Cost of living crisis

[MB]

This is not a good sign, but not unexpected

[mumbles87]

This is mainly due to the posts about mortgages and interest rates in the truss thread but didnt want to derail the thread with cost of living stuff.

This interest rate situation has made me rethink our current mortgage situation.

we are 4 years into a 10 year fix so no rush but we do overpay (not much) on each of our 3 mortgages (one is house, one was extension which runs along side the house and again 6 years left and lastly was a 10 year fix for the solar but is only 10 year term so basically is a loan) anyways all overpayments stopped on the solar one. I know the rate for that and when it ends it ends.. all overpayments focused on the bigger one.. I do normally do a lump sum over payment around feb time aswell which I was planning to split between the 3 (mainly to pay off the solar in 8 years not 10) but all going to the big one now. Just get it low as possible for 6 years time.

[SammyLeeWasOffside]

6 years is a long way away mumbles but I've always been a fan of paying off as much as you can as fast as you can. Even with the low rates of recent years I hate paying to borrow, I am much more the save for something first type.

My first mortgage I paid off in about 5 years (saved about 60% deposit first by staying at home longer than my mates did and keeping the same car for 14 years lol). This one we used as a bridging loan so there is only about 12k on it. If it wasn't for the thieving builder we would be paying that off probably.

[mumbles87]

6 years is a long way away mumbles but I've always been a fan of paying off as much as you can as fast as you can. Even with the low rates of recent years I hate paying to borrow, I am much more the save for something first type.

My first mortgage I paid off in about 5 years (saved about 60% deposit first by staying at home longer than my mates did and keeping the same car for 14 years lol). This one we used as a bridging loan so there is only about 12k on it. If it wasn't for the thieving builder we would be paying that off probably.

You are right 6 years is a long time, if I can get It as low as possible it gives me more options, plus if rates return I can borrow it for other projects

I set up the overpayments to keep the mortgage around £1400 so it's a set amount and just forget it

Much like My avc, I set them up years ago and never thought about them, like I never missed having that cash

[kenthammer1984]

just saw a video where "experts" are now predicting interest rates on mortgages will peak at around 6% in 2023.

our fixed rate mortgage deal runs out in june 2023 and i am absolutely petrified. currently a new deal is about £300-400 a month more than we currently pay, so come June/July next year we could be looking at £1k a month more for a mortgage.

Is anyone else in the same situation that their fixed term deal is ending at the worst possible time? Everyone i speak to seems to tell me they happened to get ona 5/10 year fixed deal in the last 6 months.

with our gas and electric going up to £500-600 a month (just to break even in june next year), plus the mortgage hike i am terrified by it all.

[mumbles87]

just saw a video where "experts" are now predicting interest rates on mortgages will peak at around 6% in 2023.

our fixed rate mortgage deal runs out in june 2023 and i am absolutely petrified. currently a new deal is about £300-400 a month more than we currently pay, so come June/July next year we could be looking at £1k a month more for a mortgage.

Is anyone else in the same situation that their fixed term deal is ending at the worst possible time? Everyone i speak to seems to tell me they happened to get ona 5/10 year fixed deal in the last 6 months.

with our gas and electric going up to £500-600 a month (just to break even in june next year), plus the mortgage hike i am terrified by it all.

whats your early repayment charge? would it be worth buying yourself out to lock in for a good rate?

nationwide are offering 3.79 for 10 years atm

[bubbles1966]

Normally no more than 1% if it's less than a year left on a fix.

How many years you got to go in total to clear the mortgage, Kent? I'm guessing you're late 30's by your username.

[kenthammer1984]

whats your early repayment charge? would it be worth buying yourself out to lock in for a good rate?

nationwide are offering 3.79 for 10 years atm

i did have a quick look at that - it will cost about £2,500 to leave our deal early - so depends if the £300-400 a month extra now plus the £2,500 early exit fee (and any mortgage product fee) works out cheaper than waiting and hoping for the best next june

mortgage has 25 years left i think it is

[btajim - mcfc]

Took the family out for a curry on Friday. Five of us, set me back £190.

Now we didn't scrimp, and we took enough home in doggy bags for a meal the next day, but I won't be rushing back again in a hurry.

That’s obscene for what was always an affordable meal out. I ate on Brick Lane regularly and it was nowhere near that for a huge feed.

[jabbaglob123]

I'm not going to lie as a 29 year old living at home looking to buy a property the news today about mortgages is completely and utterly devastating.

I'm on a higher than average wage and I'm finding it desperately difficult to not only find affordable housing but also to find a lender.

This post might be a bit 'cry me a river' but I genuinely despair for many people in this country who are on a lower than average wage.

Times are very tough at the moment, especially for us millennials.

[dasnutnock3]

I'm not going to lie as a 29 year old living at home looking to buy a property the news today about mortgages is completely and utterly devastating.

I'm on a higher than average wage and I'm finding it desperately difficult to not only find affordable housing but also to find a lender.

This post might be a bit 'cry me a river' but I genuinely despair for many people in this country who are on a lower than average wage.

Times are very tough at the moment, especially for us millennials.

Housing market is due a correction, this could be the spark that ignites it. We’ve said that before plenty of times but it’s definitely looking like the first real chance of a crash since 08.

[mumbles87]

Housing market is due a correction, this could be the spark that ignites it. We’ve said that before plenty of times but it’s definitely looking like the first real chance of a crash since 08.

A 25% reduction in the prices / value would be about right

It's ridiculous

House on my road sold 2020, run down last owner was older and passed away £350,000

Now it's on market 750,000 ... Yes they have done a ton of work, loft and rear extension .. beautiful inside now etc

However this roads ceiling I'd have had 550 max

[btajim - mcfc]

Prices might level out but I can’t see a crash. Unless desperate, people just won’t sell.

[sendô]

No-one selling would probably drive down prices Jim. Us people with mortgages can see that at least.

[EvilC]

Prices might level out but I can’t see a crash. Unless desperate, people just won’t sell.

Why don't you think there will be a crash?

You've seen the cost of borrowing go up really, really significantly, along with higher energy prices - this knocks onto affordability which should therefore knock onto price.

[Crouchend_Hammer]

Depends on region
In London a house goes on the market and there are about 100 viewings in a day!
The economic situation doesn't seem to be having much impact just yet!

[EvilC]

Depends on region
In London a house goes on the market and there are about 100 viewings in a day!
The economic situation doesn't seem to be having much impact just yet!

I suspect that is a matter of time. People buying now may be doing so based on mortgage offers that are several weeks old.

[chelmsfordhammer91]

Traditionally, you'd get a 25 year mortgage which monthly repayments wise would be on average around a third of your take home pay.

When I got my first mortgage 7 years ago (and we thought house prices were mad then!), all they would push was 30/35/40 year mortgages. This immediately leads to people able to pay more for housing because they aren't expecting to be mortgage free until retirement age.

Nowadays, it is more common for around 50% of take home pay to be used for mortgage payments, again increasing what houses sell for as people sacrifice elsewhere.

The big issue now is that there is nowhere left to go. Some banks issue lifetime mortgages where it is essentially interest only but the bank keeps your house on death. There ain't much more room to manoeuvre from there other than have mortgages pass down a generation.

I can see a 'crash', to around 15-20% but you won't see a 500k house (today's pricing) going on the market for 300k.

My main concern for those who can't afford what is about to happen is that we end up with a load of mortgage defaults, which will cause a bigger strain on the welfare/health services as it is (£££), and the impact this has on the pension provisions held by those who were able to afford their payments. Also, this is going to lead to a mixture of higher government borrowing and higher taxes, perpetuating the sh*tty situation that has been building for decades.

The whole thing is looking to inevitably end up a right sh*t show all round IMO.

[chelmsfordhammer91]

I suspect that is a matter of time. People buying now may be doing so based on mortgage offers that are several weeks old.

Spot on IMO. We had our mortgage offer 'secure' for 6 months. However, given the impact to the banks by the change in interest rates, I would have thought they have a snidey get out clause in there.

[mumbles87]

Traditionally, you'd get a 25 year mortgage which monthly repayments wise would be on average around a third of your take home pay.

When I got my first mortgage 7 years ago (and we thought house prices were mad then!), all they would push was 30/35/40 year mortgages. This immediately leads to people able to pay more for housing because they aren't expecting to be mortgage free until retirement age.

Nowadays, it is more common for around 50% of take home pay to be used for mortgage payments, again increasing what houses sell for as people sacrifice elsewhere.

The big issue now is that there is nowhere left to go. Some banks issue lifetime mortgages where it is essentially interest only but the bank keeps your house on death. There ain't much more room to manoeuvre from there other than have mortgages pass down a generation.

I can see a 'crash', to around 15-20% but you won't see a 500k house (today's pricing) going on the market for 300k.

My main concern for those who can't afford what is about to happen is that we end up with a load of mortgage defaults, which will cause a bigger strain on the welfare/health services as it is (£££), and the impact this has on the pension provisions held by those who were able to afford their payments. Also, this is going to lead to a mixture of higher government borrowing and higher taxes, perpetuating the sh*tty situation that has been building for decades.

The whole thing is looking to inevitably end up a right sh*t show all round IMO.

The covid stamp duty holiday was criminal, saddled people with even more debt

All to keep the fragile bubble from bursting