really? Presumably not the thousands that had their homes repossesssed. The mortgage spike started because of Truss and Kwarteng's disastrous mini-budget. The government caused this, it's not unreasonable for some measures to be introduced to prevent people from losing their homes.

P.s.

US Federal Reserve votes to increase interest rates to 16-year high | Federal Reserve | The Guardian

Rise in benchmark interest rate is 10th hike since March 2022, when the Fed started its rapid inflation-fighting campaign

amp.theguardian.com

Highest interest in the US for 16 years, was that Truss and the Tories as well?

Just for once can’t we have a thread that doesn’t get hijacked but peoples need to push their own political views into people.

 

[DudsFarm]

Market forces, high rates, houses reduce in price. 10-15% fall in house prices needed.

 

[The Fits]

Rent has gone up by 25% for many since COVID. At least homeowners have an asset. Something needs to be done about both in the short term and the rental situation needs looking at in the longer term too (build more f***ing houses!).

 

[portslade seagull]

Not much they can do seeing as the BOE is independent and free to hike or lower interest rates as it sees fit.
Interesting to see that the BOE governor blamed the recent and impending rate rises on excessive pay rises.

 

[Reddleman]

I'd be very surprised if any of the parties intervened at an actual give money to people level.

The Bank of England is independent but it is also not. Halting this madness of rasing interest rates is step one. MIRAS is a good shout for another step. Being more lenient with repayments another.

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.

 

[Pavilionaire]

It is clear from what Jeremy Hunt said that the government's priority is to get inflation down, so that means higher interest rates. " If it's not hurting it's not working" is their attitude, and, yes, I think they're content for house prices to drop 10%.

The thing is, even of you're fixed for another couple of years if you're sensible you'll think of reduxing your mortgage, so that means reining it in. Anyone providing luxury / non- essential goods or services in low or middle income areas is going to experience more tough times.

 

[Bodian]

Very different time. Pay rises as i remember, we're quite often double digit percentage.

Yes - because mortgage repayments were a mix of interest and capital, my parents mortgage payments as a percentage of their income dropped quite rapidly, as wage rises outstripped mortgage rises. And of course, the actual amounts owed in the first place were far lower in relation to income as well. I read somewhere recently that a 6% mortgage interest rate now would have been the equivalent of 25% in the early 1980s - but they were only actually up to around 15%.

Oh - found what I read: https://www.leedsbuildingsociety.co...es/housing-is-now-at-its-least-affordable.pdf

In 1980, the average UK house price was around £21,000 and mortgage costs accounted for 11.3% of disposable income (see Editors’ notes). Today, with the average 2 year fixed rate mortgage on offer to new customers currently standing at 6.43%, those figures are around £292,000 and 45.1% respectively.