Helping Mortgage holders

Redwurzel

Redwurzel

Well-known member
There seems to be a lot of requests in the last week to help people with mortgages.

Although I can see its tough at present for mortgage holders that need to move to a new deal from a very low old rate, I could not support helping in some cases people on decent incomes over say those needing to use food banks and trying to live on say less than say £250 a week.

Maybe the Government can put pressure on lenders to extend mortgage lengths to keep payments down for those struggling, say making a 25 year mortgage a 30 year mortgage. or allow peopole to go interest only forsay the next 2 years. I do expect base interest rates to drop form Q2 in 2024, but could rise to 5.75% this winter . Hence a typical 2 year fixed mortgate is now 6%, still below underlying inflation of around 7%.

Also it needs to be bore in mind house prices have risen from about £170k in 2013 to about £287k in 2023 in the last 10 years for average UK property - about 69%
 
Redwurzel said:
Also it needs to be bore in mind house prices have risen from about £170k in 2013 to about £287k in 2023 in the last 10 years for average UK property - about 69%
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Which in itself is pricing a lot of people out of becoming home owners.
The rise in property prices is ridiculous, just as is the rise of the wealth of the super rich and these are not unrelated. Suppression of wages and creaming ever larger sums off the top has given rise to house price inflation that is preventing the old tiered system from entry level to mid-priced homes.
 
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I bought a flat in early 1989 in the North of England - interest rates went up in 1989 and stayed quite high for several years the flat dropped in value. I did rent it out and sold it in 1997 for less than I paid. It hurt. I never saw a 69% increase in value, so I suspect it make me less generous to give special help. What happened in the early 1990s was porices dropped to reflect higher interst rates and buyers just had to take. With time and some inflation the properties become cheaper to buy and demand increases, but I tghink it took over 10 years in the 1990s in parts of the North. The same happened in 2008/9 prices dropped and took a long time to recover on Teesside.

If the Government say pays half of someones mortgage prices will just keep rising faster than wages and young people who don't have family support will never be able to buy.
 
I cant see the government interfering with mortgage prices, given the whole point of raising interest rates is to make the majority of people poorer, which in turn will reduce inflation.

That's the very basic theory, one that relies on making the vast major of people's monetary wealth poorer in order to bring the economy back in line.

It should make people angry surely?
 
Redwurzel said:
I bought a flat in early 1989 in the North of England - interest rates went up in 1989 and stayed quite high for several years the flat dropped in value. I did rent it out and sold it in 1997 for less than I paid. It hurt. I never saw a 69% increase in value, so I suspect it make me less generous to give special help. What happened in the early 1990s was porices dropped to reflect higher interst rates and buyers just had to take. With time and some inflation the properties become cheaper to buy and demand increases, but I tghink it took over 10 years in the 1990s in parts of the North. The same happened in 2008/9 prices dropped and took a long time to recover on Teesside.

If the Government say pays half of someones mortgage prices will just keep rising faster than wages and young people who don't have family support will never be able to buy.
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Your mortgage was probably only about 10% of your income then nowadays it’s anywhere upto 60% probably more for many. So it’s not a fair comparison.

That said government should not be subsidising mortgages. But should pressure the banks into allowing more flexible options.
 
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Priv said:
Your mortgage was probably only about 10% of your income then nowadays it’s anywhere upto 60% probably more for many. So it’s not a fair comparison.

That said government should not be subsidising mortgages. But should pressure the banks into allowing more flexible options.
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Absolutely should pressure the banking industry to offer interest only and extend their loan periods from 20 to say 30 years but this government won’t and they can’t afford to offer to pay a part of the mortgage of people who are genuinely struggling because the government finances are in a terrible state as it is
The markets would lose confidence in them again like with truss and crash people’s pensions again which is even worse
 
They are a lot of rules around make contract variations. That said where I work you can extend your term quite easily as long as it doesn’t go past your retirement age. If anyone is struggling you should explore that option with your lender.

You don’t need to wait for a fixed period to end to make changes to your mortgage term, as you still keep your rate (might be different lender to lender). It’s a common misconception.

If you do want to extend the term into your retirement, you will need to be assessed both on affordability and plausibility. Plausibility will be what your plans are if you end up at retirement such as selling the home, overpaying, using lump sum from pension.

Remember extending the term will result in you paying more interest back, but you have to balance that off against what is important now
 
Ex Footy Legs said:
Absolutely should pressure the banking industry to offer interest only and extend their loan periods from 20 to say 30 years but this government won’t and they can’t afford to offer to pay a part of the mortgage of people who are genuinely struggling because the government finances are in a terrible state as it is
The markets would lose confidence in them again like with truss and crash people’s pensions again which is even worse
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The market is fixed against mortgage holders at the moment.
Interest rates go up and banks put mortgage rates up - why?

They use our money in accounts at next to know interest to fund the loans.
If they pushed both rates up simultaneously then they could defend their position.

In short, savers are getting stuffed and borrowers are getting stuffed by banks.
 
This is where raising interest rates doesn't make sense. Raising interest rates is being done to combat inflation but inflation should include the cost of mortgages. They get around it by using CPI instead of RPI which is just stupid because mortgage and rent is one of the biggest costs that people have. Increasing interest rates is causing far more inflation than it is preventing.

I can live with all my costs rising 10%. If I spend £2k a month on my bills and shopping that's a rise of £200 which isn't great but it's a damn sight better than the £400+ my mortgage would rise if I was remortgaging today. CPI inflation of 10% with those mortgage payments is going to be a 30% increase in monthly prices.
 
We have the unfathomable situation where home owners, renters and landlords are all feeling hard done by and out of pocket. Someone must be winning and making hay out of the situation I suspect its banks.

Knowing this government any help they come up with might just have the opposite effect and make things worse.

The elephant in the room though is lack of social housing since housing stock was flogged for a pittance with righttobuy and hasnt been replaced giving us invention of the buy to let slum landlords. We need to replace private land lords many of whom arent even uk residents or uk companies with council owned housing associations and build more decent social houses.
 
1finny said:
The market is fixed against mortgage holders at the moment.
Interest rates go up and banks put mortgage rates up - why?

They use our money in accounts at next to know interest to fund the loans.
If they pushed both rates up simultaneously then they could defend their position.

In short, savers are getting stuffed and borrowers are getting stuffed by banks.
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Long lending needs more than short term deposits to fund their books so need to turn to the wholesale market. That’s why rates go up.
 
Cardiffdaffs said:
Long lending needs more than short term deposits to fund their books so need to turn to the wholesale market. That’s why rates go up.
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Yes - good point

I read the gap between rates for savers and lenders is disproportionately high at the moment though. The inference being banks are mailing it.
 
I've just remortgaged. Went from a 2 years fixed at 2.45% to a 5 year fixed at 4.5%. It was by far the the best deal we could get and its still £250 more a month. Gutted I didn't go on a 5 year fixed when we moved a couple of years back.
 
If people start losing their houses then what happens. I am mortgage free but if I lost my house or could not afford a house what’s the point in working as the working class are getting less and less take home pay
 
TheLodger said:
I'd say it will be madness to help people with mortgages when we have so many people without homes and living in homes that are not fit for habitation.
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Where do you think the people that don't have houses are living? If mortgage rates rocket, as they are, those prices will be passed on via rent rises. It's not just protecting homeowners, it's protecting anyone that isn't living in a house they have already paid off.

The older generation with their houses paid off might not be happy to see the younger generation benefit from something finally but it might be necessary.
Boro4life said:
I'm just hoping hous prices fall so can buy a house to be honest
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This rarely makes it easier for people to buy houses. If house prices fall significantly it is because banks have tightened their lending criteria. If you can't afford one now then you won't be able to afford one when that happens either. What does happen is the people with spare capital, aka the rich, just buy property in cash on the cheap.
 
In my view the while mortgage market should be restructured, there are nowhere near enough long term fixed rate deals of say 15+ years.

This would allow people to plan more long term and leave them less exposed to the lottery of the base rate changes.

I am sure there would be plenty of people who would prefer to lock in at say 4% for 20 years than ride a wave of rates that could be as low as 2% but could be as high as 7 or 8% or even higher.

I would be against government support to cover increased mortgage payments, I think that unfortunately people who have maxed themselves out to buy a house that they couldn't afford if rates go up a couple of % will just have to downsize or move somewhere cheaper. it's harsh but we cannot let the tax payers fund a lifestlye of someone living beyond thir means.
 
Colgates_shaving_foam said:
In my view the while mortgage market should be restructured, there are nowhere near enough long term fixed rate deals of say 15+ years.

This would allow people to plan more long term and leave them less exposed to the lottery of the base rate changes.

I am sure there would be plenty of people who would prefer to lock in at say 4% for 20 years than ride a wave of rates that could be as low as 2% but could be as high as 7 or 8% or even higher.

I would be against government support to cover increased mortgage payments, I think that unfortunately people who have maxed themselves out to buy a house that they couldn't afford if rates go up a couple of % will just have to downsize or move somewhere cheaper. it's harsh but we cannot let the tax payers fund a lifestlye of someone living beyond thir means.
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That isn't the situation people were in when they signed their mortgage deals. You are saying people (and it will be a huge number of people) should be punished for things that weren't in their control. Mortgages were stress tested at (I think) 3% which means you would only be approved if you could afford your mortgage if the interest rate rose by 3%. Interest rates have increased 4.5% in 3 years which is above the stress test and then that is being made worse even further by inflation being over 10% in multiple years and wages not being anywhere close to keeping up.

You are saying someone shouldn't be able to live beyond their means and that is true to a degree but what the reality is is that people weren't living beyond their means when they made these decisions. They were comfortably within their means. What their means can buy them has changed, not them. What they could afford comfortably 2 or 3 years ago is now a real struggle for people. Did you agree with the energy price cap or should people have just lived within their means and sit in the dark and cold in their own homes? Help should be provided by governments when things go wrong so badly that you can't have predicted them and it will cause severe turmoil for people (and the economy).

I bought a new house in January 2020. A lot has changed since then. I've still got nearly 2 years until I have to remortgage so hopefully things will have settled down by then but are you really saying people in 2018 should have expected a pandemic, a war in Ukraine, energy prices quadrupling, inflation at 14%, interest rates being 10x higher etc.?

I do agree with you on the length of mortgages being available but you've got to look at it the other way around as well. People have done very well out of interest rates falling which they wouldn't have done with a longer fix so people probably wouldn't take a longer mortgage anyway. It also makes it more difficult to move house. What should be done is that economies should be run more competently and things should be more stable so we can make those decisions so a good or bad decision is a £100 monthly swing not a lottery win or losing your house.
 
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