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


Axeman123

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Mortgages are still fucking cheap. The 'biggest payment hike' is no fucking consolation considering that for the best part of a decade the rates have been falling, so even a slight hike (as seen here) could be sensationalised as such.

A slow trickle higher in rates could mean that house prices stay still in nominal terms while everything else gets more expensive - that is basically theft of people's asset value via inflation. If this stunt could be pulled over even 5 years then a correction would have been done without most realising. That would be the most palatable for government as falling values present a lot of problems for their popularity.

I don't see how any kind of market correction comes without some kind of financial distress for the masses. The ingredients are actually all there, but it may still be some way off. The real indicators for me are not the headlines in the papers, but the sentiment of forums such as mumsnet. If it can become bearish then it is on.

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8 hours ago, swiss_democracy_for_all said:

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

Unless they want your house or to sell it to some other company that does.  This could turn out to be the perfect ambush - lead the untrained into the killing field.

PS:  I hate the crass financial side of housing and people's misplaced obsession with it.

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8 hours ago, Lightscribe said:

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.

Same playbook as the vaccines?

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HousePriceMania

https://www.ft.com/content/b7495f49-bc6d-44be-af9c-35a9c982bb9d

 

21 minutes ago, Boon said:

Mortgages are still fucking cheap.

Houses aren't :D

Overall, even with these ultra cheap mortgages houses are at their most unaffordable levels since the 1800s./

That means prices are extreme, extremes are usually unstable.


Ayway, FT getting in on the act

 

https://www.ft.com/content/b7495f49-bc6d-44be-af9c-35a9c982bb9d

 

“Homeowners need to be aware that it’s a case of when not if for an interest rate rise now and the clock is ticking on the record low mortgage rates we’ve all become accustomed to,” said Laura Suter, head of personal finance at investment broker AJ Bell.

 

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swiss_democracy_for_all
2 minutes ago, Harley said:

Unless they want your house or to sell it to some other company that does.  This could turn out to be the perfect ambush - lead the untrained into the killing field.

They are money machines, they don’t want some badly built cramped 3 bed house on a minuscule plot that they’re holding unrecoverable debt for double it’s now-falling value. That’s the reality of a major crash for banks. 

Boris and the Tories are aiming for controlled higher inflation over a few years IMO, 70s style, while hoping to maintain house prices flat. Doubt if they’ll achieve it, the plans of mice and men and all that..... There was no social media in the 70s, that’s been the real political game-changer, small numbers of hysterical minorities now dominate the narrative.

Sterling will drift downwards, as it has for the last 50-60 years. The Northern Lira. 

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30 minutes ago, Boon said:

Mortgages are still fucking cheap. The 'biggest payment hike' is no fucking consolation considering that for the best part of a decade the rates have been falling, so even a slight hike (as seen here) could be sensationalised as such.

A slow trickle higher in rates could mean that house prices stay still in nominal terms while everything else gets more expensive - that is basically theft of people's asset value via inflation. If this stunt could be pulled over even 5 years then a correction would have been done without most realising. That would be the most palatable for government as falling values present a lot of problems for their popularity.

I don't see how any kind of market correction comes without some kind of financial distress for the masses. The ingredients are actually all there, but it may still be some way off. The real indicators for me are not the headlines in the papers, but the sentiment of forums such as mumsnet. If it can become bearish then it is on.

Bought my first hovel just over 9 years ago the interest rate was 4.2% .I overplayed from the off and has my ltv  droped I got the bonus of falling interest rates and better morgage deals.was paid off in under 7 years would have been 6 if I had not bought another car and saved over 12k in interest

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20 minutes ago, swiss_democracy_for_all said:

They are money machines, they don’t want some badly built cramped 3 bed house on a minuscule plot that they’re holding unrecoverable debt for double it’s now-falling value. That’s the reality of a major crash for banks. 

Boris and the Tories are aiming for controlled higher inflation over a few years IMO, 70s style, while hoping to maintain house prices flat. Doubt if they’ll achieve it, the plans of mice and men and all that..... There was no social media in the 70s, that’s been the real political game-changer, small numbers of hysterical minorities now dominate the narrative.

Sterling will drift downwards, as it has for the last 50-60 years. The Northern Lira. 

I agree they want a controlled "exit" (but also think we'll get a Blackrock type setup here too (hasn't Lloyds and co started?)) but as you say the risks are very high because we're at the volatile tail ends of the normal curve.  I also agree with highlighting sterling - that is the escape valve, one like inflation, many don't notice or fail to pinpoint the blame ("bloody foreigners").  Although currency devaluation is a game they are all playing together so IMO better to mostly be holding other things.  And again, yes to social media.  Sunak hinted at some sort of support for "things".  So they'll play to that crowd (bread and circuses) as they already do.  All a complete sham.  A good time for those doers capable of critical thought, although sometimes following along in part with HMG has proven to be a profitable strategy. 

PS:  Maybe we'll move to more pension company ownership of rental property like on the continent.  A good alternative to bonds for them, as long as they are more communable - easier to maintain. 

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34 minutes ago, Boon said:

Mortgages are still fucking cheap. The 'biggest payment hike' is no fucking consolation considering that for the best part of a decade the rates have been falling, so even a slight hike (as seen here) could be sensationalised as such.

A slow trickle higher in rates could mean that house prices stay still in nominal terms while everything else gets more expensive - that is basically theft of people's asset value via inflation. If this stunt could be pulled over even 5 years then a correction would have been done without most realising. That would be the most palatable for government as falling values present a lot of problems for their popularity.

I don't see how any kind of market correction comes without some kind of financial distress for the masses. The ingredients are actually all there, but it may still be some way off. The real indicators for me are not the headlines in the papers, but the sentiment of forums such as mumsnet. If it can become bearish then it is on.

The ingredients are all there alright, but I don’t think it’s a long way off, in fact I think we could be closer than a gnats cock.

Forget about up north where houses are still relatively affordable. The focus heat map of this is in the London suburbs. Most terraced 2/3 post war houses have risen from £30k in the late 80’s to £600-700 mark today which is around 25 times. Added on to that the concentration of over leveraged BTL debt is magnified around city centres for housing HMO’s within the last decade.

So all in all the over leveraged city areas is very sensitive to even the slightest IR rises. The BTL brigade think they can pass on the increases on to the renters. Nope. The market sets the rates, and cost of living inflation hitting the low paid will just mean more and more voids. London is the rolling stone that gathers no moss and it already started rolling when the city workers retired, left or simply sold up to move to the coast over the pandemic. What happens there will ripple out like a shockwave in the UK, but the same will be happening globally.

Basically we’re about 20 years too late of saving our economy when we decided to sell off the family silver in the name of short term profit and cheaper goods instead of investing in the infrastructure and the resilience of the country. We decided to centre our economy on HPI and low IR rates forever while putting the squeeze anyone who actually worked and paid taxes.

This 40 year disinflation cycle has been a long one and the unraveling won’t be pretty. The unfolding seems slow until it isn’t. 

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HousePriceMania
33 minutes ago, swiss_democracy_for_all said:

They are money machines, they don’t want some badly built cramped 3 bed house on a minuscule plot that they’re holding unrecoverable debt for double it’s now-falling value. That’s the reality of a major crash for banks. 

 

The tax payers are on the line for that debt

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37 minutes ago, swiss_democracy_for_all said:

They are money machines, they don’t want some badly built cramped 3 bed house on a minuscule plot that they’re holding unrecoverable debt for double it’s now-falling value. That’s the reality of a major crash for banks. 

Boris and the Tories are aiming for controlled higher inflation over a few years IMO, 70s style, while hoping to maintain house prices flat. Doubt if they’ll achieve it, the plans of mice and men and all that..... There was no social media in the 70s, that’s been the real political game-changer, small numbers of hysterical minorities now dominate the narrative.

Sterling will drift downwards, as it has for the last 50-60 years. The Northern Lira. 

As Harley has said there, Lloyds are already made their moves in the UK

https://www.bbc.co.uk/news/articles/cjkdyy9xgn3o

Think of the coming property levies, carbon taxes and green mortgages making houses unsellable. The assets and pension money is tied up with the boomers, they need to extract all that via taxes

Basically private ownership of ‘anything’ will be discouraged going forwards through increasingly unaffordable costs (no need for cars taking up space in a city when a shared electric instant uber is available). Much better to let the big banks worry about that ownership stuff and the UBI gets paid directly to them. The younger generation in the cities have already pretty much been moulded into this lifestyle already. 

 

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9 minutes ago, Lightscribe said:

Basically private ownership of ‘anything’ will be discouraged going forwards through increasingly unaffordable costs (no need for cars taking up space in a city when a shared electric instant uber is available). Much better to let the big banks worry about that ownership stuff and the UBI gets paid directly to them. The younger generation in the cities have already pretty much been moulded into this lifestyle already.

We are moving office shortly and the new offices, for 450 staff, have no parking except for the directors. They won't even have secure cycle parking, which we have at present. My young colleagues all live in micro-apartments and commute by electric scooter so don't care much.

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25 minutes ago, Dave Bloke said:

no parking except for the directors.

Know your place peasants xD I'd be tempted to put pictures of Mr Toad in his jalopy nearby. 

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10 hours ago, Wight Flight said:

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

Sentiment is clearly changing.

Please let it come to pass.

I'm a contrarian! Rates to -2%! Pay people to have debt!

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2 minutes ago, Loki said:

Know your place peasants xD I'd be tempted to put pictures of Mr Toad in his jalopy nearby. 

I think that anecdotal sums up the ‘you will own nothing’ future nicely.

A return to serfdom under neo-feudalism dressed as progressive socialism. The cherry on the cake was that the indoctrination of the plebs was so perfect they placed it all upon themselves.

 

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Democorruptcy
9 hours ago, swiss_democracy_for_all said:

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. 

So what? I didn't say anything about a house price crash. Bank share prices will go up if rates rise gradually because their profitability will increase.

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1 hour ago, Dave Bloke said:

We are moving office shortly and the new offices, for 450 staff, have no parking except for the directors. 

A parking space is a taxable benefit in kind so I hope someone is helpful enough to inform HMRC. I am sure someone will step up :)

One of our offices has limited parking and next to the front door there are a few spaces marked "reserved." I parked in one once to see what would happen and the people on reception got predictably irritated. "Who is it reserved for then?" I asked, and such fun to watch them trying not to say.

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Front page of the Mail right now - I wonder why they are milking it?

The forecast increase in electric actually seems a worse prospect if the cap goes to 30p+ an hour - that would be far more ruinous particularly for family homes which use a lot of it.

I prefer the regular forums to see how regular people think. Had to smile at some of them 'hoping' that in 5 years time things might be better - quite remisicent of some of the new build buyers who couldn't sell so took their flat off 'waiting for the market to recover'

Could be pretty epic if in a few years interest rates are 2% (which is not really asking that much), so SVRs might be 6%. Some people then have a 5% interest increase and may not even be able to remortgage if LTV is not kind...... that's where I think some forced selling could come in. 

 

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reformed nice guy

If wages dont keep up with basic inflation (cost of electric, petrol, food) then a tiny interest rate rise could be the tipping point for a lot of "JIMJAMs" - Joint Income Mortgage Just About Managing.

Lots of normal people have no savings so a few months without a wage on the background of 10% food + energy inflation is a big problem.

When Mumsnet has topics about how to spruce up a shack in the woods that their boyfriend has made then we will know the collapse has happened.

https://i.4cdn.org/pol/1635493205504.jpg

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1 hour ago, reformed nice guy said:

If wages dont keep up with basic inflation (cost of electric, petrol, food) then a tiny interest rate rise could be the tipping point for a lot of "JIMJAMs" - Joint Income Mortgage Just About Managing.

Lots of normal people have no savings so a few months without a wage on the background of 10% food + energy inflation is a big problem.

It is interesting seeing just how tight some people's finances are.

On my 'Christ I am about to be homeless' facebook group you very often get people saying they are being kicked out next month and need somewhere, max £750 a month. Someone will post as link to somewhere at £780 and they will nearly always say 'we just can't stretch to that'

The other one I am seeing is people posting they can afford say £800, or £850 if it is absolutely the right location so they can walk to work.

Things are very highly strung already. There is no real room for rent increases.

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All this talk of institutional landlords ignores one thing, in my opinion. What corporate wants to manage a large number of high mileage houses of differing ages and construction details, with decades of accumulated alterations and bodges?

Purpose built blocks of identical units, with a maintenance contract and assorted gaurantees bundled together by the developer, are a very different kettle of fish. That would allow economies of scale, eg picture the situation with gas boilers and central heating systems. 600 identical systems in one location, vs 600 random ex Furgus Wilson wrecks. Institutional landlords may even move towards more temporary structures, and plan to replace buildings on the same site every few decades with ones that meet new standards rather than get bogged down in major refurbs and updates.

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7 minutes ago, Axeman123 said:

All this talk of institutional landlords ignores one thing, in my opinion. What corporate wants to manage a large number of high mileage houses of differing ages and construction details, with decades of accumulated alterations and bodges?

Purpose built blocks of identical units, with a maintenance contract and assorted gaurantees bundled together by the developer, are a very different kettle of fish. That would allow economies of scale, eg picture the situation with gas boilers and central heating systems. 600 identical systems in one location, vs 600 random ex Furgus Wilson wrecks. Institutional landlords may even move towards more temporary structures, and plan to replace buildings on the same site every few decades with ones that meet new standards rather than get bogged down in major refurbs and updates.

I can see your very good point here.

Just to be contrarian though - can't any houseowner sign up privately for a maintenance contract? Everyone I know has a boiler contract at least and many have emergency plumbers and so on. If it makes commercial sense to sell these to random owner-occupiers' houses then why not a fleet of them?

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17 minutes ago, Axeman123 said:

All this talk of institutional landlords ignores one thing, in my opinion. What corporate wants to manage a large number of high mileage houses of differing ages and construction details, with decades of accumulated alterations and bodges?

Purpose built blocks of identical units, with a maintenance contract and assorted gaurantees bundled together by the developer, are a very different kettle of fish. That would allow economies of scale, eg picture the situation with gas boilers and central heating systems. 600 identical systems in one location, vs 600 random ex Furgus Wilson wrecks. Institutional landlords may even move towards more temporary structures, and plan to replace buildings on the same site every few decades with ones that meet new standards rather than get bogged down in major refurbs and updates.

Agreed.

This is how it is done in the US and it is bloody brilliant.

https://www.broadmoor.cc/

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40 minutes ago, Wight Flight said:

It is interesting seeing just how tight some people's finances are.

On my 'Christ I am about to be homeless' facebook group you very often get people saying they are being kicked out next month and need somewhere, max £750 a month. Someone will post as link to somewhere at £780 and they will nearly always say 'we just can't stretch to that'

The other one I am seeing is people posting they can afford say £800, or £850 if it is absolutely the right location so they can walk to work.

Things are very highly strung already. There is no real room for rent increases.

 

That was the same with the particular examples cited down here during the summer.

People had arranged their finances precisely, tailoring jobs to rent and outgoings to maximise the life part if the work / life balance. Which is absolutely fair enough - if you're near a beach then you want to have the time to take your kids to it.

This had worked perfectly well for decades.

Then suddenly this summer rents on a reasonable three bed in a seaside town jumped from £700 / £750 to £1,000 / £1,100.

Leaving people with the option of earning another £450 a month, easier said than done, or going inland and eastward for the cheaper rents; uprooting the children from their schools and the family from its social circles.

I'm surprised that there wasn't more anger.

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6 minutes ago, Funn3r said:

I can see your very good point here.

Just to be contrarian though - can't any houseowner sign up privately for a maintenance contract? Everyone I know has a boiler contract at least and many have emergency plumbers and so on. If it makes commercial sense to sell these to random owner-occupiers' houses then why not a fleet of them?

I take your point. However I imagine many people attempting to take out such a contract on an individual basis get told a list of works needed at their expense before they can start, or that their install is too old/doesn't meet regs. I also haven't heard of similar contracts for drains/gutters/roofing/soffits/chimney pointing and flashing.

Another thought is the number of house sales one hears of with indemnities required or with loft rooms "for storage only" etc. I just can't see corporates wanting that BS. Landlord forums are a guilty pleasure of mine, and tales of different electricians signing off the same electric install or producing lengthy quotations seemingly at random always brighten my day.

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