bank rate rise possible and ensuing mitigations to follow The tale of 2 TV stations ITV v BBC....................... Is there a £2,900 average increase to mortgages? ... THE ANSWER In their exchanges earlier, [ PMQ's yesterday listen to it to facts ] ]Keir Starmer asked the prime minister "how much the Tory mortgage penalty is going to cost the average homeowner?" Having not had an answer he claimed the figure was £2,900. That's a figure from the Resolution Foundation, which tried to work out how much the average payment would increase for households remortgaging next year. So it's not a cost for the average homeowner, it's a cost for the average homeowner remortgaging next year. Also, while analysis has identified domestic sources of inflation, there are clearly also global factors, so it cannot all be described as a "Tory mortgage penalty". BBC NEWS REPORT stated the facts to alleviate the worry of people with mortgages ... ITV stated KS said .. the figure was £2,900 and cut short the topic and moved on to next topic. This left people believing rate rise today and £2900 increase He has lied to parliament? ..... so lets have an inquiry!
The reality is that the pain for a lot of people coming off 2 and 5 year deals now, or in the next few months, could see them paying an awful lot more than £2,900 a year. People that have had deals on mortgages with a 1.50% - 2% rate that are ending soon, could be facing new mortgage rates of up to 7.5% - 8%, and more if interest rates continue rising. For some people that will be an increase of £500+ a month. There are going to be a lot of repossessions I fear.
The vast majority of modern day ypongsters [likely under40 ] with a mortgage do not respond to the fact that in, from day 1, you are unlikely to have the same rate in years to come and have not taken advantage of the fact they have a low rate and use it to build for the future .. instead they see all money as disposable income so just waste it .. In my, our day we had no fixed mortgage, but the advice was the same as given now .. eg mortgage payment at start ££1000 a month [ my first one was something like say £95 10s 3d ] from the start say after 1 year you voluntarily pay say £1040p a month [ I rounded mine up to £96 not true figures ] after a few years or annually if stays same increase it even if only £10 a month. dont just waste your money on frivolus things! after say 5 years fixed it remortgages at a rate set at £ 1100 per month you could be in front already maybe paying it so continue adding bits annually result it gets paid of earlier and increases of 3 -4% will be on a smaller borroed sum and you are already close to it in your budget simples .. 30 year term paid off in 25 .simples
5% traditionally isn’t that high, also as Realred said it’s prudent when talking out a mortgage to understand it can go up, so best to leave a bit of “wriggle room” for when it does. The trouble is many younger borrowers have never known it rise, as it’s been almost at 0% for so long. Plus house prices are so high, Lenders don’t help either, when I took out my first mortgage we were only allowed to take out a multiple of our joint salaries, even then I didn’t take out the maximum, nowadays borrowers are allowed to take out way more compared to their salaries. I know this is driven by house prices and low mortgage rates, but it was inevitable they were going to rise at some point.
-my second house [ mortgage ] was never as high % wise as my first [ 15% + ] and I did struggle a bit for the first 2 or 3 years then I got a job with a friendly/ insurance/ pension company and for 2 and a half years [ pre IraqWAR ] did quite well ..earnings and subsidised mortgage, cleared all my debts but didnt fall into the trap of reducing payments intomortgage kept them at what I was paying... this built up a surplus .. and any rises were absorbed by regular payment. I do feel for all those that now have to find extra money .. have to go without their overspending luxuries, cut down on holidays or going to the pub or a meal a couple times a week .. cant now buy a new pair of £200 trainers every 6 month's or desiner jeans .. ripped to bits as a fashion thing!!!!! every few month's ...... uuuuuum what do I feel? well a sort of feeling of joy welcome to the real world.. lets get inflation down put the bank rate up to 9.9%
To many people would lose their house if the mortgage rate went that high. What does annoy me though is mortgage rates go up, but savings rates don’t, the banks should be made to raise interest rates on savings .
losing house .. sensiblke people wont, even those with enough sense to actually listen and adopt alternatives wont .. the plain greedy who wont give up lifestyle for the roof over their heads probably will ! Savings rates they are rising, all be it slower t6han the rate of the bank rate, borrowing rates are nowadays linked to base rate savings rate rarely so2 years ago getting the odd fixed saving rate at 2% - 2.5% was rare now it is looking out for offers of 3.5% to 4.5% 6 of my shares give me dividends that equate to 8.9% of the total original [ annual ] cost including fee's although the share value is down, the number of shares goes up [ drip ] If compared to the very first original purchase it is a lot higher!
At 9.9% I’m sure lots would, when you consider many were taken out at around 0%, or not much more, that’s a heck of a rise, especially when you consider how much houses cost, the amount owed will be £100,000’s of pounds. I’d be surprised it’s lots don’t loose their houses if nothing is put in place to help.
this all goes back to my previous comments ............ basically greed ... and younger generation everything is easy come easy go, couple lavsh holidays a year, etc etc and or believing like a lot of the immigrants that come here UK is a land of milk and honey, money grows on tree's and when it gets hard .gov will bail you out!
I took out a mortgage in 1965 at 6% by 1979 it had risen to over 15%. In 1981 I left the house and mortgage with my wife when we parted and went our separate ways [ I was made redundant and no work ] In 1983 took out a mortgage for this house single bloke and rate was 8% in a couple of years was 11% and then in about 5 years was back at 15%. I started paying 5% more than monthly premium for first 3 / 4 years at 5-6 years I just paid the monthly premium I had been in year 4 ! It ended in about 2008 when the endowment matured [ was paying interest only mortgage ]when the interest went right down I was paying off capital so got more from my endowment! Could have worked against me and been paying a higher fee!
I imagine in 1983 a 3 bed semi in Bristol would have been in the region of £25k, I know wages were a lot lower too, but relatively houses are much more expensive now, I dread to think how much a 3 bed semi in Bristol would cost now, probably in in region of £300k - £400k give or take. Plus we were used to rates rising, it’s been so low now for so long and prices so high people have fallen into the trap of not allowing for them to rise, not saying it’s right, but it’s human nature. Edit Out of interest, would a single person doing the job you were doing in 1983 be able to afford the mortgage you’d need to buy your house today ?
3 bed semi's in Keynsham Stockwood were circa 30k Whitchurch about 32k pass on this ...... 2018 ..... about a single person mortgage was around 160k plus any deposit ...! joint income would have been about 200k plus deposit! Interest only is a lot more you can borrow... but thats only for clever people? or with a good advisor! My single mortgage had an insurance in name of mortgage company to fill / protect against shortfall of requirements cost me about £20 a month for x number of years.was also endowment linked mortgages nowadays are processed differently... not all that impressed with G &R at FESTIVAL
In 1984, I bought a 3-bed Victorian terraced house close to Horfield Common for £29,950 with a 100% mortgage! That same house, extended to include a fourth bedroom, recently sold for over £400,000!!
when I bought my first house .. a new build we had been looking at properties all over... One house we looked at was in Clifton .. basement plus 2 floors plus attic rooms.. large garden .. it was was around £2.5-2.75k new build in Keynsham was around £3.3k Builders deposit was £50 .... Keynsham house currently selling for £320k Clifton one is £circa 00,000!
In the 1980’s average house price was 2 1/2 - 3 times average salary, now it’s 10 times average salary, as a single person on average salary now you wouldn’t be able to buy the house you bought back when in 1983, that’s the main problem, wages haven’t kept up with the cost of houses
Those figures are exactly inline with my post. It’s much more difficult for young people these days to get on the housing ladder isn’t it?, I feel sorry for them. It isn’t just the case that they need to be more careful, they simply don’t have the same opportunities.
checked this, it was only £6 a month and a guarantor insurance premium for 12 years [ in case I defaulted in that time ]. It is harder, but then in 1965 is was harder for people then as opposed to generation before them.... it is only much harder now because for the past few years inflation has been so low which allows interest rates to be like so .. it is always looking at the bigger picture.. but not going there!
I don’t know how to do it, it’ll take someone much brighter than me, but surely we need to find some way of making house purchasing and rents to a much more manageable level. House values are far too high, but any moves to bring them down is unpopular because home owners understandably don’t want to see their assets decrease. However those same high values prevent young people getting on the property ladder in the first place.
