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Mortgages are ALREADY getting more expensive...biggest interest payments hike since the financial crisis


Axeman123
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Wight Flight

The funny thing is that when interest rates dropped, it fucked up the boomers who relied on the interest to supplement their pensions.

So they piled in to BTL as an alternative use of their capital.

They might be fucked over again.

They would have been Ok but they got greedy and discovered the art of leverage.

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Fuck me, did I actually fix at the right time for once? I doubt it. I bet they go down to negative shortly. Sod's law.

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HousePriceMania
1 hour ago, Axeman123 said:

https://www.dailymail.co.uk/news/article-10139853/British-homeowners-face-soaring-mortgage-payments.html

Interesting times ahead for UK house prices. Also interesting to see hyperbole "homeowners should prepare for biggest rise in interest payments since financial crisis".

Dopnt be daft, OBR said they are going up 4% every year forever now.

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HousePriceMania
30 minutes ago, Wight Flight said:

The funny thing is that when interest rates dropped, it fucked up the boomers who relied on the interest to supplement their pensions.

So they piled in to BTL as an alternative use of their capital.

They might be fucked over again.

They would have been Ok but they got greedy and discovered the art of leverage.

Low IRs has "forced" people to take on risky investments just to try and get:

1) An income

2) Protection against inflation

3) Any sort of a return/yield

Sunak even said he wanted people to stop hoarding wealth ( total piss take coming from him ).

It's almost impossible now to make sensible financial decisions and there is a lot of scope for massive losses.

 

 

 

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HousePriceMania
1 hour ago, Axeman123 said:

https://www.dailymail.co.uk/news/article-10139853/British-homeowners-face-soaring-mortgage-payments.html

Interesting times ahead for UK house prices. Also interesting to see hyperbole "homeowners should prepare for biggest rise in interest payments since financial crisis".

They are saying IRs of 0.75% by end of 2022, that should be 2021

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King Penda
5 minutes ago, HousePriceMania said:

Low IRs has "forced" people to take on risky investments just to try and get:

1) An income

2) Protection against inflation

3) Any sort of a return/yield

Sunak even said he wanted people to stop hoarding wealth ( total piss take coming from him ).

It's almost impossible now to make sensible financial decisions and there is a lot of scope for massive losses.

 

 

 

Buy beer a good investment it makes you happy well for a few hours

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Virgil Caine
7 hours ago, HousePriceMania said:

Low IRs has "forced" people to take on risky investments just to try and get:

1) An income

2) Protection against inflation

3) Any sort of a return/yield

Sunak even said he wanted people to stop hoarding wealth ( total piss take coming from him ).

It's almost impossible now to make sensible financial decisions and there is a lot of scope for massive losses.

 

 

 

The miss pricing of risk has been the defining character of the financial system for much of the last 25 years. As a consequence it is hardly surprising we have ended up in a situation where all bets are likely to be bad ones.

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One percent
7 hours ago, King Penda said:

A rise to .75% lol.imadgen the carnage at 6/7%

I remember them briefly touching 17 percent after the black Wednesday fiasco.  

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Wight Flight
1 minute ago, One percent said:

I remember them briefly touching 17 percent after the black Wednesday fiasco.  

Every Boomer quotes that fact.

IIRC it was for about three hours. They never mention that.

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One percent
4 minutes ago, Wight Flight said:

Every Boomer quotes that fact.

IIRC it was for about three hours. They never mention that.

But still… and it hung around 15 for a while. Btw, I’m not old enough to qualify as boomer. They pulled the ladder up just before I got to it. 

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Wight Flight
1 minute ago, One percent said:

But still… and it hung around 15 for a while. Btw, I’m not old enough to qualify as boomer. They pulled the ladder up just before I got to it. 

It is a mindset, not an age.

 

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Wight Flight

Rising mortgage rates are all over this morning's press.

Sentiment is clearly changing.

Please let it come to pass.

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1 hour ago, Wight Flight said:

Every Boomer quotes that fact.

IIRC it was for about three hours. They never mention that.

I think I was about 22 when it happened. I had no clue about anything. I was coming to the end of my rental and people told me I should buy a house. A developer was happy to sell me a 1-bed end terrace which I could not afford, and fiddled it through for me. Everything good for a few months as I strutted around bragging about my new house, then started getting letters informing me of the "increased mortgage rate." WTF? Threw them in bin. After a while I was cumulatively 1 month behind and had to come up with the arrears i.e. one month I had to pay double, now that was brutal. Tightened belt, then re-tightened, repeat. Finally the BK, thanks Norman and IMF. I lost a lot of weight.  After two years I sold it for +60% and bought a bigger one, again because "everyone said" that's what you did. Luckily I discovered lodgers. No clue what I was doing. Proves god exists.

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Wight Flight
1 minute ago, Funn3r said:

I think I was about 22 when it happened. I had no clue about anything. I was coming to the end of my rental and people told me I should buy a house. A developer was happy to sell me a 1-bed end terrace which I could not afford, and fiddled it through for me. Everything good for a few months as I strutted around bragging about my new house, then started getting letters informing me of the "increased mortgage rate." WTF? Threw them in bin. After a while I was cumulatively 1 month behind and had to come up with the arrears i.e. one month I had to pay double, now that was brutal. Tightened belt, then re-tightened, repeat. Finally the BK, thanks Norman and IMF. I lost a lot of weight.  After two years I sold it for +60% and bought a bigger one, again because "everyone said" that's what you did. Luckily I discovered lodgers. No clue what I was doing. Proves god exists.

I had a 1 bed flat in Guildford in 1987.

I bought it for £73k with a £67k mortgage. Endowment.

My interest payment was just short of £900 per month. Fuck knows how I afforded it.

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swiss_democracy_for_all
8 minutes ago, Wight Flight said:

Rising mortgage rates are all over this morning's press.

Sentiment is clearly changing.

Please let it come to pass.

How can they allow it?

It's electoral suicide, the ones who would benefit (mostly younger) are too stupid to grasp the benefits and don't vote anyway.

Then there's the banks who fund the political parties and won't want it allowed.

 

Edited by swiss_democracy_for_all
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3 minutes ago, swiss_democracy_for_all said:

How can they allow it?

It's electoral suicide, the ones who would benefit (mostly younger) are too stupid to grasp the benefits and don't vote anyway.

Then there's the banks who fund the political parties and won't want it allowed.

 

I'll pray to the finance gods anyway.

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Wight Flight
5 minutes ago, swiss_democracy_for_all said:

How can they allow it?

It's electoral suicide, the ones who would benefit (mostly younger) are too stupid to grasp the benefits and don't vote anyway.

Then there's the banks who fund the political parties and won't want it allowed.

 

I know.

But it breaks every rule of economics to have interest rates sub 1% with inflation at 10%.

Strange times.

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Democorruptcy
8 minutes ago, swiss_democracy_for_all said:

How can they allow it?

It's electoral suicide, the ones who would benefit (mostly younger) are too stupid to grasp the benefits and don't vote anyway.

Then there's the banks who fund the political parties and won't want it allowed.

 

Why won't the banks want it? Higher rates mean higher profit margins between mortgages and savings. If a borrower is struggling just extend the mortgage term and squeeze them for longer.

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Wight Flight
10 minutes ago, Democorruptcy said:

Why won't the banks want it? Higher rates mean higher profit margins between mortgages and savings. If a borrower is struggling just extend the mortgage term and squeeze them for longer.

My understanding was that banks make more profit at lower interest rates.

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Lightscribe
1 minute ago, Democorruptcy said:

Why won't the banks want it? Higher rates mean higher profit margins between mortgages and savings. If a borrower is struggling just extend the mortgage term and squeeze them for longer.

And more importantly asset seizure of the over leveraged who’s outgoings become unaffordable and tip them over. Blackrock has already been buying swathes of neighbourhoods in the US.

Almost like it was known that the stamp duty holiday would create a last hurrah HPI bonanza and encourage people to FOMO in and take on more debt for extortionate amounts knowing that IR rates rising were on the horizon.

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swiss_democracy_for_all
1 hour ago, Democorruptcy said:

Why won't the banks want it? Higher rates mean higher profit margins between mortgages and savings. If a borrower is struggling just extend the mortgage term and squeeze them for longer.

If a house price crash were to ever happen, the banks would get left with a depreciating asset instead of the income from debt. Big enough crash and the bank goes bust, though as we saw, that’s no longer permitted. 

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Axeman123
7 hours ago, swiss_democracy_for_all said:

How can they allow it?

How can they prevent it? Allow inflation to run wild, and damn the consequences? That is how you get an Arab Spring on your doorstep, or a Nigel Farage led-party holding significant seats in parliament. The establishment had to surrender their beloved EU membership and cheap Au pairs to see him off last time, and they had to let BOJO be PM to subvert the populist wave. They are just getting ready to install a billionaire's ex-GS son-in-law now the country is pacified, and return to business as usual. The number one tool of regime change has always been inflation, make life miserable enough and old greivances bubble up to the surface.

There may well be schemes to moderate the impact of rising interest rates on mortgagees. Certainly lenders will want to extend-and-pretend, eg offer payment holidays and penalty-free periods of reduced payments if borrowers claim an adverse circumstance and an intention to get back up to date with payments. Once rates are really grinding people down some form of Miras may be available, but even at 40% it would still make mortgages from the low interest rate era punishing to service.

The big one would be jingle mail, ie people posting the keys through their lenders branch letterbox. Even though UK mortgages have never been non-recourse-lending, this was a thing in the 1990s crash. People who won't play ball with extend-and-pretend will see houses auctioned. A small prediction is that we see "UK mortgages aren't non-recourse-lending" type messaging pop up in newspapers a lot over the next two years, eg masquerading as "what if we just post the keys back?" readers letter to the finance section.

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Yadda yadda yadda

Will a cycle of rate increases go in waves playing out over many years? Inflation gets out of hand so rates rise > this reduces spending causes recession/slowdown > rates held until inflation rises again > rates rise, etc.

Of course the UK is a bit part player so could get caught in a currency crash which forces rates higher quickly. Or they could decide just to crush everything to get the pain over with. Or they could simply make a mistake that leads to unacceptably high inflation and thus a big jerk higher in rates.

Overall I would see a slow grind higher in rates as the most likely scenario. House prices will come down in terms of wage multiples. Certain local bubbles will pop more spectacularly but in other places nominal values will hold.

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