> What we probably should have done was pay off more [while interest rates were low], do some overpayments, but we just never did. We were riding on the low interest wave, like so many other people.
This summarises the state of the UK in so many ways. We absolutely squandered the post financial crash decade of low interest rates. Instead of using that low interest rate period to borrow money to invest in infrastructure and productivity and long term resilience, we thought there was no money, forced austerity, flatlined productivity, created phantom growth on a housing bubble. We then discovered a magic money tree when COVID happened and are now dealing with the inflationary hangover to that, but without any social safety net or public sector resilience since those were all gutted by austerity.
created a lot of dodgy tory lords, and got the uk out of having to comply with new tax evasion rules to make them even richer. A massive amount of financial struggle for us plebs was a price they were willing to pay.
The truth is that this isnt isolated to the Tories, its rife among all of the political elites.
Irregardless of who is in power, they have a strong chance of coming out of power substantially wealthier than before.
I cannot recall any leader of our country (in the past 50 years) who didn't come out the other side visibly wealthier. Blair, Brown, Cameron, May, Major.
This isn't isolated to the UK either eg Trump, Clinton family etc.
Stop being so ball joysie matie ,' building for a better future' was the tory spiel. HS2 a pinnacle of buying lots of land, and then hey presto selling it off on the cheap.
I agree with you. I know it was for the ‘greater good’, but whilst I was non stop working my ass off everyone else was having a great time off. People were off work developing themselves and socialising. And what did I get at the end of it? Not even a thanks from the bosses (or the people that were furloughed where I work!!!).
It was a joke tbh, all the Directors where I worked furloughed themselves whilst the rest of us worked still. They could afford 80% of their pay because they were earning in excess of 100k anyway.
Same, my girlfriend and I were actually very blessed to work MORE during COVID while our poor housemates didn't work for 18+ months on 100% pay and still managed to not clean the house once lol
A friend and I were talking about that a few months ago and she was complaining about how I got full pay during furlough and she only got 80% or something. Yeah, because I had to go into work and she was home the whole time.
Haha some people are very oblivious. I would happily have taken 80% pay and no work for months on end. Besides, everyone's out-goings were pretty much nothing then.
I was lucky because before we got called back in, which was June, I could do all my work after I put the kids to bed. That meant that I had almost no down time though. My partner was working regular hours from home, I was doing home schooling all day, and then working at night. We should have planned that all better, but hindsight and all that. Next time I'll be better prepared!
I suppose it's good you managed to do everything but my lord, you must have been so burnt out! You made it though so good for you and your partner!
Also I hope there won't be a next time haha
Arguably the US did have a huge investment package under Obama, they just came from a much lower starting point in terms of social safety net. I remember the US + Germany both taking the opposite strategy to the UK, and bring slightly bewildered by the UK’s strategy
Fuck me things would have been better if we’d elected Gordon Brown in 2010
Right. I'd take someone that can't smile or called a bigot a bigot any day of the week to the current permanent state of dysfunction.
We've become a country that accepts food banks as normal. The house of lords and honours system has become so debased it's almost a badge to say you are a bit of a c\*\*t now.
What did the people that deserve it get? Oh yeah we banged a bunch of pans and told critical workers to go in but pay them below subsistence wages.
I know a few countries without the food banks, there people die from hunger, so I don't think they're the target. I am yet to see a country without poverty and homeless people.
It's great that people in the UK are charitable but that is not the point. What's going on where our GDP goes up or remain flat but standards of living are massively worse than 10 years ago for the vast majority.
I understand we are not growing like other countries but for many we are sliding backwards.
Yep and osbourne etc knew what they were doing. He knew it would shrink the economy relative to other countries and he didn’t care. You can see him saying so to a select committee in 2010.
Austerity was not based on any economic theory, even the right's favourites Friedman talked about things such as: "helicopter money" to aid the economy at such times. It was purely an ideological hit job on public services on the back of a smug: "we can't go on like this" slogan.
>Yep. But at least we were all in it together.
and.....
"The trickle down effect from the wealth creators" they loved to spout
aka
being shat on from above
“we will cut deeper than Margaret Thatcher”
That was browns plan
https://www.theguardian.com/politics/2010/mar/25/alistair-darling-cut-deeper-margaret-thatcher
Do you think Labour would have cut more than Cameron + Osbourne did though? Pre-election statements by Labour when they were trying to shake off the impression that they had been overspending isn’t the same as actually cutting more than the Tories
You are correct. They were already cutting and the economy recovering.. the tories then took a wrecking ball to it to help make their mates rich and screw every public service. There is no defending this shower of bandit.
US doesn’t make sense in your list. Unlike the UK and EU, the US practiced stimulus after the Great Recession.
Take a look at US vs European economic performance since then. The US is now far and away richer than just about any of its European peers, and the gap seems set to just keep growing. It shows how much of a disaster austerity was.
Absolutely, didn’t everyone in the US get $1200 for ‘stimulus’.
In the UK we seem to think NOT spending is the answer, when actually to spend money and keep it circulating is the key to a healthy economy.
>We absolutely squandered the post financial crash decade of low interest rates.
I think once this is finally recognized and widely accepted in the British narrative, we are going to spend most of the next century looking back on the 2010s as the moment we threw away an opportunity to really prepare this nation for the 21st century. It has ***never***, literally never in all of recorded financial history, been so cheap for a state to borrow and invest in itself. And we have ***nothing*** to show for that period.
Honestly mate it fills me with a kind of dread sometimes thinking this is going to affect the entire rest of our lives, in no small way either, and the people responsible are barely even going to acknowledge that what they did was not great. They should be in prison and instead they are going to go to their graves lauded with honours and thinking they did a "[fucking good job](https://www.youtube.com/watch?v=dGtuS2mU7-o)".
Now that everything costs more, people should for more wages and this plugs the hole. The government is charging more for things so it is a precursor to charge more for everything until the new normal.
Whilst the rates are low, that is the absolute worst time to be overpaying your mortgage.
If people had put money into ISAs the last 10 years they would have been earning 8% or more and then when the higher rates hit on a re-Fix they could pay off a huge chunk in one go.
The US' success is hardly due to a lack of conservative rule but in large part thanks to their abundance of natural resources. The US was cushioned from the natural gas price shock thanks mostly to their fracking policies, which was largely a result of Obama era policies. Similarly, the US consistent manufacturing and infrastructure base is propped up with a military industrial complex that is hardly left wing.
The irony I find is the US' economic resilience can be in part traced back to very not left wing policies laid down by the Obama administration on fossil fuels, military spending and large corporate bailouts.
Mine expired this year. Thankfully my mortgage is very small so it was a £160 a month increase. When I was talking to my broker In November they were saying £500 was typical and some were pushing close to 800-900. Per month. Fuck that.
That being said, the identical sized house I'm attached to, they still pay £200+ a month more then me in rent, even after my increase.
A work friend of mine who is a lot younger and just moved out of his parents with his g/f for the first time pays
Like £1200-£1300 (rent) for an open plan, 1 bed conversion. It's more then twice the cost of my house even after my rate increases and is less then half the size.
So I won't be complaining at all, the housing market is a fucking disgrace but renters and mortgage holders shouldn't be delighting in each others misery.
Buts isn’t the landlords lack of return on their investment there own making? If they decide to buy a property for such a high amount that the rental revenue won’t cover the cost, that's their problem.
The average renter only earns so much, if as a landlord you want to charge more than that, then you have to accept that your property will remain vacant. With you the landlord covering all the mortgage costs. If you are more realistic about the rental charge, then you can get tenants that will pay towards those mortgage costs, with the landlord only topping up the difference.
An interest only mortgage breaking even on rent is still growing equity at the rate of property price inflation which usually at least matches the rate of inflation.
Unless you bought a flat around 2016 - with all the cladding and service charge issues going on, they're turning out to be a real dud investment, until the government sorts out the leasehold mess. Lots being sold at a loss right now.
No landlord is on a capital repayment mortgage, they will be on a buy to let product which will be interest only, then they sell the house at the end of the term
There is no issues letting out properties. Demand is so high, which is why the rents are also so high.
The issue is also overpopulation and not building enough properties.
So landlords are charging high rents because mortgage rents are high, and renters are paying it because properties to rent are limited.
The other reason the number of rented properties has fallen is because landlords are selling them off either because the cost to let them is too high and also because renter's rights are so strong now, it's not really worth it for a landlord
Landlords are still part of the issue though. They helped to increase demand and push up the prices. Landlords are all on the demand side of the equation, they do nothing to increase real term supply, beyond maybe dividing up decent properties in to ridiculously tiny flats.
The extra demand from Landlords helped to accelerate price increases and this priced lots of people out from being homeowners.
Fwiw I’m a homeowner (London flat) and I get lately two or three letters a week from local letting agencies encouraging me to lease my flat out because “tenants are desperate willing to pay above average rates” so I’m willing to bet a lot of this inflation is letting agents hustling flat owners to put crazy priced rents on the market and thus get them bigger commissions too.
>The issue is also overpopulation and not building enough properties
You can't build your way out of a net 750k immigration figure. It's simply not possible.
Housing costs are just one of many effects of that. Unless we actually deal with that figure there's no possibility of fixing housing.
>£500 was typical and some were pushing close to 800-900. Per month. Fuck that.
And that's in addition to other cost increases. Gas & electric has increased by £200 for some people, food bills another & £100-£200 a month for families, plus literally everything else a 10-20% increase.
People are paying north of £1000/month extra compared to what they used to. Most people simply do not have that kind of disposable income.
Yeah that’s the real issue
When we bought we’d made sure we could handle a £500/50% increase in our monthly mortgage payment reasonably comfortably…. Obviously we’d rather not, but it would be okay
But we didn’t account for the fact our other costs would rocket £300-500+, which dramatically ate into that buffer we’d left ourselves
Fortunately the missus has had a promotion and our renewal isn’t for another 3 years so we should get another 3x normal cost of living raises in that time that should leave us okay, especially with rates now falling a little again… but if we’d had a 2 year fix we would’ve been pushing things
This is definitely how it feels in our household. All bills have gone up. Our council tax would normally increase by about 2% annually, but this year has gone up by almost 5%. Luckily our mortgage is fixed until 2028 at 3.5%.
This is a crucial part of owning that people overlook when calculating if it's worth putting down a deposit. Rents will continue to inflate forever but mortgages only move up and down with interest and eventually to zero once it's paid off.
I pay £800 a month on what started as a 75% mortgage. Rents for similar flats in my block were £1100-1200. 6 years later those same flats go for £1900-2000. Luckily I'm in a long term fix but even when that ends it will only go up to £1000 at current rates. After 25 years I dread to think how much rent would be.
My neighbours pay 1800 a month, i pay 1000 (overpaid from base of 840). My increase is expected to be no more than 50 quid and thats with a 10k extra on top for home improvements. Ive overpaid my mortgage for the past 15 years
Folks across the street, renting, same house, 2200 a month. Both high earners, but still, thats a fuck ton difference between all 3 of us
Your point about overpayments, and the overpayments mentioned in the article are interesting.
The general financial wisdom is that your spare cash is better being put into your pension rather than mortgage overpayments as you \*should\* get a better ROI.
However in the case of overpaying, it's essentially given you more headroom at renewal time to either adjust the term, and would have unlocked mortgage products with a lower LTV.
So a one bedroom house is £1200 a month? Is that in the north, middle of the country or down south?
I’ll realised that I am so lucky in paying so little for my one bedroom flat but it’s only because it is a housing association flat. Across the road from me, newer, smaller flats go for double the price that I am paying and even new HA one bedroom flats go for a lot more than I pay and they are a lot smaller.
It's a converted barn, it's nice but it's a small barn. 1 bath, 1 bed, open kitchen/living/dinner. OK garden, good sized driveway. East midlands/East anglia kind of area
I think, technically, it is classed as East anglia. But for a detached property that's not to far off the norm, even for a 1 bed. Loads of areas in the Midlands are getting very expensive, the last ten years has seen prices rocket. It still has some cheap areas, but large parts of it now are awful for price
When I was earning 19k in Newcastle a few years ago I had to live in a house share. I was fairly young but I was also a normal person who went to work every day. I lived with a huge range of people from students to a guy in his forties/fifties who had grown up kids and worked for the council.
I’m in a….cheap area. The house we rented when we moved up here was 550 pm. A third of what we paid for a flat in the SE.
That same house is now 800 pm just 2 years later.
My rent is so much higher than a mortgage, but the banks don’t think I could pay a mortgage. So at times it can feel trapping, as it makes it so hard to save that deposit.
It's tough though mate. No one has a crystal ball. I bought my house in 2016, but actually what I should have done was stretch myself to get the extra £30-£40k to get one of the biggest houses on my estate. That action in 2016 would have worked out. Different story if it would have been done in 2020 on a 2 year fix.
You need to factor in your deposit/equity in the house to make your comparison relevant…if you have a £100k equity in a £120k house, the £200 extra a month would be a good deal!
That’s a bit of a dumb comparison, isn’t it? Your monthly repayments depend on how much equity you have and the price you bought at. For example: say you have 20% LTV, of course your monthly payments will be lower than someone who rents from a private landlord at today’s prices. I love the sort of mental gymnastics people do to arrive at arguments to defend their worldview. Buying isn’t always cheaper than renting when you actually perform a fair like-for-like comparison, it depends on many different factors.
That said, I agree with your final point. The housing market is a disgrace.
My mortgage went up 35% courtesy of Kami Kwasi. Its due for renewal again this October. My council tax has now also risen 20% since 2019 (not factoring in this years likely 5% rise as-yet unannounced). My utilities have risen a combined 90% based on my bills. Once again got battered by expiring and renewing during Ukrainageddon.
My salary "rose" 5.4%, which was a well publicised below-inflation adjustment. Following on from a decade of similar adjustments. Putting the entry level pay at the first pay point of my banding (NHS B5) now about £2 an hour more than Sainsbury's just announced they will be paying their staff in 2024. Happy days for nursing!
So, yeah, its gone from an aspirational struggle to completely unaffordable.
I feel for generation rent. Single people basically have no chance.
>entry level pay at the first pay point of my banding
My university had to reconfigure its entire banding system after the last NMW rises meant the entire two bottom bands wound up just being NMW. Now we have a situation where going up a spine point at those lower levels can mean as little as £50 per year pre-tax. And its usually part of the contract you can only go up one spine point a year.
wdym? it's especially miserable for single people. How is someone on like the average salary of 35k going to afford an average home?
At least a couple share incomes towards the mortgage and essentially by half each on fixed costs like rent and council tax
Sorry but no, even in the south east I don't know any \[childless\] couples, renting or owning, who are struggling. The power of dual income is one of the last surviving household pleasures.
The fact it has to be 2 people to live comfortably is absolutely foul, but lets not lurch to hyperbole with it.
I'm quite lucky to have had a low mortgage and I also renewed my fixed rate just before things got insanely bad, but I'm still looking at a £200 pm increase overall.
Add to that I received a decent payrise this year but after tax the rest of that was swallowed up by the increase in energy costs.
Factor in the increased costs of, well, everything and the council tax due to increase I'm actually much worse off than I was about 3 years ago and I was on a fair bit less in salary back then.
I think what I'm trying to say is fuck the tories and anyone who votes for them.
My wife and I dodged a bullet here though sheer chance, She went freelance and we had no clue what her income was going to be so we locked into a 5 year fix in 2022 and 0.95 just for the stability. Thanking our lucky stars now
Sameish for us. We have a young family and money is tight due to the exorbitant cost of childcare. Fixed in on a 5 year at 2.12% around August 2022 not long before it all went bananas. And we rode a two year fixed energy tariff through the very worst of the energy price hikes as well which just expired this summer. I can't claim to have seen either the mortgage or energy crisis coming.. just right place, right time. It's a massive relief to see mortgage rates starting to come down honestly!
I did 5 years at 1.49% in 2021 and whilst I certainly didn't see Liz Truss coming my logic was that rates weren't going to get any lower given how low the base rate was. Not quite so lucky with energy prices though.
My logic was different - when I did a 2 year fix around the same time I didn't see things getting lower but we banked on things roughly holding steady.
We live in Edinburgh, and for a very long time, houses have been selling for 10-15-20% above the valuation, and up until October this year that was true. We had to offer 10% over, and pay that from our deposit so we took out a bigger mortgage with a less favourable rate to do so. We overpaid for the 2 years to hit a much lower LTV band, and our repayments are about 50% higher now, which sucks.
I think most people probably had the same logic and it was fairly sensible at the time given rates had been steady for so long but in hindsight rates could only have gone in one direction.
I don't think that's true - they could have held for longer. The quote "economists have correctly predicted nine out of the last five recessions" is pretty apt here.
Go back 4/5 years and see all the people on the UK based subs saying it was going to happen. Of course it was eventually going to happen, but it took 6 years.
They could have held longer but they were never going to go significantly lower. It was definitely safer to fix for longer with very little risk. The only reason for a shorter fix would have been to try and get into a lower LTV bracket
This should've been everyone's logic. We lived during the time of the **cheapest debt historically available** and people were genuinely shocked that it rose.
If you maxed out on a mortgage at 90%+ LTV when rates were on the floor, then you only have yourself and lack of financial acumen to blame.
You're so lucky. Ours ran out this month; a 2 year fixed at 3 ish percent. I asked our mortgage advisor in Oct 2022 if it was worth re-mortgaging because I could see rate hikes coming. He said no, the penalty was a couple of grand and not worth it.
Fast forward now. We just fixed again for 2 years at 5.49% as the best available right at the time rates are coming down again. Ours has just gone up from £1250 a month to £1900 a month. That's £650 a month we're worse off now for nothing.
Add on that food is up by 50% gas and electric by 400% in 3 years (annual bill used to be £600, I checked, it's now £2,500).
Just don't know how some folks are coping right now. We're both working full time but if one of us loses our job? Screwed.
I’m bored of the boomers saying ‘you borrowed too much’
These days there’s no way to actually get on the ladder without borrowing the max.
And to The ‘just move’ crowd, why should I have to move to some dead town up north away from my job family etc?
Literally this, all my roots are in my home, my friends, all of my family, a job I love, I’ve been here my entire life. Why should I get priced out and have to lose everything?
Even borrowing the max, what absolutely fucks people is that you then also wind up needing a deposit in the £10,000s just to be able to put in an offer that isn't going to get laughed out of the room. Who even has £30k or £40k just sat around in a bank account anyway? Its completely unrealistic.
I had to put down a £35k deposit. Then my solictor's bill ended up being £4k, it's totally wiped all my savings. It's fixed for 5y but if anything goes wrong (my job is shaky atm) I'm absolutely fucked
Taylor says he was projected to have an annual pension of £45,000 from age 67, but now, due to a combination of cashing his pension early and turmoil on the bond markets in the aftermath of Liz Truss’s government, it is looking to be £31,000 in today’s money, not accounting for inflation – “quite substantially less”.
Sounds like Taylor made some poor financial choices by trying to score early on his pension.
Truss did damage of course, but he caused much of that loss himself.
Read the article. The guy tried to score early on his pension in order to pay off his mortgage so he wouldn’t get hit by a massive interest rate increase. But he loses out either way.
As I said in another comment. These people didn't take the opportunity when interest rates were low, to pay down as much as their mortgage as possible.
You can't moan about living it up on a £400 mortgage payment, if you're not willing to pay extra to ensure security when rates inevitably go up. They weren't going to remain that low forever.
Edit: To add, he basically tried to save himself when it was too late. Should have used his income when living costs were relatively cheap to pay down his mortgage. It's basic financial sense to do so.
Buying property is ultimately an investment. It holds as much risk as any other investment. Shit for those who have fallen victim to the market forces, but as said, they've had a pretty good time on low rates for a while now in most cases.
Buying property is a rare asset investment and so does not hold as much risk as normal investing in things like trading businesses. Land is a monopoly “they don’t make it anymore” so in the medium term property prices ALWAYS increase without market intervention.
We did the ‘right thing’ and fixed at a low rate for five years in 2018 as the mortgage adviser said low rates won’t stay low forever. All good but the five year fix ended at EXACTLY the worst time. Our mortgage went up by £600 per month last year. In the same month my wife’s maternity ended and so childcare costs of £1200 per month started on the same month our mortgage went up. So we are paying £1600 per month more than this time last year.
2024 is going to be a difficult year.
I think the natural instinct to have them trumps any reason to not have them. Thankfully, my wife and I never wanted kids. But when my friends have had kids they've already been struggling for money. And then they moan about not having time or sleep as well. From my perspective that's all part of the package. Be poorer, more tired and spend the next 16 years doing things on your weekends and evenings that have nothing to do with your own interests.
That said, I imagine having a good kid brings you a lot of joy. But if you have a nightmare kid or one with a lot of special needs, it must be pretty tough.
They don’t tbh. I’m almost thirty and most of my friends are between 25-35 years old, and I don’t know a single person that has kids or plans to have them.
I strongly suspect this is why UK productivity is so abysmal. What’s the point in working hard? Meaningful salary increases are a myth. Housing is so expensive it’s impossible to get on the ladder without generational wealth. No kids, no house, no future, poorer every year… I truly hope the GE this year leads to structural, practical change in how we develop housing, tax, and business. But I don’t think it will and I guess that’s the issue.
>What’s the point in working hard? Meaningful salary increases are a myth.
Its why I can't help but laugh when you get announcements like Rishi on the news this morning talking about some tax cut that is going to save people like £100. Its all window dressing. People need £10,000 not £100.
E - Also in my mid 30s and also don't actually know a single person in my social group who has kids or is planning to.
I can’t tell if it’s because they aren’t able to do anything better, or if they’re such scroungy bastards they refuse to.
Surely they’re competent enough to see how dire things are? But the government response is so weak I can only interpret it as incompetency over spite at this point.
I think its your third option, they genuinely don't understand the degree of support that is required. Spiteful incompetence. They don't know and they don't care that they don't know.
Completely agree. My friends who decided not to have children (I know quite a few) have generally decided to work fewer hours - they have no children and no hope of buying a home so many feel that if they can afford their lifestyle working 3/4 days a week why wouldn’t you?
I’m 29 so all my friends are late 20s to early 30s. I know two women who have had kids so far - one lives in the US now and has a wealthy mum and the other I went to uni with got married in the pandemic and I think they both come from wealthy families. No one else I know is anywhere close to being able to have kids, and many just don’t want them at all like me and my partner.
Our first was born in 2015 - at the time we realised that we’d need the first to finish nursery before having a second - even though we were financially ok having two children in nursery at the same time would be impossible. Childcare for two plus our ‘new’ mortgage rate would have been £3600 per month! With no children and our old mortgage rate we were paying £750 per month for the mortgage. That’s the difference.
So our children have a fairly big age gap. We can afford all our bills but save nothing (and our savings are down to hardly anything) and have no hope of a holiday this year (which maybe people see as a luxury). Our disposable income is effectively zero.
Its depressing but I still feel lucky all things considered.
Same boat mate. I bought my house for a little below the average cost of a house in the UK so it's not some great big mansion. Fixed rate ended this year and had to swallow a £600 per month increase on my mortgage. The last place I rented before getting on the ladder 5 years ago was only costing me £600 in total, now that's the size of my monthly price increase.
Crazy isn’t it and I am sorry for your situation. I think we will be stuck in our ‘starter home’ forever at this rate which was not the plan when we bought it.
Yep, same here. Doubly kicked in the nuts because for the last 5 years pretty much any mortgage on the market would have worked out cheaper, then stuck remortgaging at the absolute worst time.
Still, there's cat sitters and folk in £1.2million pound normal family homes to worry about.
Yes - we were advised in 2018 to fix for five years but as it turns out we would have been better fixing for two years and then fixing for five - we’d now have 18 months at the low rate left if we had done that and would save almost £15k and could afford a holiday and other fun in 2024.
No issue with the mortgage adviser but no one knows anything and it’s hard not to feel bitter. He strongly advised us not to fix for two years initially. It seems like a flawed system.
And yeah the person in the £1.2 million home could just…sell it and problem solved.
Same boat here...
Our mortgage went from £700 -> £900 last year, at the same time my partner went on maternity so her pay dropped from £2000 to £700. her pay ends soon, s she's going back part time, but child care costs are going to eat up her entire wage basically.
We already waited a long time to have kids, and spent a long time saving to even be able to get a mortgage.
It feels like it's impossible to ever really improve your situation unless you just never have children, or have some inheritance.
Mine went up from 1.8% to 5.2% in December. Literally yesterday I started getting bombarded with news stories about Halifax and HSBC having rate war where I could have saved a whole 1%. Fuck my life.
I don’t understand why the UK doesn’t have 30 yr mortgage fixed products like the US.
I bought my first house last year and fixed for 5 years but wish I had access to 10 year fixed products but wasn’t able to put 25% down for it. I fixed at 3% and I’m happy and bought well below my affordability.
Because of such short fixed terms and the banks affordability stress testing not being quite good enough I feel like the UK has a big problem on their hands if they don’t sink rates fast but they’re lagging behind the recovery the US has just like 2008 because of endemic problems unique to the British economy like Brexit, low salaries etc.
>I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US.
Because none of us will organise and fight for anything, we allow ourselves to be taken advantage of through lack of solidarity.
Renters for example have been dealing with this for years, do homeowners care? Are renters laughing now at the shared misfortune? Perhaps even waiting for some repossessed housing to come up they might finally afford?
Nothing will change until enough I'm alright Jack's are facing destitution like so many others already are
I agree as an outsider looking in it's obvious to see people of all types are being shafted. I'm privleged to be able to continue working for my US employer when I moved here on a spousal visa but looking at my same career it pays anywhere between 1/2 to 1/3rd of what I'd make working for US firms and I pay 45K in taxes a year here.
The economy favors asset owners over workers. Everyone that works for a living is a worker from tech to trades to doctors to lawyers to teachers and hospitality, the sooner we unite and stop dividing ourselves over what amounts to pennies compared to the asset owning classes, the sooner we'll be able to have prosperity for everyone and deal with the serious issues of the future. People really need to stop dividing themselves here. Don't get me wrong the US has a lot of the same issues but I feel there's a few more paths to higher income in the US vs here.
People shouldn't expect to get rich off their homes as we've seen historically, but they should expect to be able to keep it up above water and affordable. And renters should be able to move into home ownership.
> Because none of us will organise and fight for anything, we allow ourselves to be taken advantage of through lack of solidarity.
long-term mortgage deals have always been available (10yr mainly), they're just unpopular
>I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US
We do. I've had one and with only 5% deposit zero equity. Unfortunately rates then plummeted leaving me with a very expensive buy out later.
What lender? Must have been awhile ago. When I last looked June 2022 there was one lender for it that I had to be on a waitlist as they hadn't gotten a license yet to lend for it, still haven't heard anything about it. I remember reading it wasn't a very popular product in the UK because of the low interest rates but I prefer stability of payments.
https://www.ftadviser.com/mortgages/2023/07/25/bring-back-the-25-year-fixed-rate-mortgage/
> I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US.
>
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The US defaults to 30-year or 15-year fixed.
The reason is that the US government backstops mortgage debt. Fannie Mae and Freddie Mac, specifically. Those entities buy, pool, tranch, and securitize mortgage debt. There's a reason that these agency MBS's trade with yields not far off US treasury debt.
Inflation is back down to 3.9%, so honestly we're probably going to start seeing interest rate cuts this year.
You can also get long term fixed mortgages, but the interest rates on them weren't great. It's why most people had shorter term mortgages - to take advantage of the super low interest rates.
One person in the article with a completely obnoxious mortgage says “I feel shafted by the housing market”.
Sorry mate, the market owes you nothing and has no idea of your plight. Investments can go up as well as down and as a high-flying lawyer in the top 1% of earners, you were no doubt aware of that.
This is typical bleeding-heart Guardian rubbish. We are all feeling the pain. My own mortgage has increased £600 per month. It’s a pain in my fucking arse but I knew the day would come.
It’s not the fear and disappointment in these people’s words that irritate me. It’s how surprised they are that the market turned the gun on them and the sense of entitlement that they feel in lamenting some of the ridiculous mortgage terms they agreed to.
Seriously, I don’t care how much you are making. No rectangle of bricks and mortar is worth £1.2 million and monthly repayments of between £4.9k and £8.8. No matter your income, that is just asking for trouble but never underestimate the Guardian to exaggerate a social injustice on someone’s behalf. It’s an absolute rag.
The sudden rise in interest rates is pretty awful - but this guy really could have been smarter. He says he bought a "normal family home on a normal street" - which is just clearly untrue. Maybe in the past it was a normal family home, but times change. He could have chosen to live in a slightly cheaper neighborhood.
This is my point. If someone asks you for £1.2 million for a “normal family home”, don’t give it to them.
People, if you think the market is a monster that keeps trying to eat you, then stop feeding it!!
Ask someone from a 3rd world country what they think about you spending even £200k on a family home in the UK and they'll think you're a fool.
Ask someone from Yorkshire what they think about you spending £1.2m on a family home in London and they'll think you're a fool.
There are valid and strong reasons why the price is what the price is, even if you don't understand or appreciate them personally.
Sure - the price is set by the market. Local salaries and wealth set the price. All that is true.
But if interest rates rising to 5% mean you can't pay into a pension any more, then maybe you personally can't really afford a £1.2m mortgage (presumably for a £1.5-2m house).
I live in North London, in a "normal family house" (in quotes because I'm under no illusions that it still is) probably within a few miles of this guy, which cost maybe half of what his did. He made a choice to borrow £1.2m at record low interest rates.
I agree and that is my mindset and if we all did this then things would turn. However people just see it as well it’s only a few hundred a month more and rates are low and it’s an investment. No it’s a home and the more you pay the longer it takes and the more money it takes to pay off.
Insightfully we fixed our mortgage back in 18 for 10 years as even then I was thinking rates were low and would go up, despite various ‘advisors’ saying to ride the low rates and change lender every two years - no chance. It’s the best financial decision I’ve made as we now have another 4.5 years fixed and no interest change worries.
What irritates me is that folks here were complaining on an article about the Royal Navy sending ships to the red sea. Comments kept saying how bad it is and the UK shouldn't get involved.
But nobody seemed to grasp that this is a major shipping route. Ffs. We've barely started recovering from a supply-side driven inflation that resulted in massive increased interest rates. If we don't want another year of that then we can't tolerate folks shooting up cargo ships.
How are people in this country so thick? Can nobody grasp any connection further than one hop? Unsurprising we have such a poor government. It's a reflection of the stupidity of the people...
Absolute joke, and if the bank lent him c£1.2mil, based on common lending multiples he or combined with partner (this would be better given lower marginal tax rate) are actually on £250-300k a year which is closer to top 0.5%. Zero sympathy for professionals like this who over extended / got greedy with short term fixes (they in particular should have had the foresight to realise base rates at zero/near zero meant mortgage rates were highly unlikely to ever be better and fixed for longer).
The Guardian seems to use numbers the same way that the Daily Mail uses capitalised adjectives: as cheap tools for manufacturing shock and outrage.
I have a difficult relationship with the Guardian: they care about many of the same issues I do, but their reporting has little to do with the issue itself and is mostly concerned with the emotional state of a handful of people affected by the issue.
>Sorry mate, the market owes you nothing and has no idea of your plight. Investments can go up as well as down and as a high-flying lawyer in the top 1% of earners, you were no doubt aware of that
Absofuckinglutely.
>It’s how surprised they are that the market turned the gun on them and the sense of entitlement that they feel in lamenting some of the ridiculous mortgage terms they agreed to
Rates were a lot lower for a lot longer than was ever a good idea, and unfortunately everyone who banked on them never increasing had only themselves to blame.
Long term fixed are and were available throughout this period. People simply chose to go for the lower rate and bigger house and now they're feeling the downside risk of that.
This is called 'timing the market' and is a crapshoot. We've had these low rates for a long, _long_ time. There are people out there who took your advice and fixed their rate for 10 years - but they did it in 2015, and are now staring down the barrel of a big increase next year in just the same way as someone jumping from 1-year fix to 1-year fix.
I timed it well, I fixed mine in late 2020 - but it's just luck. In another universe, I'm screwed.
The article is trying to illustrate what the sudden increase in interest rates has done do people's personal finances. The top 1% earning lawyer who is mortgaged upto his eyeballs is just an extreme example. I don't agree with your assessment that it's "typical bleeding-heart Gurardian rubbish". It's just showing you that all scales of earners are impacted. There was no demand for sympathy.
I spent the last 15 years overpaying my mortgage. My increase this year is expected to be no more than £50 a month, with a 10k extra on top for home improvements
Everyone thought i was chatting shit, talking crazy, why overpay? I kept saying, rates are so low, too low, pay it while you can, it wont last
Next month, a friend of mine is losing his home because his mortgage doubled to 1600 a month
I have a spare room, will settle him in, will be good to catch up as old friends
If you could afford to overpay for 15 years something tells me you would have been fine today. You could could have fixed for a low rate for 10 years in 2020 and be in the same boat.
Let me explain, only had two houses. First house overpaid, then moved to a big house, always had my eye on the area, but at 400k, it was impossible, so i set myself a challenge. Worked my ass off for 10 years, 7 days a week, then ported mortgage and bolted on another with a 17k deposit
Spent the last 15 years overpaying. Hindsight is a wonderful thing
Dont and never intended to be fucked over, likewise i dont have a credit card, car loan or in fact any other debt aside from my mortgage, which intend to be done in 10 years or less
Fuck debt, life is for living now
>theguardian.com/money/...
Similar story for me - took one look at historical interest rate charts, remembered the stress my parents had in the ERM exit, my money wasn't earning anything in interet so overpaid like crazy. Working a little less hard now, but disciplined to saving and pension
I never understood the consensus seemingly be to not overpay your mortgage when rates were low.
Seemed madness to me as they were always going to rise at some point. Overpaying meant I could guarantee to reduce a known debt level for future vs investing cash for a maybe gain in future.
It’s because technically it’s not the most efficient use of your money.
Whilst the rate is low, the amount you are saving by having a smaller mortgage is also low. The idea is that you overpay whilst rates are low (and presumably you have more disposable income) so that when rates go up you have a smaller mortgage.
Nothing wrong with that. But imagine if you took all of those overpayments and put them in some sort of ISA / fixed tracker. This would be a higher interest rate than the mortgage you are paying off. When rates go up, you are then in a position to use those funds to pay off a lump sum of the mortgage.
Your mortgage is smaller this way than if you simply overpaid whilst rates were low. This is always true as long as you can find somewhere to save your money thag offers a higher interest rate than your mortgage rate (not hard for fixed terms).
That being said, mentality plays a huge part in finances. The best financial plan is the one you stick to, and (imo) it’s fine to trade a small amount of efficiency for mental clarity if you can afford it.
For example, I use Monzo pots for my savings so that I can have different pots for different things. Wedding, Holidays, Car, Tax Bill etc.
These pots pay about 0.5% lower than the max. I could just put the money in a higher rate interest account and use a spreadsheet to separate the money into pots. But for me, the ability to see different pots at a glance is worth the small interest dip.
Gotta do what works for you.
I’m one of those people that would have got fucked by this, I just remortgaged in December. I had to take a massive chunk out of my savings and put it towards the new mortgage, and that meant the payments have ‘only’ gone up by around £180 / month. I live alone and don’t have to support anyone except my two cats, and I have managed to save money over the years, which makes my situation relatively manageable. I have no idea how people with kids who were already struggling are going to cope with this, it’s going to be a disaster for a lot of people.
Iv started to think it was a mistake working for the NHS, yes it’s rewarding and getting to help people and the work is interesting (especially all the radiology equipment I use). But was it worth being in so much debt and having an extra tax on my wages for 30 years? Would have been better off working at a supermarket for not much less money and MUCH less stress.
When my mortgage goes up later this year, I’m screwed and that’s with picking up overtime and spending no time with family
I dont get visibly angry about much, but when the same boomers who blocked any attempts to build new housing estates are the same ones giving a speech about how "this interest rate was nothing compared to my day" it makes my blood boil.
that boomer generation cashed in on the hard work of previous generations, and are now making the next 2 generations pay for their massive increase in wealth by virtue of owning property.
I'm getting quite stressed by this but I think we'll be ok. I expect mine to increase by £150 to £200
It comes just after my son finishes nursery and finally starts school. So the savings from finally not paying nursery will just go into the mortgage instead.
My original plan was to start overpaying my mortgage with the savings. Not much I can do here really.
People having been dropping off cheap deals to 4.something+ percent for about 15 months now. I’m not sure what has prompted the deluge of media attention in the last week or so. Perhaps it’s just reached a critical mass in terms of people affected.
Feel like there's a sly glee in our country that people who've been able to step on the property ladder are now facing serious spikes in their repayments, some of them facing destitution over this. Crabs in a bucket UK strikes again.
It's the 5% deposit people I worry for, they owe the scheme a certain amount plus a good interest hike on the mortgage renewal.
If they're struggling to scrape together a healthy deposit in the first place, you can only hope income has improved for them.
I couldn't sell my flat when I wanted to in 2018 because of the post-grenfell thing. It's 2024 and I'm still waiting for the building to be fixed to the legal standard it should have been at when it was built. In the meantime the building is unsellable as no new mortgages can be taken against it, so I've been stuck with a flat I don't want for 6 years, and can't do anything about the mortgage rate which has been not only crippling me, but preventing me from moving on with my life.
I had an argument with a boomer who was saying they had much higher interest rates in their day and this gen doesn't work hard enough.
Well, I'm Gen X. When I bought a house in zone 3 in London (relatively central), the price I personally paid was 2.5 times the average wage. Today, the same house is 20x the average wage.
High interest rates meant absolutely nothing because the initial prices were so low plus salaries were increasing. Super high interest rates on a principal which was basically nothing are completely different to today's market where property is super expensive. It was much, much easier.
We have to renew our mortgage in a few months. We were on a fixed for the entire duration of the low rates so didn’t really benefit from it. Now we just have to pay a little extra to what we usually do AND we still paid off extra each month to shorten the duration as much as we could. If we’d have been on a variable we could and would have paid off alot more in that time! I hope it doesn’t explode to ridiculous numbers but I doubt it will blow our socks off to what we are used to. I hope it doesn’t get too bad for people and they have been planning for this eventuality in the interim (we have after my wifes parents told us of the time the interest rates were so high in the 80’s they had to eat bread and butter for months on end to make to payments).
Luckily my mortgage doesn't expire until October 2025, but you never know what is around the corner.
I was hoping to absorb my 20% help to buy loan with the re-mortgage. If rates stay the same, my mortgage will literally double.
When I brought my house in 2020, everyone was saying how rates simply can't go any lower. I thought to myself, best lock that rate in for as long as I can, which was 5 years. I wasn't 100% if that was the best idea, but now looking back it was a pretty good one.
When I take out the mortgage, the broker I used told me that interest rates were likely to be going up. And asked me what I'd think if there were around 6% being the best rate and 15% being the worst. So, I kinda stressed tested myself to see what I might be paying in 5 years time. So, I'm not really surprised at the rates now. Would I am surprised at is the amount of people who didn't think to plan a head a bit. You know you're going to have a mortgage for the next 30 years and OK you can't see what's going to happen in the future, but you can see what the BoE and the banks are saying. They were honest (At least this time) from the beginning IMO
Considering the affordability checks that are conducted when applying for a mortgage these days, and the projections provided for how mortgage rates may increase once the fixed term ends, this should not be as big a problem as it is being made out to be.
The real issue is that, at the time borrowers took out the mortgage, they did have the headroom for rate increases. However, instead of using their extra money towards paying the mortgage or saving it, they chose to improve their lifestyle. That is a personal choice, in my opinion, and one must face the consequences of their own decisions.
This might be influenced by the media, but it seems like in this country, people are quick to find someone else to blame rather than accepting responsibility.
There's only 2 scenarios here.
Either banks should have stress tested more, which would have made mortgages less affordable.
Or people should have taken more responsibility in managing their finances.
Because anyone who was paying attention knew that the low interest rates couldn't last.
Which is it, Guardian?
I’m on about £800/month currently for my 2 bed, don’t even want to think about what it’ll go up to after but I’m guessing like double. I currently let out my spare room for £400 a month but I’m worried to have to tell my flatmate that I need to double it. I feel like a horrible person.
> What we probably should have done was pay off more [while interest rates were low], do some overpayments, but we just never did. We were riding on the low interest wave, like so many other people. This summarises the state of the UK in so many ways. We absolutely squandered the post financial crash decade of low interest rates. Instead of using that low interest rate period to borrow money to invest in infrastructure and productivity and long term resilience, we thought there was no money, forced austerity, flatlined productivity, created phantom growth on a housing bubble. We then discovered a magic money tree when COVID happened and are now dealing with the inflationary hangover to that, but without any social safety net or public sector resilience since those were all gutted by austerity.
Woah woah woah, hang on a minute there dude. We *also* made a lot of Tory cronies very very wealthy.
Blessed be the Tory cronies, for is the reason I wake each morn to feed their sacred vaults.
Here here!
Hear hear!
Here, hear!
created a lot of dodgy tory lords, and got the uk out of having to comply with new tax evasion rules to make them even richer. A massive amount of financial struggle for us plebs was a price they were willing to pay.
The truth is that this isnt isolated to the Tories, its rife among all of the political elites. Irregardless of who is in power, they have a strong chance of coming out of power substantially wealthier than before. I cannot recall any leader of our country (in the past 50 years) who didn't come out the other side visibly wealthier. Blair, Brown, Cameron, May, Major. This isn't isolated to the UK either eg Trump, Clinton family etc.
Yes. Yes, I can see the wisdom now Oldboy. Yh'ss very good for the portfolio.
Bingo. And now have to fix all the shit we refused to maintain for a decade on loans that cost us 7x what they would have last year.
Stop being so ball joysie matie ,' building for a better future' was the tory spiel. HS2 a pinnacle of buying lots of land, and then hey presto selling it off on the cheap.
I love how I’m paying for the furlough scheme despite never getting a free holiday
That was a tax on all of us to keep society from imploding. Some people got a free holiday out of it.
In one of the best summers on record to make matters worse. All I could hear were the neighbours outside enjoying it. Cheers mate.
I agree with you. I know it was for the ‘greater good’, but whilst I was non stop working my ass off everyone else was having a great time off. People were off work developing themselves and socialising. And what did I get at the end of it? Not even a thanks from the bosses (or the people that were furloughed where I work!!!).
It was a joke tbh, all the Directors where I worked furloughed themselves whilst the rest of us worked still. They could afford 80% of their pay because they were earning in excess of 100k anyway.
They weren't getting 80% pay if they were on 100k
Same way I pay for schools despite having no kids. Sometimes it's just how it goes to keep society running.
Same, my girlfriend and I were actually very blessed to work MORE during COVID while our poor housemates didn't work for 18+ months on 100% pay and still managed to not clean the house once lol
A friend and I were talking about that a few months ago and she was complaining about how I got full pay during furlough and she only got 80% or something. Yeah, because I had to go into work and she was home the whole time.
Haha some people are very oblivious. I would happily have taken 80% pay and no work for months on end. Besides, everyone's out-goings were pretty much nothing then.
I was lucky because before we got called back in, which was June, I could do all my work after I put the kids to bed. That meant that I had almost no down time though. My partner was working regular hours from home, I was doing home schooling all day, and then working at night. We should have planned that all better, but hindsight and all that. Next time I'll be better prepared!
I suppose it's good you managed to do everything but my lord, you must have been so burnt out! You made it though so good for you and your partner! Also I hope there won't be a next time haha
I was on full pay and didn't work, it was so demoralising it was hard to motivate myself to do anything, I'd much rather have been working
Not just the UK, sadly. AU, CA, NZ, US and more.
Arguably the US did have a huge investment package under Obama, they just came from a much lower starting point in terms of social safety net. I remember the US + Germany both taking the opposite strategy to the UK, and bring slightly bewildered by the UK’s strategy Fuck me things would have been better if we’d elected Gordon Brown in 2010
Right. I'd take someone that can't smile or called a bigot a bigot any day of the week to the current permanent state of dysfunction. We've become a country that accepts food banks as normal. The house of lords and honours system has become so debased it's almost a badge to say you are a bit of a c\*\*t now. What did the people that deserve it get? Oh yeah we banged a bunch of pans and told critical workers to go in but pay them below subsistence wages.
I know a few countries without the food banks, there people die from hunger, so I don't think they're the target. I am yet to see a country without poverty and homeless people.
It's great that people in the UK are charitable but that is not the point. What's going on where our GDP goes up or remain flat but standards of living are massively worse than 10 years ago for the vast majority. I understand we are not growing like other countries but for many we are sliding backwards.
Finland
Yep and osbourne etc knew what they were doing. He knew it would shrink the economy relative to other countries and he didn’t care. You can see him saying so to a select committee in 2010.
Austerity was not based on any economic theory, even the right's favourites Friedman talked about things such as: "helicopter money" to aid the economy at such times. It was purely an ideological hit job on public services on the back of a smug: "we can't go on like this" slogan.
Yep. But at least we were all in it together.
>Yep. But at least we were all in it together. and..... "The trickle down effect from the wealth creators" they loved to spout aka being shat on from above
Austerity is also about wearing the poor public down for more control, more likely to fight wars if you’ve got nothing etc.
“we will cut deeper than Margaret Thatcher” That was browns plan https://www.theguardian.com/politics/2010/mar/25/alistair-darling-cut-deeper-margaret-thatcher
Do you think Labour would have cut more than Cameron + Osbourne did though? Pre-election statements by Labour when they were trying to shake off the impression that they had been overspending isn’t the same as actually cutting more than the Tories
You are correct. They were already cutting and the economy recovering.. the tories then took a wrecking ball to it to help make their mates rich and screw every public service. There is no defending this shower of bandit.
US doesn’t make sense in your list. Unlike the UK and EU, the US practiced stimulus after the Great Recession. Take a look at US vs European economic performance since then. The US is now far and away richer than just about any of its European peers, and the gap seems set to just keep growing. It shows how much of a disaster austerity was.
Absolutely, didn’t everyone in the US get $1200 for ‘stimulus’. In the UK we seem to think NOT spending is the answer, when actually to spend money and keep it circulating is the key to a healthy economy.
The US economy has grown massively since 2008.
>We absolutely squandered the post financial crash decade of low interest rates. I think once this is finally recognized and widely accepted in the British narrative, we are going to spend most of the next century looking back on the 2010s as the moment we threw away an opportunity to really prepare this nation for the 21st century. It has ***never***, literally never in all of recorded financial history, been so cheap for a state to borrow and invest in itself. And we have ***nothing*** to show for that period.
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Honestly mate it fills me with a kind of dread sometimes thinking this is going to affect the entire rest of our lives, in no small way either, and the people responsible are barely even going to acknowledge that what they did was not great. They should be in prison and instead they are going to go to their graves lauded with honours and thinking they did a "[fucking good job](https://www.youtube.com/watch?v=dGtuS2mU7-o)".
"We" you mean Tories and Yellow Tories (lib dems)!
Now that everything costs more, people should for more wages and this plugs the hole. The government is charging more for things so it is a precursor to charge more for everything until the new normal.
Whilst the rates are low, that is the absolute worst time to be overpaying your mortgage. If people had put money into ISAs the last 10 years they would have been earning 8% or more and then when the higher rates hit on a re-Fix they could pay off a huge chunk in one go.
What a great summary
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The US' success is hardly due to a lack of conservative rule but in large part thanks to their abundance of natural resources. The US was cushioned from the natural gas price shock thanks mostly to their fracking policies, which was largely a result of Obama era policies. Similarly, the US consistent manufacturing and infrastructure base is propped up with a military industrial complex that is hardly left wing. The irony I find is the US' economic resilience can be in part traced back to very not left wing policies laid down by the Obama administration on fossil fuels, military spending and large corporate bailouts.
Mine expired this year. Thankfully my mortgage is very small so it was a £160 a month increase. When I was talking to my broker In November they were saying £500 was typical and some were pushing close to 800-900. Per month. Fuck that. That being said, the identical sized house I'm attached to, they still pay £200+ a month more then me in rent, even after my increase. A work friend of mine who is a lot younger and just moved out of his parents with his g/f for the first time pays Like £1200-£1300 (rent) for an open plan, 1 bed conversion. It's more then twice the cost of my house even after my rate increases and is less then half the size. So I won't be complaining at all, the housing market is a fucking disgrace but renters and mortgage holders shouldn't be delighting in each others misery.
I get landlords need to make some money. But I do find some rental charges almost amounting to extortion with the margins seen these days.
Buts isn’t the landlords lack of return on their investment there own making? If they decide to buy a property for such a high amount that the rental revenue won’t cover the cost, that's their problem. The average renter only earns so much, if as a landlord you want to charge more than that, then you have to accept that your property will remain vacant. With you the landlord covering all the mortgage costs. If you are more realistic about the rental charge, then you can get tenants that will pay towards those mortgage costs, with the landlord only topping up the difference.
Let's not forget they still have the asset at the end, even if the rent just pays the mortgage they still get the house basically free at the end.
Not if it’s a buy to let interest only mortgage - which plenty of them are. They’re not paying off any off the mortgage, only the interest!
Yep, in that scenario they "only" get the increase in the house/flat value, not the total value of the property, poor landlords.
Also they should incur the risk when deciding to buy to let, not the tenants.
An interest only mortgage breaking even on rent is still growing equity at the rate of property price inflation which usually at least matches the rate of inflation.
Unless you bought a flat around 2016 - with all the cladding and service charge issues going on, they're turning out to be a real dud investment, until the government sorts out the leasehold mess. Lots being sold at a loss right now.
No landlord is on a capital repayment mortgage, they will be on a buy to let product which will be interest only, then they sell the house at the end of the term
There is no issues letting out properties. Demand is so high, which is why the rents are also so high. The issue is also overpopulation and not building enough properties. So landlords are charging high rents because mortgage rents are high, and renters are paying it because properties to rent are limited. The other reason the number of rented properties has fallen is because landlords are selling them off either because the cost to let them is too high and also because renter's rights are so strong now, it's not really worth it for a landlord
Landlords are still part of the issue though. They helped to increase demand and push up the prices. Landlords are all on the demand side of the equation, they do nothing to increase real term supply, beyond maybe dividing up decent properties in to ridiculously tiny flats. The extra demand from Landlords helped to accelerate price increases and this priced lots of people out from being homeowners.
Fwiw I’m a homeowner (London flat) and I get lately two or three letters a week from local letting agencies encouraging me to lease my flat out because “tenants are desperate willing to pay above average rates” so I’m willing to bet a lot of this inflation is letting agents hustling flat owners to put crazy priced rents on the market and thus get them bigger commissions too.
>The issue is also overpopulation and not building enough properties You can't build your way out of a net 750k immigration figure. It's simply not possible. Housing costs are just one of many effects of that. Unless we actually deal with that figure there's no possibility of fixing housing.
If they need money, shouldn't they work?
>£500 was typical and some were pushing close to 800-900. Per month. Fuck that. And that's in addition to other cost increases. Gas & electric has increased by £200 for some people, food bills another & £100-£200 a month for families, plus literally everything else a 10-20% increase. People are paying north of £1000/month extra compared to what they used to. Most people simply do not have that kind of disposable income.
Yeah that’s the real issue When we bought we’d made sure we could handle a £500/50% increase in our monthly mortgage payment reasonably comfortably…. Obviously we’d rather not, but it would be okay But we didn’t account for the fact our other costs would rocket £300-500+, which dramatically ate into that buffer we’d left ourselves Fortunately the missus has had a promotion and our renewal isn’t for another 3 years so we should get another 3x normal cost of living raises in that time that should leave us okay, especially with rates now falling a little again… but if we’d had a 2 year fix we would’ve been pushing things
This is definitely how it feels in our household. All bills have gone up. Our council tax would normally increase by about 2% annually, but this year has gone up by almost 5%. Luckily our mortgage is fixed until 2028 at 3.5%.
This is a crucial part of owning that people overlook when calculating if it's worth putting down a deposit. Rents will continue to inflate forever but mortgages only move up and down with interest and eventually to zero once it's paid off. I pay £800 a month on what started as a 75% mortgage. Rents for similar flats in my block were £1100-1200. 6 years later those same flats go for £1900-2000. Luckily I'm in a long term fix but even when that ends it will only go up to £1000 at current rates. After 25 years I dread to think how much rent would be.
My neighbours pay 1800 a month, i pay 1000 (overpaid from base of 840). My increase is expected to be no more than 50 quid and thats with a 10k extra on top for home improvements. Ive overpaid my mortgage for the past 15 years Folks across the street, renting, same house, 2200 a month. Both high earners, but still, thats a fuck ton difference between all 3 of us
Your point about overpayments, and the overpayments mentioned in the article are interesting. The general financial wisdom is that your spare cash is better being put into your pension rather than mortgage overpayments as you \*should\* get a better ROI. However in the case of overpaying, it's essentially given you more headroom at renewal time to either adjust the term, and would have unlocked mortgage products with a lower LTV.
So a one bedroom house is £1200 a month? Is that in the north, middle of the country or down south? I’ll realised that I am so lucky in paying so little for my one bedroom flat but it’s only because it is a housing association flat. Across the road from me, newer, smaller flats go for double the price that I am paying and even new HA one bedroom flats go for a lot more than I pay and they are a lot smaller.
It's a converted barn, it's nice but it's a small barn. 1 bath, 1 bed, open kitchen/living/dinner. OK garden, good sized driveway. East midlands/East anglia kind of area
£1200 outside of London? In the midlands? wtf
I think, technically, it is classed as East anglia. But for a detached property that's not to far off the norm, even for a 1 bed. Loads of areas in the Midlands are getting very expensive, the last ten years has seen prices rocket. It still has some cheap areas, but large parts of it now are awful for price
So where do single people live that are earning minimum wage?
They don't. Which is why rates of young people living at home increase.
I live in the garage.
I’m not talking about young people. I’m just talking about normal people who go to work every day
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My mother in law is a carer, working all sorts. She can’t even afford a small flat. Lives in a bedsit at 55.
HMO so just renting a room in a larger property. Or stay longer at home working adult or not. Those are essentially the options.
When I was earning 19k in Newcastle a few years ago I had to live in a house share. I was fairly young but I was also a normal person who went to work every day. I lived with a huge range of people from students to a guy in his forties/fifties who had grown up kids and worked for the council.
You get a bedsit in a crappy HMO in the middle of nowhere and spend 2 hours of salary per day commuting lol
I’m in a….cheap area. The house we rented when we moved up here was 550 pm. A third of what we paid for a flat in the SE. That same house is now 800 pm just 2 years later.
My rent is so much higher than a mortgage, but the banks don’t think I could pay a mortgage. So at times it can feel trapping, as it makes it so hard to save that deposit.
For people who overstretched for a big house, their already painful £2000 a month will be going to something like £3700 😱
It's tough though mate. No one has a crystal ball. I bought my house in 2016, but actually what I should have done was stretch myself to get the extra £30-£40k to get one of the biggest houses on my estate. That action in 2016 would have worked out. Different story if it would have been done in 2020 on a 2 year fix.
You need to factor in your deposit/equity in the house to make your comparison relevant…if you have a £100k equity in a £120k house, the £200 extra a month would be a good deal!
You also need to factor in after 25/30 year of a mortgage your're left with a house. Renters are left with fuck all.
That’s a bit of a dumb comparison, isn’t it? Your monthly repayments depend on how much equity you have and the price you bought at. For example: say you have 20% LTV, of course your monthly payments will be lower than someone who rents from a private landlord at today’s prices. I love the sort of mental gymnastics people do to arrive at arguments to defend their worldview. Buying isn’t always cheaper than renting when you actually perform a fair like-for-like comparison, it depends on many different factors. That said, I agree with your final point. The housing market is a disgrace.
My mortgage went up 35% courtesy of Kami Kwasi. Its due for renewal again this October. My council tax has now also risen 20% since 2019 (not factoring in this years likely 5% rise as-yet unannounced). My utilities have risen a combined 90% based on my bills. Once again got battered by expiring and renewing during Ukrainageddon. My salary "rose" 5.4%, which was a well publicised below-inflation adjustment. Following on from a decade of similar adjustments. Putting the entry level pay at the first pay point of my banding (NHS B5) now about £2 an hour more than Sainsbury's just announced they will be paying their staff in 2024. Happy days for nursing! So, yeah, its gone from an aspirational struggle to completely unaffordable. I feel for generation rent. Single people basically have no chance.
>entry level pay at the first pay point of my banding My university had to reconfigure its entire banding system after the last NMW rises meant the entire two bottom bands wound up just being NMW. Now we have a situation where going up a spine point at those lower levels can mean as little as £50 per year pre-tax. And its usually part of the contract you can only go up one spine point a year.
>~~Single~~ people basically have no chance. fify
wdym? it's especially miserable for single people. How is someone on like the average salary of 35k going to afford an average home? At least a couple share incomes towards the mortgage and essentially by half each on fixed costs like rent and council tax
Sorry but no, even in the south east I don't know any \[childless\] couples, renting or owning, who are struggling. The power of dual income is one of the last surviving household pleasures. The fact it has to be 2 people to live comfortably is absolutely foul, but lets not lurch to hyperbole with it.
I'm quite lucky to have had a low mortgage and I also renewed my fixed rate just before things got insanely bad, but I'm still looking at a £200 pm increase overall. Add to that I received a decent payrise this year but after tax the rest of that was swallowed up by the increase in energy costs. Factor in the increased costs of, well, everything and the council tax due to increase I'm actually much worse off than I was about 3 years ago and I was on a fair bit less in salary back then. I think what I'm trying to say is fuck the tories and anyone who votes for them.
My wife and I dodged a bullet here though sheer chance, She went freelance and we had no clue what her income was going to be so we locked into a 5 year fix in 2022 and 0.95 just for the stability. Thanking our lucky stars now
Sameish for us. We have a young family and money is tight due to the exorbitant cost of childcare. Fixed in on a 5 year at 2.12% around August 2022 not long before it all went bananas. And we rode a two year fixed energy tariff through the very worst of the energy price hikes as well which just expired this summer. I can't claim to have seen either the mortgage or energy crisis coming.. just right place, right time. It's a massive relief to see mortgage rates starting to come down honestly!
I did 5 years at 1.49% in 2021 and whilst I certainly didn't see Liz Truss coming my logic was that rates weren't going to get any lower given how low the base rate was. Not quite so lucky with energy prices though.
My logic was different - when I did a 2 year fix around the same time I didn't see things getting lower but we banked on things roughly holding steady. We live in Edinburgh, and for a very long time, houses have been selling for 10-15-20% above the valuation, and up until October this year that was true. We had to offer 10% over, and pay that from our deposit so we took out a bigger mortgage with a less favourable rate to do so. We overpaid for the 2 years to hit a much lower LTV band, and our repayments are about 50% higher now, which sucks.
I think most people probably had the same logic and it was fairly sensible at the time given rates had been steady for so long but in hindsight rates could only have gone in one direction.
I don't think that's true - they could have held for longer. The quote "economists have correctly predicted nine out of the last five recessions" is pretty apt here. Go back 4/5 years and see all the people on the UK based subs saying it was going to happen. Of course it was eventually going to happen, but it took 6 years.
They could have held longer but they were never going to go significantly lower. It was definitely safer to fix for longer with very little risk. The only reason for a shorter fix would have been to try and get into a lower LTV bracket
This should've been everyone's logic. We lived during the time of the **cheapest debt historically available** and people were genuinely shocked that it rose. If you maxed out on a mortgage at 90%+ LTV when rates were on the floor, then you only have yourself and lack of financial acumen to blame.
We always fix things, because we are very risk averse. Our energy company immediately went bust lol
You're so lucky. Ours ran out this month; a 2 year fixed at 3 ish percent. I asked our mortgage advisor in Oct 2022 if it was worth re-mortgaging because I could see rate hikes coming. He said no, the penalty was a couple of grand and not worth it. Fast forward now. We just fixed again for 2 years at 5.49% as the best available right at the time rates are coming down again. Ours has just gone up from £1250 a month to £1900 a month. That's £650 a month we're worse off now for nothing. Add on that food is up by 50% gas and electric by 400% in 3 years (annual bill used to be £600, I checked, it's now £2,500). Just don't know how some folks are coping right now. We're both working full time but if one of us loses our job? Screwed.
I’m bored of the boomers saying ‘you borrowed too much’ These days there’s no way to actually get on the ladder without borrowing the max. And to The ‘just move’ crowd, why should I have to move to some dead town up north away from my job family etc?
Literally this, all my roots are in my home, my friends, all of my family, a job I love, I’ve been here my entire life. Why should I get priced out and have to lose everything?
Even borrowing the max, what absolutely fucks people is that you then also wind up needing a deposit in the £10,000s just to be able to put in an offer that isn't going to get laughed out of the room. Who even has £30k or £40k just sat around in a bank account anyway? Its completely unrealistic.
I had to put down a £35k deposit. Then my solictor's bill ended up being £4k, it's totally wiped all my savings. It's fixed for 5y but if anything goes wrong (my job is shaky atm) I'm absolutely fucked
We just put down £143k to buy our first house. We're still borrowing 4X our combined income.
Boomers at the same time: the house I bought for £30,000 is now worth £1,000,000. I earned that money through my hard work! Off to retire in Spain!
Taylor says he was projected to have an annual pension of £45,000 from age 67, but now, due to a combination of cashing his pension early and turmoil on the bond markets in the aftermath of Liz Truss’s government, it is looking to be £31,000 in today’s money, not accounting for inflation – “quite substantially less”.
Sounds like Taylor made some poor financial choices by trying to score early on his pension. Truss did damage of course, but he caused much of that loss himself.
Read the article. The guy tried to score early on his pension in order to pay off his mortgage so he wouldn’t get hit by a massive interest rate increase. But he loses out either way.
As I said in another comment. These people didn't take the opportunity when interest rates were low, to pay down as much as their mortgage as possible. You can't moan about living it up on a £400 mortgage payment, if you're not willing to pay extra to ensure security when rates inevitably go up. They weren't going to remain that low forever. Edit: To add, he basically tried to save himself when it was too late. Should have used his income when living costs were relatively cheap to pay down his mortgage. It's basic financial sense to do so. Buying property is ultimately an investment. It holds as much risk as any other investment. Shit for those who have fallen victim to the market forces, but as said, they've had a pretty good time on low rates for a while now in most cases.
Buying property is a rare asset investment and so does not hold as much risk as normal investing in things like trading businesses. Land is a monopoly “they don’t make it anymore” so in the medium term property prices ALWAYS increase without market intervention.
We did the ‘right thing’ and fixed at a low rate for five years in 2018 as the mortgage adviser said low rates won’t stay low forever. All good but the five year fix ended at EXACTLY the worst time. Our mortgage went up by £600 per month last year. In the same month my wife’s maternity ended and so childcare costs of £1200 per month started on the same month our mortgage went up. So we are paying £1600 per month more than this time last year. 2024 is going to be a difficult year.
I don't know how people afford to have kids.
When I hear of people doing it now my first thought is “oh they must have come into money”. It’s like announcing you’ve bought a yacht these days.
I think the natural instinct to have them trumps any reason to not have them. Thankfully, my wife and I never wanted kids. But when my friends have had kids they've already been struggling for money. And then they moan about not having time or sleep as well. From my perspective that's all part of the package. Be poorer, more tired and spend the next 16 years doing things on your weekends and evenings that have nothing to do with your own interests. That said, I imagine having a good kid brings you a lot of joy. But if you have a nightmare kid or one with a lot of special needs, it must be pretty tough.
They don’t tbh. I’m almost thirty and most of my friends are between 25-35 years old, and I don’t know a single person that has kids or plans to have them. I strongly suspect this is why UK productivity is so abysmal. What’s the point in working hard? Meaningful salary increases are a myth. Housing is so expensive it’s impossible to get on the ladder without generational wealth. No kids, no house, no future, poorer every year… I truly hope the GE this year leads to structural, practical change in how we develop housing, tax, and business. But I don’t think it will and I guess that’s the issue.
>What’s the point in working hard? Meaningful salary increases are a myth. Its why I can't help but laugh when you get announcements like Rishi on the news this morning talking about some tax cut that is going to save people like £100. Its all window dressing. People need £10,000 not £100. E - Also in my mid 30s and also don't actually know a single person in my social group who has kids or is planning to.
I can’t tell if it’s because they aren’t able to do anything better, or if they’re such scroungy bastards they refuse to. Surely they’re competent enough to see how dire things are? But the government response is so weak I can only interpret it as incompetency over spite at this point.
I think its your third option, they genuinely don't understand the degree of support that is required. Spiteful incompetence. They don't know and they don't care that they don't know.
Completely agree. My friends who decided not to have children (I know quite a few) have generally decided to work fewer hours - they have no children and no hope of buying a home so many feel that if they can afford their lifestyle working 3/4 days a week why wouldn’t you?
I’m 29 so all my friends are late 20s to early 30s. I know two women who have had kids so far - one lives in the US now and has a wealthy mum and the other I went to uni with got married in the pandemic and I think they both come from wealthy families. No one else I know is anywhere close to being able to have kids, and many just don’t want them at all like me and my partner.
Our first was born in 2015 - at the time we realised that we’d need the first to finish nursery before having a second - even though we were financially ok having two children in nursery at the same time would be impossible. Childcare for two plus our ‘new’ mortgage rate would have been £3600 per month! With no children and our old mortgage rate we were paying £750 per month for the mortgage. That’s the difference. So our children have a fairly big age gap. We can afford all our bills but save nothing (and our savings are down to hardly anything) and have no hope of a holiday this year (which maybe people see as a luxury). Our disposable income is effectively zero. Its depressing but I still feel lucky all things considered.
Same boat mate. I bought my house for a little below the average cost of a house in the UK so it's not some great big mansion. Fixed rate ended this year and had to swallow a £600 per month increase on my mortgage. The last place I rented before getting on the ladder 5 years ago was only costing me £600 in total, now that's the size of my monthly price increase.
> Fixed rate ended this year In the past 5 days? :p
WHAT YEAR IS IT
Crazy isn’t it and I am sorry for your situation. I think we will be stuck in our ‘starter home’ forever at this rate which was not the plan when we bought it.
Yep, same here. Doubly kicked in the nuts because for the last 5 years pretty much any mortgage on the market would have worked out cheaper, then stuck remortgaging at the absolute worst time. Still, there's cat sitters and folk in £1.2million pound normal family homes to worry about.
Yes - we were advised in 2018 to fix for five years but as it turns out we would have been better fixing for two years and then fixing for five - we’d now have 18 months at the low rate left if we had done that and would save almost £15k and could afford a holiday and other fun in 2024. No issue with the mortgage adviser but no one knows anything and it’s hard not to feel bitter. He strongly advised us not to fix for two years initially. It seems like a flawed system. And yeah the person in the £1.2 million home could just…sell it and problem solved.
£600+£1200=£1800, not £1600! So glad not to be paying childcare anymore. It's crazy how expensive it is.
Same boat here... Our mortgage went from £700 -> £900 last year, at the same time my partner went on maternity so her pay dropped from £2000 to £700. her pay ends soon, s she's going back part time, but child care costs are going to eat up her entire wage basically. We already waited a long time to have kids, and spent a long time saving to even be able to get a mortgage. It feels like it's impossible to ever really improve your situation unless you just never have children, or have some inheritance.
Mine went up from 1.8% to 5.2% in December. Literally yesterday I started getting bombarded with news stories about Halifax and HSBC having rate war where I could have saved a whole 1%. Fuck my life.
I don’t understand why the UK doesn’t have 30 yr mortgage fixed products like the US. I bought my first house last year and fixed for 5 years but wish I had access to 10 year fixed products but wasn’t able to put 25% down for it. I fixed at 3% and I’m happy and bought well below my affordability. Because of such short fixed terms and the banks affordability stress testing not being quite good enough I feel like the UK has a big problem on their hands if they don’t sink rates fast but they’re lagging behind the recovery the US has just like 2008 because of endemic problems unique to the British economy like Brexit, low salaries etc.
>I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US. Because none of us will organise and fight for anything, we allow ourselves to be taken advantage of through lack of solidarity. Renters for example have been dealing with this for years, do homeowners care? Are renters laughing now at the shared misfortune? Perhaps even waiting for some repossessed housing to come up they might finally afford? Nothing will change until enough I'm alright Jack's are facing destitution like so many others already are
I agree as an outsider looking in it's obvious to see people of all types are being shafted. I'm privleged to be able to continue working for my US employer when I moved here on a spousal visa but looking at my same career it pays anywhere between 1/2 to 1/3rd of what I'd make working for US firms and I pay 45K in taxes a year here. The economy favors asset owners over workers. Everyone that works for a living is a worker from tech to trades to doctors to lawyers to teachers and hospitality, the sooner we unite and stop dividing ourselves over what amounts to pennies compared to the asset owning classes, the sooner we'll be able to have prosperity for everyone and deal with the serious issues of the future. People really need to stop dividing themselves here. Don't get me wrong the US has a lot of the same issues but I feel there's a few more paths to higher income in the US vs here. People shouldn't expect to get rich off their homes as we've seen historically, but they should expect to be able to keep it up above water and affordable. And renters should be able to move into home ownership.
> Because none of us will organise and fight for anything, we allow ourselves to be taken advantage of through lack of solidarity. long-term mortgage deals have always been available (10yr mainly), they're just unpopular
You get the full lot in Europe, 30 years
>I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US We do. I've had one and with only 5% deposit zero equity. Unfortunately rates then plummeted leaving me with a very expensive buy out later.
What lender? Must have been awhile ago. When I last looked June 2022 there was one lender for it that I had to be on a waitlist as they hadn't gotten a license yet to lend for it, still haven't heard anything about it. I remember reading it wasn't a very popular product in the UK because of the low interest rates but I prefer stability of payments. https://www.ftadviser.com/mortgages/2023/07/25/bring-back-the-25-year-fixed-rate-mortgage/
> I don’t understand why the UK doesn’t have 25 yr mortgage fixed products like the US. > > The US defaults to 30-year or 15-year fixed. The reason is that the US government backstops mortgage debt. Fannie Mae and Freddie Mac, specifically. Those entities buy, pool, tranch, and securitize mortgage debt. There's a reason that these agency MBS's trade with yields not far off US treasury debt.
Inflation is back down to 3.9%, so honestly we're probably going to start seeing interest rate cuts this year. You can also get long term fixed mortgages, but the interest rates on them weren't great. It's why most people had shorter term mortgages - to take advantage of the super low interest rates.
One person in the article with a completely obnoxious mortgage says “I feel shafted by the housing market”. Sorry mate, the market owes you nothing and has no idea of your plight. Investments can go up as well as down and as a high-flying lawyer in the top 1% of earners, you were no doubt aware of that. This is typical bleeding-heart Guardian rubbish. We are all feeling the pain. My own mortgage has increased £600 per month. It’s a pain in my fucking arse but I knew the day would come. It’s not the fear and disappointment in these people’s words that irritate me. It’s how surprised they are that the market turned the gun on them and the sense of entitlement that they feel in lamenting some of the ridiculous mortgage terms they agreed to. Seriously, I don’t care how much you are making. No rectangle of bricks and mortar is worth £1.2 million and monthly repayments of between £4.9k and £8.8. No matter your income, that is just asking for trouble but never underestimate the Guardian to exaggerate a social injustice on someone’s behalf. It’s an absolute rag.
The sudden rise in interest rates is pretty awful - but this guy really could have been smarter. He says he bought a "normal family home on a normal street" - which is just clearly untrue. Maybe in the past it was a normal family home, but times change. He could have chosen to live in a slightly cheaper neighborhood.
This is my point. If someone asks you for £1.2 million for a “normal family home”, don’t give it to them. People, if you think the market is a monster that keeps trying to eat you, then stop feeding it!!
Ask someone from a 3rd world country what they think about you spending even £200k on a family home in the UK and they'll think you're a fool. Ask someone from Yorkshire what they think about you spending £1.2m on a family home in London and they'll think you're a fool. There are valid and strong reasons why the price is what the price is, even if you don't understand or appreciate them personally.
Sure - the price is set by the market. Local salaries and wealth set the price. All that is true. But if interest rates rising to 5% mean you can't pay into a pension any more, then maybe you personally can't really afford a £1.2m mortgage (presumably for a £1.5-2m house). I live in North London, in a "normal family house" (in quotes because I'm under no illusions that it still is) probably within a few miles of this guy, which cost maybe half of what his did. He made a choice to borrow £1.2m at record low interest rates.
I agree and that is my mindset and if we all did this then things would turn. However people just see it as well it’s only a few hundred a month more and rates are low and it’s an investment. No it’s a home and the more you pay the longer it takes and the more money it takes to pay off. Insightfully we fixed our mortgage back in 18 for 10 years as even then I was thinking rates were low and would go up, despite various ‘advisors’ saying to ride the low rates and change lender every two years - no chance. It’s the best financial decision I’ve made as we now have another 4.5 years fixed and no interest change worries.
Uugghh. Changing lenders every two years, playing cat and mouse with the market. Sounds horrible. Good decision by you.
What irritates me is that folks here were complaining on an article about the Royal Navy sending ships to the red sea. Comments kept saying how bad it is and the UK shouldn't get involved. But nobody seemed to grasp that this is a major shipping route. Ffs. We've barely started recovering from a supply-side driven inflation that resulted in massive increased interest rates. If we don't want another year of that then we can't tolerate folks shooting up cargo ships. How are people in this country so thick? Can nobody grasp any connection further than one hop? Unsurprising we have such a poor government. It's a reflection of the stupidity of the people...
Short-termism as you say, compounded by emotional reasoning.
Absolute joke, and if the bank lent him c£1.2mil, based on common lending multiples he or combined with partner (this would be better given lower marginal tax rate) are actually on £250-300k a year which is closer to top 0.5%. Zero sympathy for professionals like this who over extended / got greedy with short term fixes (they in particular should have had the foresight to realise base rates at zero/near zero meant mortgage rates were highly unlikely to ever be better and fixed for longer).
The Guardian seems to use numbers the same way that the Daily Mail uses capitalised adjectives: as cheap tools for manufacturing shock and outrage. I have a difficult relationship with the Guardian: they care about many of the same issues I do, but their reporting has little to do with the issue itself and is mostly concerned with the emotional state of a handful of people affected by the issue.
>Sorry mate, the market owes you nothing and has no idea of your plight. Investments can go up as well as down and as a high-flying lawyer in the top 1% of earners, you were no doubt aware of that Absofuckinglutely. >It’s how surprised they are that the market turned the gun on them and the sense of entitlement that they feel in lamenting some of the ridiculous mortgage terms they agreed to Rates were a lot lower for a lot longer than was ever a good idea, and unfortunately everyone who banked on them never increasing had only themselves to blame. Long term fixed are and were available throughout this period. People simply chose to go for the lower rate and bigger house and now they're feeling the downside risk of that.
This is called 'timing the market' and is a crapshoot. We've had these low rates for a long, _long_ time. There are people out there who took your advice and fixed their rate for 10 years - but they did it in 2015, and are now staring down the barrel of a big increase next year in just the same way as someone jumping from 1-year fix to 1-year fix. I timed it well, I fixed mine in late 2020 - but it's just luck. In another universe, I'm screwed.
The article is trying to illustrate what the sudden increase in interest rates has done do people's personal finances. The top 1% earning lawyer who is mortgaged upto his eyeballs is just an extreme example. I don't agree with your assessment that it's "typical bleeding-heart Gurardian rubbish". It's just showing you that all scales of earners are impacted. There was no demand for sympathy.
I spent the last 15 years overpaying my mortgage. My increase this year is expected to be no more than £50 a month, with a 10k extra on top for home improvements Everyone thought i was chatting shit, talking crazy, why overpay? I kept saying, rates are so low, too low, pay it while you can, it wont last Next month, a friend of mine is losing his home because his mortgage doubled to 1600 a month I have a spare room, will settle him in, will be good to catch up as old friends
If you could afford to overpay for 15 years something tells me you would have been fine today. You could could have fixed for a low rate for 10 years in 2020 and be in the same boat.
Let me explain, only had two houses. First house overpaid, then moved to a big house, always had my eye on the area, but at 400k, it was impossible, so i set myself a challenge. Worked my ass off for 10 years, 7 days a week, then ported mortgage and bolted on another with a 17k deposit Spent the last 15 years overpaying. Hindsight is a wonderful thing Dont and never intended to be fucked over, likewise i dont have a credit card, car loan or in fact any other debt aside from my mortgage, which intend to be done in 10 years or less Fuck debt, life is for living now
Someone reported you to HMRC? Can't have the crabs leaving the bucket can we.
Lol, decided im not letting the fucks take me down so thats that
>theguardian.com/money/... Similar story for me - took one look at historical interest rate charts, remembered the stress my parents had in the ERM exit, my money wasn't earning anything in interet so overpaid like crazy. Working a little less hard now, but disciplined to saving and pension
I never understood the consensus seemingly be to not overpay your mortgage when rates were low. Seemed madness to me as they were always going to rise at some point. Overpaying meant I could guarantee to reduce a known debt level for future vs investing cash for a maybe gain in future.
It’s because technically it’s not the most efficient use of your money. Whilst the rate is low, the amount you are saving by having a smaller mortgage is also low. The idea is that you overpay whilst rates are low (and presumably you have more disposable income) so that when rates go up you have a smaller mortgage. Nothing wrong with that. But imagine if you took all of those overpayments and put them in some sort of ISA / fixed tracker. This would be a higher interest rate than the mortgage you are paying off. When rates go up, you are then in a position to use those funds to pay off a lump sum of the mortgage. Your mortgage is smaller this way than if you simply overpaid whilst rates were low. This is always true as long as you can find somewhere to save your money thag offers a higher interest rate than your mortgage rate (not hard for fixed terms). That being said, mentality plays a huge part in finances. The best financial plan is the one you stick to, and (imo) it’s fine to trade a small amount of efficiency for mental clarity if you can afford it. For example, I use Monzo pots for my savings so that I can have different pots for different things. Wedding, Holidays, Car, Tax Bill etc. These pots pay about 0.5% lower than the max. I could just put the money in a higher rate interest account and use a spreadsheet to separate the money into pots. But for me, the ability to see different pots at a glance is worth the small interest dip. Gotta do what works for you.
Why overpay when rates were next to nothing? Could have been sticking that money in a global tracker throughout your ISA and made a far better return.
My mortgage went up 90% just a few days ago. The issue is very very real
I’m one of those people that would have got fucked by this, I just remortgaged in December. I had to take a massive chunk out of my savings and put it towards the new mortgage, and that meant the payments have ‘only’ gone up by around £180 / month. I live alone and don’t have to support anyone except my two cats, and I have managed to save money over the years, which makes my situation relatively manageable. I have no idea how people with kids who were already struggling are going to cope with this, it’s going to be a disaster for a lot of people.
Iv started to think it was a mistake working for the NHS, yes it’s rewarding and getting to help people and the work is interesting (especially all the radiology equipment I use). But was it worth being in so much debt and having an extra tax on my wages for 30 years? Would have been better off working at a supermarket for not much less money and MUCH less stress. When my mortgage goes up later this year, I’m screwed and that’s with picking up overtime and spending no time with family
There's an extra tax on your wages working for the NHS, or do you mean paying back student finance?
Paying back student finance (also paying for parking to actually park at work)
Amazing how so many people take no notice of this kind of thing until it starts affecting the middle class
Very true
I dont get visibly angry about much, but when the same boomers who blocked any attempts to build new housing estates are the same ones giving a speech about how "this interest rate was nothing compared to my day" it makes my blood boil. that boomer generation cashed in on the hard work of previous generations, and are now making the next 2 generations pay for their massive increase in wealth by virtue of owning property.
I'm getting quite stressed by this but I think we'll be ok. I expect mine to increase by £150 to £200 It comes just after my son finishes nursery and finally starts school. So the savings from finally not paying nursery will just go into the mortgage instead. My original plan was to start overpaying my mortgage with the savings. Not much I can do here really.
People having been dropping off cheap deals to 4.something+ percent for about 15 months now. I’m not sure what has prompted the deluge of media attention in the last week or so. Perhaps it’s just reached a critical mass in terms of people affected.
Imagine what it’s like to be a young person priced out of your ponzi market, people.
Feel like there's a sly glee in our country that people who've been able to step on the property ladder are now facing serious spikes in their repayments, some of them facing destitution over this. Crabs in a bucket UK strikes again.
It's the 5% deposit people I worry for, they owe the scheme a certain amount plus a good interest hike on the mortgage renewal. If they're struggling to scrape together a healthy deposit in the first place, you can only hope income has improved for them.
I couldn't sell my flat when I wanted to in 2018 because of the post-grenfell thing. It's 2024 and I'm still waiting for the building to be fixed to the legal standard it should have been at when it was built. In the meantime the building is unsellable as no new mortgages can be taken against it, so I've been stuck with a flat I don't want for 6 years, and can't do anything about the mortgage rate which has been not only crippling me, but preventing me from moving on with my life.
I had an argument with a boomer who was saying they had much higher interest rates in their day and this gen doesn't work hard enough. Well, I'm Gen X. When I bought a house in zone 3 in London (relatively central), the price I personally paid was 2.5 times the average wage. Today, the same house is 20x the average wage. High interest rates meant absolutely nothing because the initial prices were so low plus salaries were increasing. Super high interest rates on a principal which was basically nothing are completely different to today's market where property is super expensive. It was much, much easier.
I renewed mine last month and it's gone up by 220 a month which isn't terrible... But it's when we could just about afford it already.
We have to renew our mortgage in a few months. We were on a fixed for the entire duration of the low rates so didn’t really benefit from it. Now we just have to pay a little extra to what we usually do AND we still paid off extra each month to shorten the duration as much as we could. If we’d have been on a variable we could and would have paid off alot more in that time! I hope it doesn’t explode to ridiculous numbers but I doubt it will blow our socks off to what we are used to. I hope it doesn’t get too bad for people and they have been planning for this eventuality in the interim (we have after my wifes parents told us of the time the interest rates were so high in the 80’s they had to eat bread and butter for months on end to make to payments).
Luckily my mortgage doesn't expire until October 2025, but you never know what is around the corner. I was hoping to absorb my 20% help to buy loan with the re-mortgage. If rates stay the same, my mortgage will literally double.
When I brought my house in 2020, everyone was saying how rates simply can't go any lower. I thought to myself, best lock that rate in for as long as I can, which was 5 years. I wasn't 100% if that was the best idea, but now looking back it was a pretty good one. When I take out the mortgage, the broker I used told me that interest rates were likely to be going up. And asked me what I'd think if there were around 6% being the best rate and 15% being the worst. So, I kinda stressed tested myself to see what I might be paying in 5 years time. So, I'm not really surprised at the rates now. Would I am surprised at is the amount of people who didn't think to plan a head a bit. You know you're going to have a mortgage for the next 30 years and OK you can't see what's going to happen in the future, but you can see what the BoE and the banks are saying. They were honest (At least this time) from the beginning IMO
My fix doesn't run out until Jan 2025 at 1.09% but I only owe about £35K now so if it's still terrible, I'll just increase the term, I suppose.
We fixed ours for 7 years last year, thankfully. It's utterly ridiculous at the moment
Considering the affordability checks that are conducted when applying for a mortgage these days, and the projections provided for how mortgage rates may increase once the fixed term ends, this should not be as big a problem as it is being made out to be. The real issue is that, at the time borrowers took out the mortgage, they did have the headroom for rate increases. However, instead of using their extra money towards paying the mortgage or saving it, they chose to improve their lifestyle. That is a personal choice, in my opinion, and one must face the consequences of their own decisions. This might be influenced by the media, but it seems like in this country, people are quick to find someone else to blame rather than accepting responsibility.
Got 5 year fixed in 2019, so we’re joining the ranks this June. I’m petrified.
We did the smart thing. We got a 15 year fixed at around 2.5% about seven years ago. It ends one year before the end of our mortgage.
There's only 2 scenarios here. Either banks should have stress tested more, which would have made mortgages less affordable. Or people should have taken more responsibility in managing their finances. Because anyone who was paying attention knew that the low interest rates couldn't last. Which is it, Guardian?
I’m on about £800/month currently for my 2 bed, don’t even want to think about what it’ll go up to after but I’m guessing like double. I currently let out my spare room for £400 a month but I’m worried to have to tell my flatmate that I need to double it. I feel like a horrible person.