Mortgage fix

rjsterry

surrey_commuter said:

Jezyboy said:

pblakeney said:

focuszing723 said:

focuszing723 said:

Look that fooker in the x and y and tell me that the blissful weren't going to get a right royal kick in the tackle.

Agreed. I'd have done any calculations based on 5% during that period and made surplus payments while lower. Can't afford the house you want? Neither could I.

Meh, it's all very well saying you'd effectively pretend to live with a higher rate, but the housing market was priced with low interest rates in mind.

As most of us are in the twilight of our careers so not expecting to double our pay in the next 5 years then I think this is the logical way to look at it. My last mortgage could easily have been £200k bigger but I chose not to for exactly that reason.

This is why it infuriates me that there is even talk that I should help some irresponsible censored to pay his maxed out mortgage.

Why not get sky high returns in a bank or bond you have never heard of as there is no downside as if it goes bust good old SC will bail you out with the money he has on acct at 2% less.

Speak for yourself, mate.

Stevo_666

surrey_commuter said:

Jezyboy said:

pblakeney said:

focuszing723 said:

focuszing723 said:

Look that fooker in the x and y and tell me that the blissful weren't going to get a right royal kick in the tackle.

Agreed. I'd have done any calculations based on 5% during that period and made surplus payments while lower. Can't afford the house you want? Neither could I.

Meh, it's all very well saying you'd effectively pretend to live with a higher rate, but the housing market was priced with low interest rates in mind.

As most of us are in the twilight of our careers so not expecting to double our pay in the next 5 years then I think this is the logical way to look at it. My last mortgage could easily have been £200k bigger but I chose not to for exactly that reason.

This is why it infuriates me that there is even talk that I should help some irresponsible censored to pay his maxed out mortgage.

Why not get sky high returns in a bank or bond you have never heard of as there is no downside as if it goes bust good old SC will bail you out with the money he has on acct at 2% less.

Agree (apart from the twilight bit).

joeyhalloran

I agree in cases of second homes or 'i want a better house' buyers but first time buyers struggling with rent for years and just getting on the housing ladder...that's rough

TheBigBean

kingstongraham said:

rick_chasey said:

kingstongraham said:

If people used less energy but the price of energy was still high, that doesn't help bring inflation down does it? (as a measure)

Headline inflation sure. That's partly why we're seeing that fall.

Doesn't account for core inflation though.

I said that it doesn't. If energy is part of the basket and it is high due to external factors, people using less of it doesn't reduce inflation.

The average gas and electricity price is included in the CPI basket, so what you say is correct; however, the weighting of each basket item and the contents of the basket are periodically adjusted to reflect the typical person. Therefore, if there was a long term reduction in energy use it would flow through to the basket eventually.

As I said before, it is an estimation, and not some super exact scientific value.

pblakeney

joeyhalloran said:

I agree in cases of second homes or 'i want a better house' buyers but first time buyers struggling with rent for years and just getting on the housing ladder...that's rough

That's a fair point which I failed to expand on.

wallace_and_gromit

pblakeney said:

rick_chasey said:

pblakeney said:

Jezyboy said:

pblakeney said:

focuszing723 said:

focuszing723 said:

Look that fooker in the x and y and tell me that the blissful weren't going to get a right royal kick in the tackle.

Agreed. I'd have done any calculations based on 5% during that period and made surplus payments while lower. Can't afford the house you want? Neither could I.

Meh, it's all very well saying you'd effectively pretend to live with a higher rate, but the housing market was priced with low interest rates in mind.

Yeah, and inevitably going to increase. The only question was when.
My method copes with both eventualities instead of being tied to one.

Still to be convinced prices will fall materially tbh.

Yeah, I’ve been saying since day 1 that increasing interest rates will have minimal effect.
The answer given is that they only have the one tool.

Interest rates must be effective on inflation eventually, as rising interest rates are widely predicted to trigger a recession involving meaningful -ve GDP growth (not just the arguments about -0.1% vs +0.1% that characterise the current political discussions as to whether the UK is "in a recession").

A recession would reflect an excess of supply over demand and hence aggregate prices will fall. The ONS report yesterday highlighted that a significant element of current inflation is due to discretionary spending e.g. holidays, with food and fuel playing a less significant role.

The trick is to raise interest rates early enough and just enough to dampen demand without triggering a serious economic downturn. And I think the BoE has missed this particular trick unfortunately.

wallace_and_gromit

surrey_commuter said:

Jezyboy said:

pblakeney said:

focuszing723 said:

focuszing723 said:

Look that fooker in the x and y and tell me that the blissful weren't going to get a right royal kick in the tackle.

Agreed. I'd have done any calculations based on 5% during that period and made surplus payments while lower. Can't afford the house you want? Neither could I.

Meh, it's all very well saying you'd effectively pretend to live with a higher rate, but the housing market was priced with low interest rates in mind.

As most of us are in the twilight of our careers...

Age-wise for me then yes. But I like to think of this period as equivalent to the 70s rock bands who can barely get out of bed in the morning but who are amongst the rare acts that can sell out a "stadium tour".

Whether anyone else view me in this light is another matter altogether!

joeyhalloran

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

pangolin

joeyhalloran said:

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

Depends whether they own a house or not.

rick_chasey

joeyhalloran said:

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

yes, (depending on where their savings are - if they're locked up in assets that are impacted by the rates then ymmv)

wallace_and_gromit

joeyhalloran said:

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

Yes in terms of cash savings. “It depends” on equity etc assets as rising interest rates may trigger general economic downturn and reduced returns from such assets. But potentially offset by better annuity rates for new retirees.

Pross

The interesting thing (no pun intended) with interest rate changes is that when they were being reduced every month back in the GFC the vox pop interviews were all saying ‘it’s not going to make any difference to me’ but when it goes the other way it’s going to be disastrous for them.

I haven’t got too much sympathy with those asking for help. I had a Northern Rock mortgage when they collapsed that was on a fixed rate. The Government took them over and wanted as many mortgages as possible off their books so as soon as my fix ended the rate went up hugely and I was paying £300 more overnight. As I had a high LTV, property prices were falling and maximum LTVs from providers were dropping I had to just suck it up at the same time as a 10% pay cut and removal of fuel benefit that was another extra cost of a few hundred a month.

There was no talk of getting help and it never crossed my mind to expect it. I’d made the mistake of assuming pay rises each year were a given and borrowed on that basis. One of the downsides of the financial support given during Covid is that an element of people now expect the Government to help them out of any financial difficulties.

shirley_basso

only £300?

Jezyboy

£300 was a lot more back in 2008!

joeyhalloran

Pross said:

One of the downsides of the financial support given during Covid is that an element of people now expect the Government to help them out of any financial difficulties.

Not just Covid but also the energy price crisis. I agree that it seems many people now expect the government to bail them out.

shirley_basso

Jezyboy said:

£300 was a lot more back in 2008!

Okay, so £500 in today's money

For the amount my mortgage is about to go up, I could have kept my first home.

surrey_commuter

joeyhalloran said:

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

yes, but people with savings are unlikely to run out and buy a new boat with their windfall whereas people with debts will have to cut their spending

so overall it is bad for the economy (so good for reducing inflation)

morstar

I definitely think Covid opened the floodgates to people expecting a safety net for every circumstance.

However, wages have been massively eroded to where people were already using foodbanks. Something was already very much broken and it just got a lot worse.

Conversely, like others have said, I’d be resentful of bailing out people who have over leveraged. I haven’t. I’ve been lucky to have significant wage growth in recent years. Despite this, every time we’ve looked into moving, I’ve just looked at the numbers and said no thanks.

I’d love to have moved but I’d rather be comfortable and not panicking every time the rates move. Don’t see why I should now subsidise somebody who had the same numbers and said f*** it, let’s do it.

I’ve frequently laughed at how much the lenders would lend me. Crazy numbers. Fine if I only had the mortgage to pay and nothing else.

kingstongraham

surrey_commuter said:

kingstongraham said:

If people used less energy but the price of energy was still high, that doesn't help bring inflation down does it? (as a measure)

Energy prices soared so people used 15% less, if they had continued as before then prices would have been higher

Not once the price cap was there and we were all paying it on the never never.

wallace_and_gromit

rick_chasey said:

joeyhalloran said:

Does rising interest rates mean those without mortgage (or significant other debt) are better off as their savings will give a greater return?

yes, (depending on where their savings are - if they're locked up in assets that are impacted by the rates then ymmv)

Nicely edited!

Jezyboy

kingstongraham said:

surrey_commuter said:

kingstongraham said:

If people used less energy but the price of energy was still high, that doesn't help bring inflation down does it? (as a measure)

Energy prices soared so people used 15% less, if they had continued as before then prices would have been higher

Not once the price cap was there and we were all paying it on the never never.

Most people I know used less. Or went back into the office for some free heating!

MidlandsGrimpeur2

Doesn't interest benefitting savers also depend on how much banks are passing on? It seems that increased interest on savings isn't matching increased interest on borrowing. Yes, savers are seeing some benefit, but perhaps not as great as they should be.

pblakeney

MidlandsGrimpeur2 said:

Doesn't interest benefitting savers also depend on how much banks are passing on? It seems that increased interest on savings isn't matching increased interest on borrowing. Yes, savers are seeing some benefit, but perhaps not as great as they should be.

Basic principle of banking to make a profit.
They pay out less interest than they charge.

kingstongraham

Jezyboy said:

kingstongraham said:

surrey_commuter said:

kingstongraham said:

If people used less energy but the price of energy was still high, that doesn't help bring inflation down does it? (as a measure)

Energy prices soared so people used 15% less, if they had continued as before then prices would have been higher

Not once the price cap was there and we were all paying it on the never never.

Most people I know used less. Or went back into the office for some free heating!

Agreed, but that had no impact on the inflation rate.

Jezyboy

morstar said:

I definitely think Covid opened the floodgates to people expecting a safety net for every circumstance.

However, wages have been massively eroded to where people were already using foodbanks. Something was already very much broken and it just got a lot worse.

Conversely, like others have said, I’d be resentful of bailing out people who have over leveraged. I haven’t. I’ve been lucky to have significant wage growth in recent years. Despite this, every time we’ve looked into moving, I’ve just looked at the numbers and said no thanks.

I’d love to have moved but I’d rather be comfortable and not panicking every time the rates move. Don’t see why I should now subsidise somebody who had the same numbers and said f*** it, let’s do it.

I’ve frequently laughed at how much the lenders would lend me. Crazy numbers. Fine if I only had the mortgage to pay and nothing else.

Meh, tbf I'm not sure how the policies designed to limit the spread of COVID could have happened without the financial safety nets. As much as it's galling when distant friends reminisce about their lovely furlough holidays when you had to work at home the whole way through, that's just the way it is.

The energy price cap thing...well overall as a policy its older than COVID, it was designed to paper over cracks in a market that didn't seem to be working well for consumers, and it turns out that papering over cracks doesn't work as a long term strategy to fix things.

rjsterry

Not sure what good it does you being resentful of someone else getting something that you don't need.

It's not going to make any difference to how much tax you pay.

surrey_commuter

rjsterry said:

Not sure what good it does you being resentful of someone else getting something that you don't need.

It's not going to make any difference to how much tax you pay.

It is those of us who chose to exercise some self-discipline as we did not want to face the consequences of it going wrong ending up having to face the consequences of it going wrong for somebody else.

The % of net contributors in this country is very small and I suspect in CS it is the reverse, how exactly are we not paying for other peoples bad choices?

briantrumpet

Baling out mortgages will, like housing benefit, not help the people it's intended to, but will prop up house prices and go into banks' profits. Those with the most financial muscle will take the biggest benefit, at the expense of taxpayers.

TheBigBean

surrey_commuter said:

rjsterry said:

Not sure what good it does you being resentful of someone else getting something that you don't need.

It's not going to make any difference to how much tax you pay.

It is those of us who chose to exercise some self-discipline as we did not want to face the consequences of it going wrong ending up having to face the consequences of it going wrong for somebody else.

The % of net contributors in this country is very small and I suspect in CS it is the reverse, how exactly are we not paying for other peoples bad choices?

I think you are being a bit harsh. After 15 years of low interest rates which were factored into property prices, I don't think everyone had much of a choice unless you think they should have continued to rent (risk of regular eviction) or bought somewhere too small (family of four in a studio).

pblakeney

briantrumpet said:

Baling out mortgages will, like housing benefit, not help the people it's intended to, but will prop up house prices and go into banks' profits. Those with the most financial muscle will take the biggest benefit, at the expense of taxpayers.

This is true. If there is to be a bailout the there is no point in the BoE increasing interest rates.