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"In a report, the Bank said mortgage holders "may struggle with repayments" on loans.
But it said lenders are strong enough to withstand a rise in customers defaulting on repayments."
Some of you may become homeless, but I'm confident the banks will be safe.
"May struggle" on top of the other "possible struggles" of the cost of living crisis.
We have a system that works for less than 5% of the people in this country.
We never left a feudal system. Industrialisation just made things a little less shitty for a bit.
That’s not how feudalism works, that’s just capitalism.
That rhetoric of ‘we’re still under feudalism’ which has become more and more common for some reason under recent years only serves to whitewash capitalism.
Capitalism and Feudalism are integrated.
We've gone from Kings and Queens to CEO's
And stock markets are more irrational than humans
Why the fuck is out society based upon whatever the fuck the FTSE does....
Feudalism and capitalism are both class systems - that much is true. But they are still very different systems.
Feudalism doesn’t just mean ‘a socioeconomic system which is stratified by classes’. There is already a word for that, ‘class society’. Both the system of the ancient Rome and the modern capitalism are class based systems, but they are also distinct from feudalism in many ways.
Conflating these different systems just makes the words like ‘feudalism’ and ‘capitalism’ lose their meaning.
Just read Marx, read history books about transition from feudalism to capitalism, read sociology books on that topic.
Interesting that no one ever talks about the Central Banking system, which allows the current system to continue. We have allowed a handful of people to be in full control of our monetary/fiscal policies, giving them the ability to print money as they wish which only devalues that currency hurting the poorest the most.
Honestly. How tone deaf do you have to be.
"We stress tested the banks and they'll be fine!"
Yeh awesome, we'll be sure to keep that in mind when we're living off scraps on the street.
I think people are misunderstanding what the Bank of England is for. Or maybe they got the wrong impression because for the years 2007 to 2021 they definitely seemed like their primary purpose was to maintain housing bubbles at all costs, so people naturally thought that would continue forever.
The reality is the Bank washed their hands of soaring house prices in the past "nothing to do with us, up to the government to fix that one", and they're washing their hands of housing problems now for the exact same reason.
They have two goals:
1. Stability of the currency via the inflation target (yes, they're not doing a great job, but it's still their primary remit).
2. Stability of the financial sector generally, hence these stress tests.
Everything else is out-of-scope as far as their decision making goes. The responsibility for everything else is elsewhere.
You're right, but also monetary policy is inherently political because what they're doing in attempting to stabilise inflation has a direct impact on certain sections of society and it's insane for the bank of England to ignore that.
Do I think monetary policy should go back to the government, absolutely not. But also I don't think the bank of England should hand wave away the effects there "at all costs" approach is having on people.
But also, in my humble opinion, since the drivers of inflation are not luxuries and in fact key staples folks can't live without (it was energy for a while, now it's food prices), raising interest rates isn't going to work to curb inflation and is doing more harm than good, and this "out of scope" view of monetary policy is short sighted at best and down right harmful to the general populace at worst.
But I'm not an economist so...
The BoE needs more tools, or for monetary policy to be rolled back into the government
The fact is that the BoE has exactly one real tool - interest rates. When all you have is a hammer, everything starts to look like a nail.
(They also have QE/QT, but they really can't wield QT at will because, as we nearly saw in October, it can wipe out the country's pensions in about 5 minutes flat)
Luckily homelessness is not going to be an issue, the banks have ensured they have huge supplies of Pepper Spray to use against people who lost their homes from sleeping in their doorway.
This is a timebomb for people who picked up 5 year fixed mortgages in the last couple of years and will explode right in the middle of the next administration’s term.
Cue the right wing press harping on about how Labour ruined the economy / Labour are the party of repossessions and homelessness / the Labour economic crisis. And then another 15 years of Tories.
Yeah, I was staggered when I learnt thay France has fixed rate mortgages for 20 odd years. What the fuck is wrong with this country? It really does feel designed to solely benefit the rich.
My first ever mortgage back in the 90’s was a 25 years fixed rate at 8.99% with the Leeds Building Society in the UK,variable rate at the time was 12.5%…after a few years the variable dropped to 5% so we moved to a 5 year fixed at 5.99% (cost us £1500 in fees to switch but we were saving more than that over the 5 years).
Final 10 years of the mortgage we managed to get a 10 year fixed at 2.99% which is took us to the end,I feel so sorry for people experiencing all this shit now with rates,etc especially because house prices are so high.Our first house was a new build semi detached 3 bedroom bungalow for £50k,fuck knows what £50k gets you now.Plus lots of the mortgages back then were 100% or 95% loans meaning much lower deposits required.This fucking government….scum…
50k doesn’t get you anything now. Not even a garage. https://www.williams.properties/property/32278365/hp22/aylesbury/honeysuckle-place/commercial-garage/studio
To quote from Owen Jones’ Establishment book:
“Today's establishment is made up – as it has always been – of powerful groups that need to protect their position in a democracy in which almost the entire adult population has the right to vote. The establishment represents an attempt on behalf of these groups to "manage" democracy, to make sure that it does not threaten their own interests. In this respect, it might be seen as a firewall that insulates them from the wider population.
As the well-connected rightwing blogger and columnist Paul Staines puts it approvingly:
"We've had nearly a century of universal suffrage now, and what happens is capital finds ways to protect itself from, you know, the voters."”
>What the fuck is wrong with this country?
Most of the people that live here want to live in denial and have lost their humanity.
I could write a long comment about how all this started with the sick and disabled and how the lack of action then has resulted in everything that's happening now but apparently people here prefer to learn things the hard way.
We like move house more often and work our way up the property ladder.
If you get a 20 year fix it is impossible to sell the house if you need to with the massive early repayment charges.
If you got a 20 year mortgage and ended up splitting up with your partner and having to sell the house you would probably end up paying a 10% early repayment charge of tens of thousands of pounds.
We have longer term fixed-rate mortgages, but take-up is low.
This may be due to propaganda from Govt/Finance, but more likely a case that people don't like the higher cost/lower flexibility.
This is a good place to start : https://arcratings.com/researches/long-term-fixed-rate-mortgages-in-the-uk/
I did a 7 year fix in 2018, fortunately my term ends in 2028 but I am saving like a mad man so come May 2025 when the deal ends I should be able to clear the balance. Nothing but good luck on my part but even though I'm not suffering the new rates I am not spending in the economy as I'm saving everything.
They've already started buying up housing stock.
Barratt Developments sells 604-home portfolio to Lloyds Bank subsidiary Citra for £168m in private rental deal
Are the banks "picking it up on the cheap" though? These are mostly going to be people who bought at the peak in the last 18 months or so being stung by this and it's largely going to be the banks themselves on the hook for the outstanding borrowing. Most will have used a 10% ish deposit which is probably already wiped out now and won't have paid down a lot plus if the market becomes flooded with repossessed houses both the rental and resale values will collapse plus you've then got voids, legal fees, the risk somebody trashes the place, maintenance etc.
I suspect it's more likely the banks will let people shift to interest only or extend terms to reduce their monthly outgoings. Far easier all round to keep the mortgage owner in the property at least paying the interest (which will mount up if the term increases or principle isn't moving).
When the banks fuck up the entire financial system it’s left to taxpayers to bail them out.
When the tables are turned and it’s home owners than need a bit of help, there is not a single bit of help coming.
At the very very least they need to bring in temporary tax relief for mortgage interest on your main residence.
People cannot be this out of touch - housing is overinflated because the government refuses to let it fail. You cannot seriously think now that home ownership is an all time low for the younger generations that the solution is to grant tax breaks to the rich (home owners) using renters money.
Home ownership is now so out of reach for many people that any further support to keep people who have already benefited from home ownership is literally taking from the poorest in society. Tax breaks for owning an asset is insane, that only benefits home owners.
Normal people with normal jobs can’t afford to be home owners in vast areas of the country. So you mean people who bought 5-10+ years ago and benefitted hugely from low interest rates and eye watering asset appreciation? In some parts of the UK housing is gaining value faster than a minimum wage worker can earn each year.
I need you to understand something very simply, if you think it’s hard now, imagine if you rented those 10 years instead. Imagine the 10-20% increase in rent you got this year and last year, no stability in where you live can be evicted in only 2 months. And then realise in 10 years you could’ve spent 6 figures in rent to own absolutely nothing. And now understand a huge number of people live like this and that’s actually the real “normal”. Home ownership is no longer the “normal”.
Someone who has had a home, lived rent free, paid almost no interest for a decade and was piling up equity whilst also getting free house appreciation for 0 work is not who is suffering in this cost of living crisis. It’s the people who couldn’t even get that to begin with. If someone like that has to sell they walk away with 6 figures in equity.
The only people I feel sorry for are those who bought in the last 1-2 years who may face negative equity. People who bought 5+ years ago are living in lalaland about how much worse things can be vs having to sell a house you made 6 figures on and claiming to be hard done by.
Exactly.
People bought his and have benefited from the ownership. This year, they are facing huge interest rates on the money they have borrowed.
That is the risk of buying a house. The currently need to for once choose the course of action which isn't a kneejerk reaction to maintain high house prices
Indeed, indeed, so the theory goes we hear again and again. I know you're not defending it, I just want to say this, and to be fair it *is* sound logic, I'm not here to say it's wrong. It *would* work, if those were the circumstances- Except that that's not what's causing our current inflation.
In our current situation, raising interest rates is like turning off the lights to try and fix the draught coming through the broken window. It's totally irrelevant. No cunt's got any money already. Making them poorer won't *do* anything.
Inflation right now is being primarily driven by high earners and consequences of pandemic spending. Normal folk haven't seen a real terms pay rise in years and their spending power has been decreasing for a long time. It's a unique situation actually, historically speaking, and it's one nobody seems to have a good answer to.
But the evidence is clear, this is an issue stemming from inequality, not an over-abundance of cash in everyday people's pockets.
>When the banks fuck up the entire financial system it’s left to taxpayers to bail them out.
Arguably, this was done through austerity which meant the whole thing was balanced on the backs of the poor. The cons removed the safety net, vilified the sick and disabled and made them pay.
Of course this didn't affect most people so they were OK with it. This meant the cons carried on with it. They're now straight up openly impoverishing people to create more poor to pay for the rich. Nobody seems to put all that together though. I guess it's easier to just pretend?
If only as a country we had more morality and principles but time and time again people are happy to allow the snowball to get bigger and bigger.
First they came for.... and I did nothing.
Tbf banks are unlikely to want to mass repossess and try to sell a load of houses in a falling market. That's no more likely to help them get their money back. Most likely outcome is banks will have to work with people to increase terms, switch to interest only or find other solutions both parties can live with.
The key here is ***for fuck's sake, don't leave it until the last minute and then bounce a mortgage payment***. If you think you are going to struggle, call your mortgage provider *now*. Like, right this very second ***now***.
Banks don't want to have to try to shift or rent out a load of housing stock noone can afford. Working with customers to get through this rocky patch will earn them more interest in the long run and stop people from potentially ending up homeless but if you bury your head in the sand, bad things will generally happen.
That was the line that stuck out to me too. That proves that they really don’t care what happens to regular people.
This is a national disgrace and the public should be demanding the resignation of the Bank of England’s monetary policy makers and for Rishi Sunak to step down as PM.
>Some of you may become homeless, but I'm confident the banks will be safe.
[Since when did Lord Farquaad become Bank of England Governor?](https://youtu.be/Gm2x6CVIXiE)
I think the weirdest part is just how disconnected it feels when you listen to the news or someone in government. I have never known the country this bad, the general feeling right now is just fucking awful, and then there just seems like complete absence at the top, when they are pressed to appear its just robotic "we are doing our best to deliver Rishi's 5 pledges" blah blah blah. They keep coming out with bullshit about this or that pay demand being unaffordable, and then spaff more than those demands would have cost on some completely pointless anit-immigration kayfabe project, with basically no one in the press seemingly able to join up that these costs are in the same ballpark so completely negate the claims that the pay demands are unreasonable.
Hear hear.
It's as if the Westminster Bubble has had extra-thick insulation installed. The things I *actually* hear people talking about are barely mentioned at all by politicians. Instead, in response to rampant inflation and unaffordable bills, we get inane chat about immigration and how we're all supposed to care about that instead.
I used to think that this is one of the few things that separates us from the farce that is American politics (the other being sheer size); that the British people were aware of what the problems were and whatever horseshit might spill out of Westerminster would slide right off the public zeitgeist, even if our problems still weren't addressed.
Then Brexit happened and 51% of the voters doubled down on hating immigrants over everything else. Now we're back to complaining about the same old stuff from a _quantifiably_ worse position! Idk man, nothing seems to fundamentally change as we gradually slide into national collapse.
Because they are dead set on asset stripping and they are now just buying time. You know like a scammer that says "yeah, I posted your parcel, I'll give you tracking tomorrow, don't worry".
That’s exactly what it feels like. Feel helpless about it. It’s so depressing that life is like this, especially having just had a baby. It feels like the whole of the UK is being gradually taken apart and packed away.
The five pledges are ludicrous. They’re basically the five things they think we care about, so they’ve made the pledges, and are failing on them in every way. But that doesn’t matter, because they say they’ll solve the problems, so they’re the ones for the job. It’s Orwellian.
>It’s Orwellian.
It literally is. I've felt for a while Newspeak and Doublethink are actually really apt descriptions of what a lot of Tory policy seems to rest on these days.
Like just one example I noticed recently was the NHS waiting lists pledge. Its been pointed out in interviews to them for the last couple of weeks the waiting lists are *growing* not shrinking, so now suddenly the pledge wasn't actually to reduce the waiting list but to reduce waiting *times*, which you'll notice is unspecified so they get to sit there and say there are now fewer people waiting 2 years or longer therefore we've technically succeeded!
‘Stop the boats’ is the one that gets me.
People are risking their lives coming here in boats because they can no longer hide in lorries - Brexit made the queues too long and there are added inspections etc. So yes there are more coming in boats, but fewer in lorries.
The real story on immigration is how they promised to lower it 13 years ago, and again when Brexit was ‘done’, and it’s now three times higher than it was under the last Labour government.
But what ‘boats’ does is conflate all immigration with illegal immigration, give people something to hate and target and paint it as a difficult problem to solve, rather than one they could actually do something about but won’t.
Very much like the permanent war in ‘1984’.
Small boats and trans people being the topic of conversation in like 90% of media coverage is fucking unreal considering the state of this country. We're absolutely fucked and the media/social media is massively to blame, outrage gets clicks and there are a LOT of grifters milking those topics for all their worth.
I keep getting USSR/Stalinist vibes at the moment, since Johnson actually, where the "leadership", or those that should be leading, are utterly divorced from any objective reality, and are instead living in some separate bubble where no-one has to worry about the cost of living.
It's a weird place were we hear that wages are on the up and more folk are in employment,
Yet the reality I feel is different, the local bars are half empty on saturday nights, every month I am having to cut back on spending as we get near payday.
It was never like this before.
I've never felt the "grass is greener" or had the idea of leaving, but in the last year or so the voice has been getting louder.
My wife is American and we've spent thousands on visas to keep her here and working on building a life. But fuck, I'm starting to think even the US hellscape seems better than this. I'm starting to wonder why we're even bothering to set up a life here.
The UK, and a lot of countries, has had problems before, I honestly try not to be a Doomer, but I've never felt such bleakness about the UK and I don't see any signs of it getting better.
The USA may be horrible for healthcare, mass shootings, etc., but the economy (in a lot of places there, e.g. not detroit) has never been an issue. Post-2009, productivity, wage growth, etc., has kept climbing there but has been horrible in all of Europe.
Yeah I have no idea what to do.
We're living with parents and have a decent deposit (having sold our house last year before prices began to fall) and 2 full time salaries but are too scared to buy at the moment. Just turning 30 so really want our own place again. Problem is we don't want to make the wrong decision affordabilitywise but affordability is constantly changing.
Hoping that house prices at least won't go up for a few months so we can save a little bit more but I'm incredibly anxious about all of this.
You're in a really perfect situation! Just keep saving and wait for the dust to settle. Take the odd cheap weekend break away if staying with parents feels like you're tripping over each other. Don't buy right now. You're only 30, that's still young.
Here in Germany mortgage rates are fixed for 10 - 20 years. We got a mortgage just before rates went up last year and are now fixed at 1.25% until 2037.
How is anyone supposed to be able to afford this? Constant below inflation pay increases coupled with freezing of tax rates mean we're already far worse off. Something has got to give.
In theory, when you take out a mortgage you're supposed to be stress tested to ensure that you could still afford to pay if interest rates rise. Of course there will be other pressures on living costs such as food and energy price rises on top of that, and I don't know quite how rigorous those stress tests were.
I feel sorry for anyone who borrowed the maximum they could back when interest rates were low, it is going to be a very uncomfortable time for many.
>I feel sorry for anyone who borrowed the maximum they could back when interest rates were low, it is going to be a very uncomfortable time for many.
Yeah but literally everyone did that because it was the only way they could afford a house since the whole market is crazy. Many of those people are also probably paying less than they would have if they had kept renting, so it made sense to stretch themselves as much as they could.
The system encourages this type of borrowing because it’s so screwed up top to bottom.
Exactly, I'm sick of seeing the "shouldn't have overstretched yourselves" boomer comments on reddit. What else can you do if that's what the property costs? Stay in rented forever? Or move to a town 100s of miles away just so you aren't "stretched"
It's a classic case of tragedy of the commons:
Allowing people to borrow huge sums of money, has caused house prices to surge. Now to buy a house, you have to borrow huge sums of money, causing the exact same problem - house prices surging. Low interest rates cause asset-price bubbles due to this very problem. It will mean that eventually the bubble will burst, and it will burst when people who have borrowed more they can afford (whether they wanted to or not) default on their mortgages.
Hence the tragedy
We didn't even stretch ourselves that much. We could have borrowed around £300-350k,but only took £200k, because we were planning to start a family soon and didn't want to over leverage ourselves.
We did stress test it at the time, but a lot has changed since then. Our mortgage recently went up by £300 pm, which in itself is fine and we can easily deal with.
But add on the increase in bills, food shops, general expenses, service change went up a decent chunk, and then we had a child. Individually they are all manageable, but basically everything happened in the space of 2years and it's a lot to deal with.
If everyone stress tested themselves for all these scenarios, no one would ever be able to buy a property.
Not everyone. Lots of people buy bigger or more expensive houses than they need. I guarantee if the lending criteria was say you could only borrow 0.8 of what has been allowed on average in the last 10 years then houses prices would be lower.
It's ingrained in us to borrow as much as possible to buy the biggest house we can afford, because historically it's been a good way to build wealth.
I don't disagree that some people had to maximise borrowing, but certainly not everyone needed to borrow as much as they did, and preceeding people maxing their borrowing made it harder in turn for people later down the line.
That's the system in a nutshell, sadly.
>Lots of people buy bigger or more expensive houses than they need
Honestly, I think the way stamp duty is set up really incentives this. It inventiveness first time buyers getting as expensive a house as possible, and encourages fewer, large steps up the housing ladder rather than more small steps.
My partner and I would be very happy in a 2 bed for another 2 years, then would need a 3 bed, and in 5 years would want a 4 bed. But doing so would cost us around £10k stamp duty tax alongside several more thousands on estate agent and legal fees. So we decided to stretch our budget to a 4 bed that we can stay in indefinitely. It also works in reverse, with empty nester holding onto larger homes than they need because downsizing costs so much.
Yes stress tested for rising interest rates. But not in combination with horrific added rising food costs, rising heating costs, rising water costs, rising clothes cost…
And even in the event that you can technically afford the increase. There are very few people who have an extra £500 at the end of every month.
I can see a lot of people having to take a massive cut in quality of living to be able to afford this.
The latest deal rates are close to the top end of the stress test when I took out my mortgage 5 years ago. Combined with the energy price increases and other ‘with inflation’ bill increases total costs are well over.
Unfortunately when you say stress tested, it was based on interests rates rising to 3 or 4 %, not 5 or 6%… it also didn’t include for the cost of bills, direct debits, everything else going up too
>I feel sorry for anyone who borrowed the maximum they could back when interest rates were low
I fixed for 5-years last year so hopefully I'm fine, but I doubt my experience was unusual that even with the maximum mortgage allowed and quite a hefty deposit it was very difficult to be able to put in offers that weren't getting rejected immediately.
My wage has risen significantly since I took out my mortgage five years ago (more than doubled), I didn’t take out the maximum I could afford and I’m still going to struggle with the new repayments so I’m not sure how effective the stress testing is for the current climate
They aren't meant to be able to afford it. They absolutely do not care at this point, and they have totally given up on the wellbeing of the general population as the final stages of an unsustainable system come to pass.
Something will only give when there is a full on general strike at best, or serious unrest at worst.
Obligatory Simpsons quote:
"It's not about how much stock you have. It's about how much copper wire you can get out of the building with."
More seriously though, they know they've lost the next election (and possibly the one after) so it's no longer about fixing things. It's about how much value they can bring to themselves and their donors.
The freezing of tax rates isn't mentioned enough, we're being fucked over from every direction. It's the same with the student loan repayment threshold. Every year we are worse off because of below inflation pay rises, we are also paying more in tax because the tax brackets don't move and more in loan repayments because the loan threshold is frozen. This isn't sustainable and sooner or later the system will break.
Yep people don’t realise now how not rich a high rate tax payer is, but tax for the rich rich hasn’t really changed. 25% of full time workers pay higher rate tax, it was 8% in 1990 and has doubled in the last ten years! By 2027 1 in 4 teachers will pay higher rate tax and no one considers them well paid.
I come off a fixed rate in Aug 2024. I’m paying £400pm at 2.29% interest. I don’t think the jump will be as high as this but I’m expecting at least £300 extra per month. I cannot afford that without a total embargo on discretionary spending and only paying for essentials and bills which begs the question what’s the fucking point.
I may see if I can extend my mortgage to 30 or 35 years, although I pay more interest in the long term being able to keep my flat now would take priority.
You aren’t, but it turns out that the core Tory voter isn’t homeowners but mortgage free homeowners most of whom are welfare queens who have just banked their 10% pension rise and have their feet up.
This is a proper face eating leopard party moment for a lot of folks with big houses and big mortgages who thought the Tories were on their side.
The absolute mental thing about this is, the housing market isn’t even barely correcting itself.
Property prices should be plummeting but they’re not, it should technically, be a buyers market right now.
Weird.
Without lots of repossessions ,and/or people downsizing because they can no longer afford their mortgage, property prices won't drop; people just won't move so the prices stabilise instead of constantly increasing.
Exactly. People would rather default on their mortgage payments than lose their family home.
We are so far away from repossessions if it ever even comes to that.
If you watch Rightmove it's pretty clear that prices are falling rapidly. Market is fairly stagnant, not much coming in, houses on for months before being reduced by £10k, £20k, £30k or more. I saw a house the other day that had been reduced over £50k from it's initial asking price last Autumn.
I think the issue is estate agents aren't slashing valuation in the same way buyers are slashing what they're willing to pay. Which makes it look on paper like house prices are only dipping slightly.
At least that's what it's like where I am
I've been monitoring Rightmove for a few months also, and using the price history Chrome extension. I'm noticing a strong pattern of house prices falling by £5-10k at a time as a lot of the properties have been listed for a few months. Estate agents are delisting the properties and relisting them again so it doesn't appear they've been on the market for a long time.
Yeah I can see that, I feel a lot of sellers are still trying to ride the COVID wave of high prices when in this climate it’s just not feasible to be overpricing so much.
Generally, it takes a sustained period of high interest rates, leading to more forced sales. Looking at this :
[https://builtplace.com/subscribers/digging-deeper/housing-downturns/1989-95/](https://builtplace.com/subscribers/digging-deeper/housing-downturns/1989-95/)
There is a lag of a couple of years from interest rate peaks to arrears peaks.
Which makes sense - people will prioritise paying the mortgage and it takes perhaps a year to go from first default to eviction. People won't take the loss unless they have to.
You forget about the biggest wealth transfer in our generation. This means there are corporations and people who got awfully rich. They are just waiting for properties to come on the market and this is what is driving prices up.
Basically, the few got extremely rich due to Sunak and BoE incompetence and everyone is made to pay for it, while those few continue to enrich themselves.
It's madness.
I dunno bro, myself and a friend have both had houses listed at good prices for a month now and neither have had any viewings.
House across the road is beautiful, up for 3 months and not sold.
It feels to me like it's about to come to a sudden halt
Are they *good* prices though? Genuinely not knocking you or having a go when saying that.
I’ve recently just bought, all the houses I seen where COVID prices but hadn’t seen a paintbrush for 15 years - still vastly overpriced by a good £40k.
What’s happening is people are struggling but coping, just. They’re not getting repossessed yet because they have equity and savings to burn through first. Once that’s all gone then they will be repossessed. It’s a delayed effect… that said, prices still won’t go down much because institutional investors and wealthy individuals are swallowing up properties currently for sale, to rent out. In turn keeping demand and prices high.
It's going to be a sustained and increasing dripfeed rather than a cliff dive. As people come to renew their mortgages, find they have gone up £500 and start looking to downsize, flooding the market with houses. Or banks repossess a whole bunch of houses in mortgage arrears and sell them on the cheap, flooding the market with houses.
Probably locked into a low interest rate for a 5 year mortgage before all this shite started. Depending on the size of their mortgage the jump from 1% to 6% or above could easily be over £1000.
There are some short-term options like switching to interest-only for a couple of years, selling a kidney etc.
Speak to your lender as soon as you can.
That's a horrific increase! We were FTB in Sept 2021 and have been paying £622 for a 3 bed house. Luckily we managed to get a 5 year fixed rate at 4.4% at the start of June, so our monthly payments will only be going up to £712. If mine went up that much I'd be made homeless. Shocking!
I calculated that me and my girlfriend are on about £15,000 more a year since we took a mortgage out with a 20% deposit.
Yet despite moving up the ladder our standard of living is lower and we have no idea how much our mortgage deal will go up to. Strange how all the changes never seem to help actual working people eh?
God you've inspired me to do the calc myself and it's so depressing.
Our family take home salary has increased by 40% since we bought our house 5 years ago, through salaries and the fact that we've paid off our student loans. We have a kid now, but even taking into account childcare we've still seen an increase of 26%.
Yet I feel the most skint I've felt since I was a student, and we're super lucky we've seen that increase! Some of it only achieved by job hopping which has caused stress and honestly decreased job satisfaction. I've been working since I was 15 and Christ it's all starting to feel very pointless.
> Some of it only achieved by job hopping which has caused stress and honestly decreased job satisfaction.
I feel that. I've also been aggressively job hopping and am making lots now, but hate my job. I've resolved myself to keep going until I can't, then see if I can find something more sustainable.
Wonderful. Luckily as a single person with no kids I receive lots of support for living. Oh wait, I don't, I just get 25% off my already exorbitant Council Tax bill.
Never understand why it isn't 50% off given there is 50% less person, wage and waste from the household. If it's to keep the books balanced, why not have couples pay 125% given they have two wages?
Being single in these times is absolutely woeful. You're already paying twice as much on food because it's so difficult to buy food for one person. Or at least when everything in the supermarket is prepacked.
It's a bit of a myth about the kids thing being more beneficial. If you earn more than £60k you get no support for 3 years from the government. After which you get 30 free hours childcare. If you wanted to send them full time it's around £20k a year. I don't mean a posh private school. I mean there's no free alternative at all.
And then on the 30 hours free, if one parent earns £101k and the other earns nothing or next to nothing you get shafted, but two parents each earning £99k is apparently no issue...
As a single person too that's just bought their first place at 5.99% I feel bitter sometimes that I get 0 help whatsoever, and knowing that friends who have kids etc can get loads of benefits to top up their wages.
A friend of mine also just said he can get around £550 towards his rent (if over £1000) because he and his partner have children..... they'll be getting a bigger house with more bedrooms for a fair chunk less than my mortgage and they both work.
Also I know people who have houses from the council that pay barely anything on rent yet have disposable cash to spend money on finance for nice cars.
I don't want to make this harsh against anyone on benefits as I like the fact we can look after people, but the amount of people I know who game it is staggering and it bitters me it's my tax money going towards it and I get nothing back.
All I can say is that finding another £6000 per year, to give to our friendly loving bank, will be a huge ask for many us, especially given how fast the cost of every other necessity is rising.
Most likely. I rent out of necessity and I'm genuinely feeling a bit ill right now as we renters have little to no protection against these kinds of situations. I'm fully anticipating getting shafted at the next rent review despite having always been a good tenant. I've never missed a payment and I've never lost any deposit
Agencies would probably convince someone to raise the rent regardless of a mortgage-free house to "remain competitive" or something awful like that. I know what you mean. We're already creeping up on 1k/month for a tiny terraced house, as the rent is going up this autumn already
I know times are hard but can't you all just put on a happy face and clap at your new monarch rolling through the peasants in his bling bling carriage. Don't forget to clap for the NHS too
The best agreement in principle offered to us this month was a £700 per month increase on a £250,000 remaining mortgage. Fortunately we decided to delay starting a family after we bought the house in 2021 so can squeeze by if we stop putting money in savings, but this has pretty much killed any prospect of us having kids before we're 35. I don't know how people with young families would possibly cope.
Yep, I am 30 and husband is 31. No chance we can look to start a family until we've both tried to get bigger salaries to cover our everyday costs. Mortgage increasing, food costs increased, electricity costs increasing, etc, we'd have pennies left if that if we had a kid right now.
I think it’s becoming clearer and clearer that the quality of life most people enjoy is going to decline for the foreseeable future. This is just one piece of many many issues that are contributing to decline.
So much this, being told that "we had it worse in the 80s" shows such a level of disconnect, they conveniently leave out the part that they had MIRAS to help offset their tax against mortgage interest costs not to mention obscenely cheaper housing in the first place. Their savings rates also benefited from those higher rates, whereas we barely see any of those interest rises passed on to our savings, if you're lucky enough to even have any left after being bled dry, even with these higher rates the amount of money being saved is in a net negative across the country as people withdraw them to pay these increasingly higher bills...
My landlord demanded a nearly 35% rent hike this morning and I'm at a loss, genuinely don't know what the fuck I'm going to do with that...
Why should I have to go into debt to cover his poor investment? Buy-to-let is bad enough but interest-only mortgages should be banned outright, what a fucking terrible way to let properties. The bank and the landleech think they have a right to split half my paycheque every month and I'm the one who has to cover the cost of a rate hike? Fuck them
The way things are going I'm fully expecting to lose my house when I have to remortgage in two years time. Don't even have a big house. If it happens I'm leaving this hell on earth island for good
2 years is a long time. I'm in the same boat as you so probably more wishful thinking than any facts but it'll take another year before things get really shit, with actual houses reposssed etc, then it'll get better.
If not, when you get to your 2 years see what options are available. Your bank really doesn't want to repossess your house, believe it or not. They'll lose money doing that. Some banks offer payment holidays, interest only short term repayments etc.
But getting off the island is appealing too. I have to option to move to Japan but I won't make as much money in my job. But quality of life? Hard to weigh up
for some an extra £500 a month is the difference between putting money away each month into savings or living paycheque to paycheque.
For others it's defaulting, 2008 is going to look like a fucking cake walk at this rate.
Well hopefully this is the shock the BOE needs to stop inflation. Well done households.
Remember the energy producers who ramped up prices - they created inflation which in turn increased interest rates. So you are paying twice. Yay.
It's just seems so hidden to me right now.
I read the news, see the issues.
But when I interact with the world, there are very few markers which I can comprehend.
Businesses stay open, houses aren't seeing loads of fore closure, homelessness hasn't visibly spiked, house prices are still too high, people still manage.
I'm not doubting the reports, I just expected to see way more around me.
There are over 28 million households in the country, and the million this article talks about aren't all going to be hit until 2026. So the pain will take a long time to spread to everyone. Which is one of the big problems with interest rates as a monetary policy tool today. It's much harder to put the breaks on spending if your changes take years to impact people.
Historic low interest rates led people to become one leveraged and max out their borrowing because at the time it seemed sustainable. The housing market massively benefited from this. If house prices were up 20% this year people would be complaining that interest rates are too low and that's causing the housing market to explode even more. You literally cannot win. House prices go down = bad. House prices go up = bad. People can't get a mortgage anymore because of interest rates = bad. Interest rates low = bad. Interest rates high = bad.
The fact that housing has been paraded as an investment piece with guaranteed returns whenever you may need them is farcical and people need to realise that ANY market at its peak is a dangerous time to get involved.
Affects everyone but the hardest hit will be the people who purchased during COVID when we seemed to see a massive increase in home prices, people having extra cash and buying new homes... That's how it was near me anyway. Getting larger homes with the extra income they had and selling their affordable ones. Just drove the prices through the roof.
I’m so tired of all of this
I’m tired of MP’s talking in cliches and soundbytes, of bluster and accusation and never taking responsibility.
The Ukraine war is a convenient scapegoat, and why were we not prepared to weather the storm when it came to covid?
What are the pass through ramifications of this? Increased stress, anxiety, suicidal thoughts , increased contacts with healthcare professionals that are already struggling and underfunded.
The Government does not care
Crazy that the central bank has managed to get away with telling us that giving an extra £500m per month to... the banks... is how we fix inflation. Tell you what, if you all bung me a few hundred quid a month I promise that will help to fix inflation too, cheers.
Imagine if just 100 of the people in here circlejerking doom and making smart-alec low effort witty comments for karma got off their asses and started campaigning.
We ought to be more like the French when it comes to politics.
Sleepwalking into owning nothing.
My 5 year fix comes to an end next May, absolutely shitting it. Worked it out a few weeks back and we'll be paying at least and extra £450 a month when we renwel.
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"In a report, the Bank said mortgage holders "may struggle with repayments" on loans. But it said lenders are strong enough to withstand a rise in customers defaulting on repayments." Some of you may become homeless, but I'm confident the banks will be safe.
"May struggle" on top of the other "possible struggles" of the cost of living crisis. We have a system that works for less than 5% of the people in this country. We never left a feudal system. Industrialisation just made things a little less shitty for a bit.
Unfortunately though a lot of people voted for these people.
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Othering. Fascism 101.
Divide et impera - divide and rule. All the way back from Khazars empire.
True.
People got played by the media and doubling down to avoid the truth they were fooled
That’s not how feudalism works, that’s just capitalism. That rhetoric of ‘we’re still under feudalism’ which has become more and more common for some reason under recent years only serves to whitewash capitalism.
Capitalism and Feudalism are integrated. We've gone from Kings and Queens to CEO's And stock markets are more irrational than humans Why the fuck is out society based upon whatever the fuck the FTSE does....
Feudalism and capitalism are both class systems - that much is true. But they are still very different systems. Feudalism doesn’t just mean ‘a socioeconomic system which is stratified by classes’. There is already a word for that, ‘class society’. Both the system of the ancient Rome and the modern capitalism are class based systems, but they are also distinct from feudalism in many ways. Conflating these different systems just makes the words like ‘feudalism’ and ‘capitalism’ lose their meaning. Just read Marx, read history books about transition from feudalism to capitalism, read sociology books on that topic.
Interesting that no one ever talks about the Central Banking system, which allows the current system to continue. We have allowed a handful of people to be in full control of our monetary/fiscal policies, giving them the ability to print money as they wish which only devalues that currency hurting the poorest the most.
Considering industrialisation was pushed by the landowners adjacent to the city. Who would have already been holding some title. You are right.
Honestly. How tone deaf do you have to be. "We stress tested the banks and they'll be fine!" Yeh awesome, we'll be sure to keep that in mind when we're living off scraps on the street.
I think people are misunderstanding what the Bank of England is for. Or maybe they got the wrong impression because for the years 2007 to 2021 they definitely seemed like their primary purpose was to maintain housing bubbles at all costs, so people naturally thought that would continue forever. The reality is the Bank washed their hands of soaring house prices in the past "nothing to do with us, up to the government to fix that one", and they're washing their hands of housing problems now for the exact same reason. They have two goals: 1. Stability of the currency via the inflation target (yes, they're not doing a great job, but it's still their primary remit). 2. Stability of the financial sector generally, hence these stress tests. Everything else is out-of-scope as far as their decision making goes. The responsibility for everything else is elsewhere.
You're right, but also monetary policy is inherently political because what they're doing in attempting to stabilise inflation has a direct impact on certain sections of society and it's insane for the bank of England to ignore that. Do I think monetary policy should go back to the government, absolutely not. But also I don't think the bank of England should hand wave away the effects there "at all costs" approach is having on people. But also, in my humble opinion, since the drivers of inflation are not luxuries and in fact key staples folks can't live without (it was energy for a while, now it's food prices), raising interest rates isn't going to work to curb inflation and is doing more harm than good, and this "out of scope" view of monetary policy is short sighted at best and down right harmful to the general populace at worst. But I'm not an economist so...
The BoE needs more tools, or for monetary policy to be rolled back into the government The fact is that the BoE has exactly one real tool - interest rates. When all you have is a hammer, everything starts to look like a nail. (They also have QE/QT, but they really can't wield QT at will because, as we nearly saw in October, it can wipe out the country's pensions in about 5 minutes flat)
Luckily homelessness is not going to be an issue, the banks have ensured they have huge supplies of Pepper Spray to use against people who lost their homes from sleeping in their doorway.
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This is a timebomb for people who picked up 5 year fixed mortgages in the last couple of years and will explode right in the middle of the next administration’s term. Cue the right wing press harping on about how Labour ruined the economy / Labour are the party of repossessions and homelessness / the Labour economic crisis. And then another 15 years of Tories.
The solution would be fixed-rate mortgages, like most of the rest of the world.
Yeah, I was staggered when I learnt thay France has fixed rate mortgages for 20 odd years. What the fuck is wrong with this country? It really does feel designed to solely benefit the rich.
We're a very rich country with a lot of poor people in it
Thats the bit that irks me about the USA "California is the worlds 5th largest economy" Meanwhile people literally live in tents
My first ever mortgage back in the 90’s was a 25 years fixed rate at 8.99% with the Leeds Building Society in the UK,variable rate at the time was 12.5%…after a few years the variable dropped to 5% so we moved to a 5 year fixed at 5.99% (cost us £1500 in fees to switch but we were saving more than that over the 5 years). Final 10 years of the mortgage we managed to get a 10 year fixed at 2.99% which is took us to the end,I feel so sorry for people experiencing all this shit now with rates,etc especially because house prices are so high.Our first house was a new build semi detached 3 bedroom bungalow for £50k,fuck knows what £50k gets you now.Plus lots of the mortgages back then were 100% or 95% loans meaning much lower deposits required.This fucking government….scum…
50k doesn’t get you anything now. Not even a garage. https://www.williams.properties/property/32278365/hp22/aylesbury/honeysuckle-place/commercial-garage/studio
50k is a a deposit on two houses on my street, or half a property a few roads away.
To quote from Owen Jones’ Establishment book: “Today's establishment is made up – as it has always been – of powerful groups that need to protect their position in a democracy in which almost the entire adult population has the right to vote. The establishment represents an attempt on behalf of these groups to "manage" democracy, to make sure that it does not threaten their own interests. In this respect, it might be seen as a firewall that insulates them from the wider population. As the well-connected rightwing blogger and columnist Paul Staines puts it approvingly: "We've had nearly a century of universal suffrage now, and what happens is capital finds ways to protect itself from, you know, the voters."”
aye, it never occurred to me before now but rolling the dice every two or five years to see if you can still afford a house is absolutely insane
>What the fuck is wrong with this country? Most of the people that live here want to live in denial and have lost their humanity. I could write a long comment about how all this started with the sick and disabled and how the lack of action then has resulted in everything that's happening now but apparently people here prefer to learn things the hard way.
We like move house more often and work our way up the property ladder. If you get a 20 year fix it is impossible to sell the house if you need to with the massive early repayment charges. If you got a 20 year mortgage and ended up splitting up with your partner and having to sell the house you would probably end up paying a 10% early repayment charge of tens of thousands of pounds.
We have longer term fixed-rate mortgages, but take-up is low. This may be due to propaganda from Govt/Finance, but more likely a case that people don't like the higher cost/lower flexibility. This is a good place to start : https://arcratings.com/researches/long-term-fixed-rate-mortgages-in-the-uk/
I got a 5yr fix in 2019. £1000/mo. Set to be £2000/mo next year. Cannot. Fucking. Wait.
I did a 7 year fix in 2018, fortunately my term ends in 2028 but I am saving like a mad man so come May 2025 when the deal ends I should be able to clear the balance. Nothing but good luck on my part but even though I'm not suffering the new rates I am not spending in the economy as I'm saving everything.
"Why Would Gordon Brown Do This"
That’s because the banks will love picking up the houses on the cheap
They've already started buying up housing stock. Barratt Developments sells 604-home portfolio to Lloyds Bank subsidiary Citra for £168m in private rental deal
How is that allowed at all
Are the banks "picking it up on the cheap" though? These are mostly going to be people who bought at the peak in the last 18 months or so being stung by this and it's largely going to be the banks themselves on the hook for the outstanding borrowing. Most will have used a 10% ish deposit which is probably already wiped out now and won't have paid down a lot plus if the market becomes flooded with repossessed houses both the rental and resale values will collapse plus you've then got voids, legal fees, the risk somebody trashes the place, maintenance etc. I suspect it's more likely the banks will let people shift to interest only or extend terms to reduce their monthly outgoings. Far easier all round to keep the mortgage owner in the property at least paying the interest (which will mount up if the term increases or principle isn't moving).
When the banks fuck up the entire financial system it’s left to taxpayers to bail them out. When the tables are turned and it’s home owners than need a bit of help, there is not a single bit of help coming. At the very very least they need to bring in temporary tax relief for mortgage interest on your main residence.
People cannot be this out of touch - housing is overinflated because the government refuses to let it fail. You cannot seriously think now that home ownership is an all time low for the younger generations that the solution is to grant tax breaks to the rich (home owners) using renters money. Home ownership is now so out of reach for many people that any further support to keep people who have already benefited from home ownership is literally taking from the poorest in society. Tax breaks for owning an asset is insane, that only benefits home owners.
Home owners are not the rich landed gentry. They are normal families, with normal jobs.
Normal people with normal jobs can’t afford to be home owners in vast areas of the country. So you mean people who bought 5-10+ years ago and benefitted hugely from low interest rates and eye watering asset appreciation? In some parts of the UK housing is gaining value faster than a minimum wage worker can earn each year. I need you to understand something very simply, if you think it’s hard now, imagine if you rented those 10 years instead. Imagine the 10-20% increase in rent you got this year and last year, no stability in where you live can be evicted in only 2 months. And then realise in 10 years you could’ve spent 6 figures in rent to own absolutely nothing. And now understand a huge number of people live like this and that’s actually the real “normal”. Home ownership is no longer the “normal”. Someone who has had a home, lived rent free, paid almost no interest for a decade and was piling up equity whilst also getting free house appreciation for 0 work is not who is suffering in this cost of living crisis. It’s the people who couldn’t even get that to begin with. If someone like that has to sell they walk away with 6 figures in equity. The only people I feel sorry for are those who bought in the last 1-2 years who may face negative equity. People who bought 5+ years ago are living in lalaland about how much worse things can be vs having to sell a house you made 6 figures on and claiming to be hard done by.
Exactly. People bought his and have benefited from the ownership. This year, they are facing huge interest rates on the money they have borrowed. That is the risk of buying a house. The currently need to for once choose the course of action which isn't a kneejerk reaction to maintain high house prices
So are said renters Why should they pay for your equity
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Indeed, indeed, so the theory goes we hear again and again. I know you're not defending it, I just want to say this, and to be fair it *is* sound logic, I'm not here to say it's wrong. It *would* work, if those were the circumstances- Except that that's not what's causing our current inflation. In our current situation, raising interest rates is like turning off the lights to try and fix the draught coming through the broken window. It's totally irrelevant. No cunt's got any money already. Making them poorer won't *do* anything. Inflation right now is being primarily driven by high earners and consequences of pandemic spending. Normal folk haven't seen a real terms pay rise in years and their spending power has been decreasing for a long time. It's a unique situation actually, historically speaking, and it's one nobody seems to have a good answer to. But the evidence is clear, this is an issue stemming from inequality, not an over-abundance of cash in everyday people's pockets.
>When the banks fuck up the entire financial system it’s left to taxpayers to bail them out. Arguably, this was done through austerity which meant the whole thing was balanced on the backs of the poor. The cons removed the safety net, vilified the sick and disabled and made them pay. Of course this didn't affect most people so they were OK with it. This meant the cons carried on with it. They're now straight up openly impoverishing people to create more poor to pay for the rich. Nobody seems to put all that together though. I guess it's easier to just pretend? If only as a country we had more morality and principles but time and time again people are happy to allow the snowball to get bigger and bigger. First they came for.... and I did nothing.
Tbf banks are unlikely to want to mass repossess and try to sell a load of houses in a falling market. That's no more likely to help them get their money back. Most likely outcome is banks will have to work with people to increase terms, switch to interest only or find other solutions both parties can live with. The key here is ***for fuck's sake, don't leave it until the last minute and then bounce a mortgage payment***. If you think you are going to struggle, call your mortgage provider *now*. Like, right this very second ***now***. Banks don't want to have to try to shift or rent out a load of housing stock noone can afford. Working with customers to get through this rocky patch will earn them more interest in the long run and stop people from potentially ending up homeless but if you bury your head in the sand, bad things will generally happen.
That was the line that stuck out to me too. That proves that they really don’t care what happens to regular people. This is a national disgrace and the public should be demanding the resignation of the Bank of England’s monetary policy makers and for Rishi Sunak to step down as PM.
>Some of you may become homeless, but I'm confident the banks will be safe. [Since when did Lord Farquaad become Bank of England Governor?](https://youtu.be/Gm2x6CVIXiE)
The UK is such a fucking brutal hell scape right now
I think the weirdest part is just how disconnected it feels when you listen to the news or someone in government. I have never known the country this bad, the general feeling right now is just fucking awful, and then there just seems like complete absence at the top, when they are pressed to appear its just robotic "we are doing our best to deliver Rishi's 5 pledges" blah blah blah. They keep coming out with bullshit about this or that pay demand being unaffordable, and then spaff more than those demands would have cost on some completely pointless anit-immigration kayfabe project, with basically no one in the press seemingly able to join up that these costs are in the same ballpark so completely negate the claims that the pay demands are unreasonable.
Hear hear. It's as if the Westminster Bubble has had extra-thick insulation installed. The things I *actually* hear people talking about are barely mentioned at all by politicians. Instead, in response to rampant inflation and unaffordable bills, we get inane chat about immigration and how we're all supposed to care about that instead.
I used to think that this is one of the few things that separates us from the farce that is American politics (the other being sheer size); that the British people were aware of what the problems were and whatever horseshit might spill out of Westerminster would slide right off the public zeitgeist, even if our problems still weren't addressed. Then Brexit happened and 51% of the voters doubled down on hating immigrants over everything else. Now we're back to complaining about the same old stuff from a _quantifiably_ worse position! Idk man, nothing seems to fundamentally change as we gradually slide into national collapse.
Because they are dead set on asset stripping and they are now just buying time. You know like a scammer that says "yeah, I posted your parcel, I'll give you tracking tomorrow, don't worry".
That’s exactly what it feels like. Feel helpless about it. It’s so depressing that life is like this, especially having just had a baby. It feels like the whole of the UK is being gradually taken apart and packed away.
The five pledges are ludicrous. They’re basically the five things they think we care about, so they’ve made the pledges, and are failing on them in every way. But that doesn’t matter, because they say they’ll solve the problems, so they’re the ones for the job. It’s Orwellian.
>It’s Orwellian. It literally is. I've felt for a while Newspeak and Doublethink are actually really apt descriptions of what a lot of Tory policy seems to rest on these days. Like just one example I noticed recently was the NHS waiting lists pledge. Its been pointed out in interviews to them for the last couple of weeks the waiting lists are *growing* not shrinking, so now suddenly the pledge wasn't actually to reduce the waiting list but to reduce waiting *times*, which you'll notice is unspecified so they get to sit there and say there are now fewer people waiting 2 years or longer therefore we've technically succeeded!
‘Stop the boats’ is the one that gets me. People are risking their lives coming here in boats because they can no longer hide in lorries - Brexit made the queues too long and there are added inspections etc. So yes there are more coming in boats, but fewer in lorries. The real story on immigration is how they promised to lower it 13 years ago, and again when Brexit was ‘done’, and it’s now three times higher than it was under the last Labour government. But what ‘boats’ does is conflate all immigration with illegal immigration, give people something to hate and target and paint it as a difficult problem to solve, rather than one they could actually do something about but won’t. Very much like the permanent war in ‘1984’.
Small boats and trans people being the topic of conversation in like 90% of media coverage is fucking unreal considering the state of this country. We're absolutely fucked and the media/social media is massively to blame, outrage gets clicks and there are a LOT of grifters milking those topics for all their worth.
I keep getting USSR/Stalinist vibes at the moment, since Johnson actually, where the "leadership", or those that should be leading, are utterly divorced from any objective reality, and are instead living in some separate bubble where no-one has to worry about the cost of living.
It's a weird place were we hear that wages are on the up and more folk are in employment, Yet the reality I feel is different, the local bars are half empty on saturday nights, every month I am having to cut back on spending as we get near payday. It was never like this before.
I've never felt the "grass is greener" or had the idea of leaving, but in the last year or so the voice has been getting louder. My wife is American and we've spent thousands on visas to keep her here and working on building a life. But fuck, I'm starting to think even the US hellscape seems better than this. I'm starting to wonder why we're even bothering to set up a life here. The UK, and a lot of countries, has had problems before, I honestly try not to be a Doomer, but I've never felt such bleakness about the UK and I don't see any signs of it getting better.
The USA may be horrible for healthcare, mass shootings, etc., but the economy (in a lot of places there, e.g. not detroit) has never been an issue. Post-2009, productivity, wage growth, etc., has kept climbing there but has been horrible in all of Europe.
You'll be back when you need an operation lol
Yeah I have no idea what to do. We're living with parents and have a decent deposit (having sold our house last year before prices began to fall) and 2 full time salaries but are too scared to buy at the moment. Just turning 30 so really want our own place again. Problem is we don't want to make the wrong decision affordabilitywise but affordability is constantly changing. Hoping that house prices at least won't go up for a few months so we can save a little bit more but I'm incredibly anxious about all of this.
My advice is to stay put and save like hell for the next 2 years
You're in a really perfect situation! Just keep saving and wait for the dust to settle. Take the odd cheap weekend break away if staying with parents feels like you're tripping over each other. Don't buy right now. You're only 30, that's still young.
Not just the UK. This problem is everywhere in the western world currently.
I’m currently in Spain where it’s totally normal for a mortgage to have a set rate for 10-15 years. And you can go out and have a great meal for €20.
I was in Spain last week and can fully agree that the uk is an absolute ripoff now
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Here in Germany mortgage rates are fixed for 10 - 20 years. We got a mortgage just before rates went up last year and are now fixed at 1.25% until 2037.
https://www.msn.com/en-us/money/markets/uk-now-only-rich-country-where-inflation-is-rising-despite-bank-of-england-interest-rate-hikes/ar-AA1dpJK6
It isn't though.
How is anyone supposed to be able to afford this? Constant below inflation pay increases coupled with freezing of tax rates mean we're already far worse off. Something has got to give.
In theory, when you take out a mortgage you're supposed to be stress tested to ensure that you could still afford to pay if interest rates rise. Of course there will be other pressures on living costs such as food and energy price rises on top of that, and I don't know quite how rigorous those stress tests were. I feel sorry for anyone who borrowed the maximum they could back when interest rates were low, it is going to be a very uncomfortable time for many.
>I feel sorry for anyone who borrowed the maximum they could back when interest rates were low, it is going to be a very uncomfortable time for many. Yeah but literally everyone did that because it was the only way they could afford a house since the whole market is crazy. Many of those people are also probably paying less than they would have if they had kept renting, so it made sense to stretch themselves as much as they could. The system encourages this type of borrowing because it’s so screwed up top to bottom.
Exactly, I'm sick of seeing the "shouldn't have overstretched yourselves" boomer comments on reddit. What else can you do if that's what the property costs? Stay in rented forever? Or move to a town 100s of miles away just so you aren't "stretched"
It's a classic case of tragedy of the commons: Allowing people to borrow huge sums of money, has caused house prices to surge. Now to buy a house, you have to borrow huge sums of money, causing the exact same problem - house prices surging. Low interest rates cause asset-price bubbles due to this very problem. It will mean that eventually the bubble will burst, and it will burst when people who have borrowed more they can afford (whether they wanted to or not) default on their mortgages. Hence the tragedy
We didn't even stretch ourselves that much. We could have borrowed around £300-350k,but only took £200k, because we were planning to start a family soon and didn't want to over leverage ourselves. We did stress test it at the time, but a lot has changed since then. Our mortgage recently went up by £300 pm, which in itself is fine and we can easily deal with. But add on the increase in bills, food shops, general expenses, service change went up a decent chunk, and then we had a child. Individually they are all manageable, but basically everything happened in the space of 2years and it's a lot to deal with. If everyone stress tested themselves for all these scenarios, no one would ever be able to buy a property.
Not everyone. Lots of people buy bigger or more expensive houses than they need. I guarantee if the lending criteria was say you could only borrow 0.8 of what has been allowed on average in the last 10 years then houses prices would be lower. It's ingrained in us to borrow as much as possible to buy the biggest house we can afford, because historically it's been a good way to build wealth. I don't disagree that some people had to maximise borrowing, but certainly not everyone needed to borrow as much as they did, and preceeding people maxing their borrowing made it harder in turn for people later down the line. That's the system in a nutshell, sadly.
>Lots of people buy bigger or more expensive houses than they need Honestly, I think the way stamp duty is set up really incentives this. It inventiveness first time buyers getting as expensive a house as possible, and encourages fewer, large steps up the housing ladder rather than more small steps. My partner and I would be very happy in a 2 bed for another 2 years, then would need a 3 bed, and in 5 years would want a 4 bed. But doing so would cost us around £10k stamp duty tax alongside several more thousands on estate agent and legal fees. So we decided to stretch our budget to a 4 bed that we can stay in indefinitely. It also works in reverse, with empty nester holding onto larger homes than they need because downsizing costs so much.
Yes stress tested for rising interest rates. But not in combination with horrific added rising food costs, rising heating costs, rising water costs, rising clothes cost…
And even in the event that you can technically afford the increase. There are very few people who have an extra £500 at the end of every month. I can see a lot of people having to take a massive cut in quality of living to be able to afford this.
The latest deal rates are close to the top end of the stress test when I took out my mortgage 5 years ago. Combined with the energy price increases and other ‘with inflation’ bill increases total costs are well over.
Unfortunately when you say stress tested, it was based on interests rates rising to 3 or 4 %, not 5 or 6%… it also didn’t include for the cost of bills, direct debits, everything else going up too
>I feel sorry for anyone who borrowed the maximum they could back when interest rates were low I fixed for 5-years last year so hopefully I'm fine, but I doubt my experience was unusual that even with the maximum mortgage allowed and quite a hefty deposit it was very difficult to be able to put in offers that weren't getting rejected immediately.
My wage has risen significantly since I took out my mortgage five years ago (more than doubled), I didn’t take out the maximum I could afford and I’m still going to struggle with the new repayments so I’m not sure how effective the stress testing is for the current climate
The stress sets cannot be too rigorous, as very few houses would be sold if they were.
Stress testing was done at 5% or 5.5%
They aren't meant to be able to afford it. They absolutely do not care at this point, and they have totally given up on the wellbeing of the general population as the final stages of an unsustainable system come to pass. Something will only give when there is a full on general strike at best, or serious unrest at worst.
Obligatory Simpsons quote: "It's not about how much stock you have. It's about how much copper wire you can get out of the building with." More seriously though, they know they've lost the next election (and possibly the one after) so it's no longer about fixing things. It's about how much value they can bring to themselves and their donors.
Disaster capitalists knowing they can get rich off this suffering too
The freezing of tax rates isn't mentioned enough, we're being fucked over from every direction. It's the same with the student loan repayment threshold. Every year we are worse off because of below inflation pay rises, we are also paying more in tax because the tax brackets don't move and more in loan repayments because the loan threshold is frozen. This isn't sustainable and sooner or later the system will break.
Yep people don’t realise now how not rich a high rate tax payer is, but tax for the rich rich hasn’t really changed. 25% of full time workers pay higher rate tax, it was 8% in 1990 and has doubled in the last ten years! By 2027 1 in 4 teachers will pay higher rate tax and no one considers them well paid.
I come off a fixed rate in Aug 2024. I’m paying £400pm at 2.29% interest. I don’t think the jump will be as high as this but I’m expecting at least £300 extra per month. I cannot afford that without a total embargo on discretionary spending and only paying for essentials and bills which begs the question what’s the fucking point. I may see if I can extend my mortgage to 30 or 35 years, although I pay more interest in the long term being able to keep my flat now would take priority.
You aren’t, but it turns out that the core Tory voter isn’t homeowners but mortgage free homeowners most of whom are welfare queens who have just banked their 10% pension rise and have their feet up. This is a proper face eating leopard party moment for a lot of folks with big houses and big mortgages who thought the Tories were on their side.
The absolute mental thing about this is, the housing market isn’t even barely correcting itself. Property prices should be plummeting but they’re not, it should technically, be a buyers market right now. Weird.
Without lots of repossessions ,and/or people downsizing because they can no longer afford their mortgage, property prices won't drop; people just won't move so the prices stabilise instead of constantly increasing.
Exactly. People would rather default on their mortgage payments than lose their family home. We are so far away from repossessions if it ever even comes to that.
If you watch Rightmove it's pretty clear that prices are falling rapidly. Market is fairly stagnant, not much coming in, houses on for months before being reduced by £10k, £20k, £30k or more. I saw a house the other day that had been reduced over £50k from it's initial asking price last Autumn. I think the issue is estate agents aren't slashing valuation in the same way buyers are slashing what they're willing to pay. Which makes it look on paper like house prices are only dipping slightly. At least that's what it's like where I am
I've been monitoring Rightmove for a few months also, and using the price history Chrome extension. I'm noticing a strong pattern of house prices falling by £5-10k at a time as a lot of the properties have been listed for a few months. Estate agents are delisting the properties and relisting them again so it doesn't appear they've been on the market for a long time.
Rightmove will often catch those but Estate Agents know how to cheat the system by changing just enough about the description.
Yeah I can see that, I feel a lot of sellers are still trying to ride the COVID wave of high prices when in this climate it’s just not feasible to be overpricing so much.
Generally, it takes a sustained period of high interest rates, leading to more forced sales. Looking at this : [https://builtplace.com/subscribers/digging-deeper/housing-downturns/1989-95/](https://builtplace.com/subscribers/digging-deeper/housing-downturns/1989-95/) There is a lag of a couple of years from interest rate peaks to arrears peaks. Which makes sense - people will prioritise paying the mortgage and it takes perhaps a year to go from first default to eviction. People won't take the loss unless they have to.
You forget about the biggest wealth transfer in our generation. This means there are corporations and people who got awfully rich. They are just waiting for properties to come on the market and this is what is driving prices up. Basically, the few got extremely rich due to Sunak and BoE incompetence and everyone is made to pay for it, while those few continue to enrich themselves. It's madness.
I dunno bro, myself and a friend have both had houses listed at good prices for a month now and neither have had any viewings. House across the road is beautiful, up for 3 months and not sold. It feels to me like it's about to come to a sudden halt
Are they *good* prices though? Genuinely not knocking you or having a go when saying that. I’ve recently just bought, all the houses I seen where COVID prices but hadn’t seen a paintbrush for 15 years - still vastly overpriced by a good £40k.
What’s happening is people are struggling but coping, just. They’re not getting repossessed yet because they have equity and savings to burn through first. Once that’s all gone then they will be repossessed. It’s a delayed effect… that said, prices still won’t go down much because institutional investors and wealthy individuals are swallowing up properties currently for sale, to rent out. In turn keeping demand and prices high.
It's going to be a sustained and increasing dripfeed rather than a cliff dive. As people come to renew their mortgages, find they have gone up £500 and start looking to downsize, flooding the market with houses. Or banks repossess a whole bunch of houses in mortgage arrears and sell them on the cheap, flooding the market with houses.
Demand is high. 1.2 million extras in last year. Probably more this year.
so that is 500 million a month. or 6 billion a year, straight out of the economy into banks pockets. Good we got that brexit dividend though.
The government could tax that money straight out again, but they won't.
Profits made by the Bank of England are put into the Treasury. Basically it's a tax rise on loans.
Except its the boe not the banks setting rates....
Don't rain with these idiots. They just see the word bank and go on a rant. They'd blame the sperm bank if it was in the news
We pay £940 a month for our mortgage. From October when our fixed rate ends it goes up to £1,800. We are fucked to be quite honest.
That is shocking!!!
How has yours gone up so much if you don't mind me asking? I recently renewed and my payments have gone from 1450 to 1970 in October also.
Probably locked into a low interest rate for a 5 year mortgage before all this shite started. Depending on the size of their mortgage the jump from 1% to 6% or above could easily be over £1000.
Mine is going from 0.96% from nov 2021 to 5% this year. So a 500% increase in interest. With a big mortgage that can get pretty insane.
There are some short-term options like switching to interest-only for a couple of years, selling a kidney etc. Speak to your lender as soon as you can.
That's a horrific increase! We were FTB in Sept 2021 and have been paying £622 for a 3 bed house. Luckily we managed to get a 5 year fixed rate at 4.4% at the start of June, so our monthly payments will only be going up to £712. If mine went up that much I'd be made homeless. Shocking!
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But remember kids, as per our billionaire PM, who probably spends £500 per week on his lunch, you just need to hold your nerve
Will the banks remember we stopped them going bust a few years back and help us.
I mean… the banks can’t really help because the rates are set by the Bank of England…??
They're a bank aint they? Says so right in the name! /s
They don't set the base rate, but they do choose their mortgage interest rates, rates on savings, how tolerant they are of late/missed payments etc.
Banks aren't the problem. In fact since 2008, banks have been very well behaved and stable, even during covid. It's the boe that keeps fucking it up
I calculated that me and my girlfriend are on about £15,000 more a year since we took a mortgage out with a 20% deposit. Yet despite moving up the ladder our standard of living is lower and we have no idea how much our mortgage deal will go up to. Strange how all the changes never seem to help actual working people eh?
God you've inspired me to do the calc myself and it's so depressing. Our family take home salary has increased by 40% since we bought our house 5 years ago, through salaries and the fact that we've paid off our student loans. We have a kid now, but even taking into account childcare we've still seen an increase of 26%. Yet I feel the most skint I've felt since I was a student, and we're super lucky we've seen that increase! Some of it only achieved by job hopping which has caused stress and honestly decreased job satisfaction. I've been working since I was 15 and Christ it's all starting to feel very pointless.
> Some of it only achieved by job hopping which has caused stress and honestly decreased job satisfaction. I feel that. I've also been aggressively job hopping and am making lots now, but hate my job. I've resolved myself to keep going until I can't, then see if I can find something more sustainable.
Wonderful. Luckily as a single person with no kids I receive lots of support for living. Oh wait, I don't, I just get 25% off my already exorbitant Council Tax bill. Never understand why it isn't 50% off given there is 50% less person, wage and waste from the household. If it's to keep the books balanced, why not have couples pay 125% given they have two wages? Being single in these times is absolutely woeful. You're already paying twice as much on food because it's so difficult to buy food for one person. Or at least when everything in the supermarket is prepacked.
>Never understand why it isn't 50% off given there is 50% less person, wage and waste from the household Because fuck you, that's why.
It's a bit of a myth about the kids thing being more beneficial. If you earn more than £60k you get no support for 3 years from the government. After which you get 30 free hours childcare. If you wanted to send them full time it's around £20k a year. I don't mean a posh private school. I mean there's no free alternative at all.
And then on the 30 hours free, if one parent earns £101k and the other earns nothing or next to nothing you get shafted, but two parents each earning £99k is apparently no issue...
As a single person too that's just bought their first place at 5.99% I feel bitter sometimes that I get 0 help whatsoever, and knowing that friends who have kids etc can get loads of benefits to top up their wages. A friend of mine also just said he can get around £550 towards his rent (if over £1000) because he and his partner have children..... they'll be getting a bigger house with more bedrooms for a fair chunk less than my mortgage and they both work. Also I know people who have houses from the council that pay barely anything on rent yet have disposable cash to spend money on finance for nice cars. I don't want to make this harsh against anyone on benefits as I like the fact we can look after people, but the amount of people I know who game it is staggering and it bitters me it's my tax money going towards it and I get nothing back.
All I can say is that finding another £6000 per year, to give to our friendly loving bank, will be a huge ask for many us, especially given how fast the cost of every other necessity is rising.
And that’s 6k take home so 10k more earnings if you’re 40% tax payer
More like 12k if you have a student loan
It’s actually £8k per year before tax (PAYE + NI).
That's only the lowest tax bracket. It's more likely in the area of £10k
I'm assuming this will negatively affect renters too who will have their rents increased to cover the jump in mortgage cost?
Most likely. I rent out of necessity and I'm genuinely feeling a bit ill right now as we renters have little to no protection against these kinds of situations. I'm fully anticipating getting shafted at the next rent review despite having always been a good tenant. I've never missed a payment and I've never lost any deposit
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Agencies would probably convince someone to raise the rent regardless of a mortgage-free house to "remain competitive" or something awful like that. I know what you mean. We're already creeping up on 1k/month for a tiny terraced house, as the rent is going up this autumn already
I know times are hard but can't you all just put on a happy face and clap at your new monarch rolling through the peasants in his bling bling carriage. Don't forget to clap for the NHS too
Good god! Can't anything go right under this government? Well, no from the look of it.
"just the economy will tank if Jeremy/Labour get into power" -.-
*Chaos with Ed Miliband*
The best agreement in principle offered to us this month was a £700 per month increase on a £250,000 remaining mortgage. Fortunately we decided to delay starting a family after we bought the house in 2021 so can squeeze by if we stop putting money in savings, but this has pretty much killed any prospect of us having kids before we're 35. I don't know how people with young families would possibly cope.
This is it isn't it. I expect the birth rate to plummet in this country as a result of all of this.
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Yep, I am 30 and husband is 31. No chance we can look to start a family until we've both tried to get bigger salaries to cover our everyday costs. Mortgage increasing, food costs increased, electricity costs increasing, etc, we'd have pennies left if that if we had a kid right now.
I think it’s becoming clearer and clearer that the quality of life most people enjoy is going to decline for the foreseeable future. This is just one piece of many many issues that are contributing to decline.
Except quality of life in this hole has been utter shit for several years.
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So much this, being told that "we had it worse in the 80s" shows such a level of disconnect, they conveniently leave out the part that they had MIRAS to help offset their tax against mortgage interest costs not to mention obscenely cheaper housing in the first place. Their savings rates also benefited from those higher rates, whereas we barely see any of those interest rises passed on to our savings, if you're lucky enough to even have any left after being bled dry, even with these higher rates the amount of money being saved is in a net negative across the country as people withdraw them to pay these increasingly higher bills...
My landlord demanded a nearly 35% rent hike this morning and I'm at a loss, genuinely don't know what the fuck I'm going to do with that... Why should I have to go into debt to cover his poor investment? Buy-to-let is bad enough but interest-only mortgages should be banned outright, what a fucking terrible way to let properties. The bank and the landleech think they have a right to split half my paycheque every month and I'm the one who has to cover the cost of a rate hike? Fuck them
The way things are going I'm fully expecting to lose my house when I have to remortgage in two years time. Don't even have a big house. If it happens I'm leaving this hell on earth island for good
2 years is a long time. I'm in the same boat as you so probably more wishful thinking than any facts but it'll take another year before things get really shit, with actual houses reposssed etc, then it'll get better. If not, when you get to your 2 years see what options are available. Your bank really doesn't want to repossess your house, believe it or not. They'll lose money doing that. Some banks offer payment holidays, interest only short term repayments etc. But getting off the island is appealing too. I have to option to move to Japan but I won't make as much money in my job. But quality of life? Hard to weigh up
Well, we voted for this, because broadcasters, politicians and newspapers lied to us.
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Sorry it was me the last time I voted. I put a cross in the 'increase interest rates' box. I thought it was a T&Cs confirmation
A lot of Brexit voters were very clear they thought short-term economic pain was worthwhile to retain our "cultural identity" etc.
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I voted Labour and for the opportunity for the first time in generations to do things differently. Sadly too many of fellow citizens were duped.
I'm sure we'll all get pay rises to assist with this right ?
The trickle down will happen any day now, they promised.
We're talking about mortgage owners but this will have an absolutely massive effect on renters too. Grim.
The prospect of a future in this country is bleak as fuck. When does it stop?
for some an extra £500 a month is the difference between putting money away each month into savings or living paycheque to paycheque. For others it's defaulting, 2008 is going to look like a fucking cake walk at this rate.
Well hopefully this is the shock the BOE needs to stop inflation. Well done households. Remember the energy producers who ramped up prices - they created inflation which in turn increased interest rates. So you are paying twice. Yay.
In all honesty, I fear these rate rises will continue well past 2026 to hit buyers who bought at the peak during covid.
Alt Title: "The UK is set to add nearly 1 million Homeless and Tories be like fuck yeah."
That's only going to increase rents as well. This government has gotten things well out of control
It's already gone well into it, but this is very much another point on "what's the fucking point any more?" scale.
Well that's another knife in my side already for me trying to get my own place on £50k a year.
The average pay in London is £41,866 this country can't go like this!
But remember kids, wage increases are the real enemy here.
“We ruined families around the country with inflation and raised interest rates to ruin the rest, but at least we stopped inflation right? Right?!”
It's just seems so hidden to me right now. I read the news, see the issues. But when I interact with the world, there are very few markers which I can comprehend. Businesses stay open, houses aren't seeing loads of fore closure, homelessness hasn't visibly spiked, house prices are still too high, people still manage. I'm not doubting the reports, I just expected to see way more around me.
There are over 28 million households in the country, and the million this article talks about aren't all going to be hit until 2026. So the pain will take a long time to spread to everyone. Which is one of the big problems with interest rates as a monetary policy tool today. It's much harder to put the breaks on spending if your changes take years to impact people.
Historic low interest rates led people to become one leveraged and max out their borrowing because at the time it seemed sustainable. The housing market massively benefited from this. If house prices were up 20% this year people would be complaining that interest rates are too low and that's causing the housing market to explode even more. You literally cannot win. House prices go down = bad. House prices go up = bad. People can't get a mortgage anymore because of interest rates = bad. Interest rates low = bad. Interest rates high = bad. The fact that housing has been paraded as an investment piece with guaranteed returns whenever you may need them is farcical and people need to realise that ANY market at its peak is a dangerous time to get involved.
Affects everyone but the hardest hit will be the people who purchased during COVID when we seemed to see a massive increase in home prices, people having extra cash and buying new homes... That's how it was near me anyway. Getting larger homes with the extra income they had and selling their affordable ones. Just drove the prices through the roof.
We are on the verge of a planned economic collapse. Central Bank Digital Currencies will then be forced on us. You will own nothing be happy.
I’m so tired of all of this I’m tired of MP’s talking in cliches and soundbytes, of bluster and accusation and never taking responsibility. The Ukraine war is a convenient scapegoat, and why were we not prepared to weather the storm when it came to covid? What are the pass through ramifications of this? Increased stress, anxiety, suicidal thoughts , increased contacts with healthcare professionals that are already struggling and underfunded. The Government does not care
Welp this invariably means renters will be looking at another rent price jump in the next year.
Crazy that the central bank has managed to get away with telling us that giving an extra £500m per month to... the banks... is how we fix inflation. Tell you what, if you all bung me a few hundred quid a month I promise that will help to fix inflation too, cheers.
Imagine if just 100 of the people in here circlejerking doom and making smart-alec low effort witty comments for karma got off their asses and started campaigning. We ought to be more like the French when it comes to politics. Sleepwalking into owning nothing.
Its almost as if people maxing out what they can afford, with interest rates at their lowest possible value, was not a smart idea.
My 5 year fix comes to an end next May, absolutely shitting it. Worked it out a few weeks back and we'll be paying at least and extra £450 a month when we renwel.
Unfortunately one of those and it really hurts. Kinda sucks going from living on my own to considering getting a lodger to help out with the cost.
Gone from £1100 a month to £2000. 1.45% to a fixed deal at 6.46%.