Anyone concerned by interest rates rising re mortgage?

[ellal]

In Wales developers have to build a %age of social housing to get planning permission approved. .. don't know if its the same for England

It's called 'affordable housing' here, but 80% of market value is hardly that!

And sadly there are enough 'I'm alright jack' old gits who look down on those who haven't had the good fortune to have taken advantage of a previous era housing market and council houses...

Which means they vote for no change since they like their paper wealth to be maintained...

Of course it will be their kids and grand kids also suffering, but apparently many of them just don't care!

 

[Vinty]

The government could order the Banks to allow borrowers to extend the term of their loan up to a 100 years.
This would reduce monthly repayments, years down the line, owners could sell their house without an early repayment penalty.
This was popular in Japan during the 1980s.

100 Year Mortgage Calculator: Calculate Local 100-YR Home Loan Payments

www.mortgagecalculator.org

 

[diy_fun_uk]

As is always the case in matters concerning money and investments, there is (or should be) a degree of self responsibility. When you take out a mortgage these days, the paperwork states along the lines of 'at w% interest your monthly payment will be £x, however at y% your payments will rise to £z.' So the advice is there and you can argue it's up to the individual to ensure they can afford the mortgage even if rates go up by a few %.

However, life's rarely as straightforward as that. Broadly, you can maybe split people into two categories.

Category A are those who actually only need a £250k 3 bed house but calculate if they stretch themselves they can buy a £400k 4 bed house. So they do the latter, and things are fine when they're on a lower mortgage rate, but they have little or no wiggle room should rates rise. Have they been responsible from a financial management perspective?

Category B are those who need the £250k 3 bed house and can't afford anything higher. They calculate they'll be stretched if they buy it, even at a lower introductory rate. And they know they'll very likely be fecked should rates rise. But they need a house of that size which in their area doesn't come any cheaper than £250k. So they buy it. Have they been responsible from a financial management perspective?

I suppose my point is there's a difference between those who overstretch themselves through choice and those who do it through necessity.

 

[Ivor Windybottom]

The government could order the Banks to allow borrowers to extend the term of their loan up to a 100 years.
This would reduce monthly repayments, years down the line, owners could sell their house without an early repayment penalty.
This was popular in Japan during the 1980s.

100 Year Mortgage Calculator: Calculate Local 100-YR Home Loan Payments

www.mortgagecalculator.org

They've already gone further than that, people are being offered a switch to interest-only, which is effectively a mortgage over a limitless period of time that will never be paid off.

Basically renting the house from the bank, paying the interest rate as rent AND paying for all repairs. Not a good deal but possibly better than trying to sell while the market's dead or repossession.

The only sustainable outcome is around 30% price drops, but this will lead to many losing "their" (the bank's) home, as they'll end up owing more than the house is worth. In this country, if you owe more than the bank sells the house for then you still owe the balance - you can't just hand the keys back and walk away. The only way out is bankruptcy.

The upside of big price drops is that we'll all be able to laugh at the previously smug BTL slumlords sending their rented Range Rovers back and going bust, screaming desperately for tax breaks and subsidy as they go under.

 

[diy_fun_uk]

The upside of big price drops is that we'll all be able to laugh at the previously smug BTL slumlords sending their rented Range Rovers back and going bust, screaming desperately for tax breaks and subsidy as they go under.

I can't speak for England, however in Scotland 90+ % of landlords own one rental property. One. Trust me, they're not driving around in Range Rovers ...

And your sympathy or lack of it is interesting. If landlords go bust, the rental property is sold. If the renter can't afford to buy it, they've essentially been made homeless and need to find another place to rent. Oh but wait, there are no properties to rent as landlords have sold up. Next stop for the renter? Approach the local council and ask for a council property ...

 

[Ivor Windybottom]

I can't speak for England, however in Scotland 90+ % of landlords own one rental property. One. Trust me, they're not driving around in Range Rovers ...

And your sympathy or lack of it is interesting. If landlords go bust, the rental property is sold. If the renter can't afford to buy it, they've essentially been made homeless and need to find another place to rent. Oh but wait, there are no properties to rent as landlords have sold up. Next stop for the renter? Approach the local council and ask for a council property ...

Your theory sounds good until you actually think about it.

When landlords decide to sell up (or get reposessed), they don't burn down the house. They sell it to someone else. It's likely that their tenant will need a new home, but the new buyer of this house may well have been renting elsewhere. Sometimes the sitting tenant may even buy it themselves. Either way, there are exactly the same number of households and houses, only the middleman has been removed from the system.

Landlording has become a parasitic industry that works against the interests of the vast majority, mainly by driving up house prices. It's time for a much needed clearout - those who are genuinely wealthy and can afford things like maintenance will remain, the upstart get-rich-quick-on-credit brigade will have to come up with a new plan or possibly even do something productive with their time, i.e. some actual work.

 

[securespark]

too many voters are boomers, sitting on a nice mortgage free house (or tiny mortgage).

to make houses affordable, houses need to be cheaper, boomers wont vote for that

so until generation rent become a big enough majority, we are stuck

In my Paternal Grandmother's day, no one she knew had a mortgage; everyone rented.

 

[jeds]

In my Paternal Grandmother's day, no one she knew had a mortgage; everyone rented.

And nearly all of those rented from the council.

 

[fillyboy]

In my Paternal Grandmother's day, no one she knew had a mortgage; everyone rented.

And nearly all of those rented from the council.

Wasn't until the 50's that council house building really ramped up to about 150,000 units a year. In London there were various charities like the Guinness Trust owning a lot of property, probably more than the council.

 

[Ivor Windybottom]

We've gone from private landlords, to social landlords, then private owner-occupiers and now back to private landlords. We had a couple of lucky generations, now we're back in Dickensian times.

Hopefully whatever economic ****storm is coming will shake things up so that people under 40 can have a chance of becoming owner-occupiers as their parents could.

If prices drop then the end outcome should be a huge improvement for most. But those who've bought in recently are definitely going to suffer hugely for the greater good.

 

[Vinty]

Your theory sounds good until you actually think about it.

When landlords decide to sell up (or get reposessed), they don't burn down the house. They sell it to someone else. It's likely that their tenant will need a new home, but the new buyer of this house may well have been renting elsewhere. Sometimes the sitting tenant may even buy it themselves. Either way, there are exactly the same number of households and houses, only the middleman has been removed from the system.

Landlording has become a parasitic industry that works against the interests of the vast majority, mainly by driving up house prices. It's time for a much needed clearout - those who are genuinely wealthy and can afford things like maintenance will remain, the upstart get-rich-quick-on-credit brigade will have to come up with a new plan or possibly even do something productive with their time, i.e. some actual work.

Definition of a landlord is buy a house with a mortgage and get some other sucker, who could have a mortgage of his own but
can't afford it because he is paying your buy to let mortgage.

 

[Mottie]

In Wales developers have to build a %age of social housing to get planning permission approved. .. don't know if its the same for England

It’s the same in Newham. When the MOT station was put up for sale for development into flats, nobody was interested as you would have had trouble shifting the full price ones with 'social' ones in close proximity. The social ones are generally build to a lower spec and look completely different to the private ones. Normally inhabited by a different demographic too. In the end, the whole site was bought by a housing association. Funny how they don’t have to build a percentage of nice 'unaffordable' privately owned ones though, isn’t it?

 

[Vinty]

The state should be supplying subsidised housing for working families so that they can raise the capital to buy their own house.
Chancers and investment strategists should be excluded.

 

[gas112]

Christ knows why millions more never jumped onto 10 year fixed mortgages at 2% or less, common sense told you that if it still dropped slightly the loss would be minimal but if interest rates went back to historical averages then you would be laughing. When I paid the 15% mortgage back in the day when rates fell we continued to pay the same as we had done in case they went back up. Cut our cloth to suit as a result paid mortgage off 8 years early and mortgage free at 39.
To many do not look at the figures over total length of mortgage instead of trying to pay off early and save a fortune

 

[fillyboy]

The state should be supplying subsidised housing for working families so that they can raise the capital to buy their own house.
Chancers and investment strategists should be excluded.

What about non working families?