Helping Mortgage holders

Nano said:
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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Stress testing was a lot more stringent that interest rates being at 3-4%. I know most stressed tested at over 7%.
 
uncle_rico said:
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.
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Same here.
Two year fixed rate deal just expired - got the best two year deal I could get and £130 a month poorer.
Kicking myself I didn’t take out a 5/10 yr deal two years ago now but 5h1t happens
 
Nano said:
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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I think the energy price cap is very different as there were no cheaper deals available. Pretty much everyone was on a variable unless you were luckily on a long term fix below the cap.

People who have maxed themselves out on a mortgage can in theory at least, move to a cheaper area or a smaller house.

There are loads of people over the last few years that have maxed themselves out with getting a mortgage on a 4 bed detached exec house when they really didn't need it.

I don't think it would be fair to support those people when in theory as I say they could move to TS1 or somewhere if necessary.

I get what you are saying regarding the 3% stress test but looking at historical rates, they were always likely to climb above 5%.
 
Colgates_shaving_foam said:
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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Agreed. You must always consider what will happen if rates go up, some just thought they would be next to zero forever.

There’s a big awakening coming for many in the UK. Everyone knows plenty of people living in a house that is way beyond their means, with two german cars on the drive less than 5 year old, expensive holidays and walking around wearing only designer clothes. Their job and their lifestyle simply do not align.

Two at work have just been clobbered, £350 and £388 a month rises respectively. One might survive as his wife’s grandma has just left them some cash, the other has no idea how he’ll pay it.

I’m not for a moment saying everyone struggling has been reckless, but many have been and they’re in for a big shock.
 
Just checked the stress test was based on standard mortgage rate plus 3% so most mortgages have been stressed to at least in around 7%
 
InglebyUTB said:
Everyone knows plenty of people living in a house that is way beyond their means, with two german cars on the drive less than 5 year old, expensive holidays and walking around wearing only designer clothes. Their job and their lifestyle simply do not align.
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I don’t.
 
ForssAwakens said:
Just checked the stress test was based on standard mortgage rate plus 3% so most mortgages have been stressed to at least in around 7%
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But mortgage rates are already at 6%, possibly still rising, and that doesn't include the sky high inflation throughout the rest of the economy. Really when you say stress tested to 7% you are talking about a £4-500 a month increase in total living costs (on a £300k house). Mortgage rates alone are going to be that but then you've got he extra £100 everyone is paying for energy, £200 for food, £100 for petrol, childcare costs, council tax, phone bills, clothes etc. Literally everything has skyrocketed in price so it has far exceeded that 7% stress test.

I fully agree that people that make bad decisions and push themselves to the limit have themselves to blame when foreseen changes happen but we're talking about 3 or 4 different things happening all at once.
 
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sherlock1969 said:
People should have an option of fixing their rate for the lifetime of the loan. Happens elsewhere.
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Depends if they come with early repayment charges. Lifetimes fixed with charges don’t fit the U.K. system.

We have the term property ladder. We have a big fixation in bricks and mortars in this country and we always chasing the bigger home or next luxury item
 
Colgates_shaving_foam said:
Do you mean brokers are incentivised to recommend 2 year fixes or 5 year fixes at a push so as to maximise commission?
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I like your suggestion of charging high early years but restricting after

I wasn’t saying that but Brokers are incentivised to go 2 years, and the bad ones out there recommend that no matter what

It’s more the constant chase of going up the property ladder
 
ForssAwakens said:
Depends if they come with early repayment charges. Lifetimes fixed with charges don’t fit the U.K. system.

We have the term property ladder. We have a big fixation in bricks and mortars in this country and we always chasing the bigger home or next luxury item
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sherlock1969 said:
People should have an option of fixing their rate for the lifetime of the loan. Happens elsewhere.
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It's the norm in some countries.
 
Nobody should lose their home because of government policies and incompetence.
Nobody should pay more interest than what it was when they borrowed the money.
 
Trug said:
Nobody should lose their home because of government policies and incompetence.
Nobody should pay more interest than what it was when they borrowed the money.
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Exactly this. Every rule we have around this matter is there to protect the banks. They don't give a stuff about the people. The whole system is rigged against us. The interest rate doesn't change anything for them. It just means they have to adjust their margin. Interest rate at 0%, banks charge us 2%. Interest rates at 4% banks charge us 6%. Either way banks are getting their 2% profit. They're also stiffing savers by paying out less than the interest rate. It's in their interest to push house prices up as well. 2% of £300k is better than 2% of £100k so they are responsible for people not being able to buy their own houses. If we don't pay our mortgage then who loses? Not the banks, they get your house, so there is no risk to them lending irresponsibly.
 
There are too many people who seem to think that we don't need recessions. The BOE has one instrument, rates. The whole purpose is officially to slow down growth in order to slow down the rate of inflation, although I'd argue that even if zero is achieved now, the actual price levels now have gone up far more than people's permanent income (we can exclude one-off bonuses and "cost of living help" because they aren't going to carry on). Given wages have not gone up, people are permanently poorer. You need a recession to bring prices down, deflation. That's the only weapon they have.

Mortgage assistance smacks of Johnsonian "cake and eat it". "We'll get prices under control by making sure people have as much disposable income as before!". Doesn't work that way. Not only would giving relief to middle-classes and people who’ve over stretched themselves be politically disastrous, their spending would only see prices continue to have upward pressure put on them.
 
InglebyUTB said:
Mortgage assistance smacks of Johnsonian "cake and eat it". "We'll get prices under control by making sure people have as much disposable income as before!". Doesn't work that way. Not only would giving relief to middle-classes and people who’ve over stretched themselves be politically disastrous, their spending would only see prices continue to have upward pressure put on them.
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This is now way beyond an argument about disposable income, this is about people's homes. And lives. Because make no mistake we are going to see a massive increase in suicide rates as a direct result of government policy (this will be on top of the hundreds of thousands of preventable death that can already be attributed to the Tory austerity policies).
 
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