Property crash, just maybe it really is different this time (Part 2)

[Bobthebuilder]

13 minutes ago, Stuey said:

The interest rate spike will be very temporary. Once prices respond to relatively cheap energy, rates will be back to the 2010s normal.

 

This is a golden window to buy a home.

 

 

If you do get made redundant, you would make a great estate agent.

[Rare Bear]

24 minutes ago, Dave Bloke said:

The Guardian polled people and 75% of people thought that Sunak's pledge to half the inflation rate meant prices would drop overall!

Is that reflective of only guardian readers or of the population in general?

[spygirl]

Fuckwits R Us

https://www.theguardian.com/business/2023/jun/22/this-is-ruining-peoples-lives-homeowners-hit-by-uk-mortgage-crisis-speak-out

For Steven, a media consultant from Guildford, and his wife, the remortgaging nightmare is only beginning. “People like me can’t sleep at night – it’s horrendous,” he says. “The mortgage for our three-bed cottage is up for renewal in December. We’ve geared our lives around the low interest rates of the past 13 years. I am the only earner in the family. If interest rates hit 6%, I’ll have to find an extra £1,480 per month – well over double what we pay now. That is totally catastrophic for our family, absolutely terrifying.”

The UK is experiencing the sharpest, fastest rise in interest rates since the 1980s, and markets and homeowners are having to digest yet another increase from the Bank of England, which raised rates by another 0.5 percentage points to 5% on Thursday to a 15-year high.

Financial markets are expecting the Bank of England will raise interest rates again at its next meeting in early August.

After more than a decade of rates at 0.75% or below, this has left many homeowners whose fixed deals are ending, and those on tracker mortgages, facing huge blows to their finances.

Many of the people who have got in touch with the Guardian are young couples and families, who are often worse affected than older homeowners by the interest rate hikes because they have repaid smaller parts of their often relatively large mortgages.

Steven, 52, and his wife have an interest-only mortgage. They bought their house 20 years ago, initially on an interest rate of 4.8%.

“But over the years, we’ve had to increase our mortgage for home improvements, and back then we had two incomes and no children,” Steven says. “We have a £480,000 mortgage remaining, and will probably end up paying around £19,000 extra per year just on interest. This is ruining people’s lives.”

Steven considers the Bank’s decision to raise interest rates for the 13th time in a row a grave mistake, because millions of homeowners’ mortgages are yet to be affected – thanks to the popularity of fixed-rate mortgages, struck during the ultra-low rates era, that have yet to expire.

 

Another one of Brown children.....

Hes only got ~5 y left onthat mortgage anyhow. FFS.

 

[Stuey]

31 minutes ago, spygirl said:

 

Oh, and how few people 'buying' houses have acutally not got a repayment in place.

I've not either...

[HousePriceMania]

35 minutes ago, spygirl said:

Poeple dont understand how few people have acutally been buying house to live in since ~2000.

And they dotn graps how mcuh leverage the people who have been buying houses have took on.

Oh, and how few people 'buying' houses have acutally not got a repayment in place.

 

 

Exactly, it's an investment bubble not a property market.

This must surely be in full on reverse now.

Anyone can go on rightmove and look at the prices of crap houses in crap towns objectively.

They are nonsensical, unless you are on the pyramid and have tonnes of free equity you can afford a basic house.

I sincerely hope we see 70% price collapse and no one speculates on property ever again.

[HousePriceMania]

32 minutes ago, Bobthebuilder said:

If you do get made redundant FROM THE ESTATE AGENCY, you would make a great estate agent.

Im confused 

[spygirl]

5 minutes ago, HousePriceMania said:

Exactly, it's an investment bubble not a property market.

This must surely be in full on reverse now.

Anyone can go on rightmove and look at the prices of crap houses in crap towns objectively.

They are nonsensical, unless you are on the pyramid and have tonnes of free equity you can afford a basic house.

I sincerely hope we see 70% price collapse and no one speculates on property ever again.

its not even an investment, its loads of pepl tkaing naked positions.

Locally, must stuff has beenbought by IO BTlers and FHL.

This is very hot money.

 

[Ash4781b]

2 hours ago, Frank Hovis said:

 

She wanted to remortgage at a cheaper rate two months ago, but went bankrupt shortly before the pandemic, which shredded her credit rating: “I have spoken to a broker and I will struggle to get a mortgage from a high-street lender.”

What makes this even worse is.....

A qualified accountant

“A qualified accountant, she is also considering trying to earn extra money by taking on accounting work and working a 55- to 60-hour week. “
 

That’s a long week. But I’d imagine the tax thresholds will hit hard. Might be an accountant doing cash in hand jobs.

Edited June 22, 2023 by Ash4781b

[Ash4781b]

1 hour ago, spygirl said:

Fuckwits R Us

https://www.theguardian.com/business/2023/jun/22/this-is-ruining-peoples-lives-homeowners-hit-by-uk-mortgage-crisis-speak-out

For Steven, a media consultant from Guildford, and his wife, the remortgaging nightmare is only beginning. “People like me can’t sleep at night – it’s horrendous,” he says. “The mortgage for our three-bed cottage is up for renewal in December. We’ve geared our lives around the low interest rates of the past 13 years. I am the only earner in the family. If interest rates hit 6%, I’ll have to find an extra £1,480 per month – well over double what we pay now. That is totally catastrophic for our family, absolutely terrifying.”

The UK is experiencing the sharpest, fastest rise in interest rates since the 1980s, and markets and homeowners are having to digest yet another increase from the Bank of England, which raised rates by another 0.5 percentage points to 5% on Thursday to a 15-year high.

Financial markets are expecting the Bank of England will raise interest rates again at its next meeting in early August.

After more than a decade of rates at 0.75% or below, this has left many homeowners whose fixed deals are ending, and those on tracker mortgages, facing huge blows to their finances.

Many of the people who have got in touch with the Guardian are young couples and families, who are often worse affected than older homeowners by the interest rate hikes because they have repaid smaller parts of their often relatively large mortgages.

Steven, 52, and his wife have an interest-only mortgage. They bought their house 20 years ago, initially on an interest rate of 4.8%.

“But over the years, we’ve had to increase our mortgage for home improvements, and back then we had two incomes and no children,” Steven says. “We have a £480,000 mortgage remaining, and will probably end up paying around £19,000 extra per year just on interest. This is ruining people’s lives.”

Steven considers the Bank’s decision to raise interest rates for the 13th time in a row a grave mistake, because millions of homeowners’ mortgages are yet to be affected – thanks to the popularity of fixed-rate mortgages, struck during the ultra-low rates era, that have yet to expire.

 

Another one of Brown children.....

Hes only got ~5 y left onthat mortgage anyhow. FFS.

 

Geared their lives around low interest rates. One for @DurhamBorn

[eek]

1 hour ago, Dave Bloke said:

The Guardian polled people and 75% of people thought that Sunak's pledge to half the inflation rate meant prices would drop overall!

Yep - Sunak is an idiot for making the statement in the first place.

He failed to understand that most people are just idiots and that he understands inflation to be is very different from what other people believe it to be.

[One percent]

1 hour ago, spygirl said:

Fuckwits R Us

https://www.theguardian.com/business/2023/jun/22/this-is-ruining-peoples-lives-homeowners-hit-by-uk-mortgage-crisis-speak-out

For Steven, a media consultant from Guildford, and his wife, the remortgaging nightmare is only beginning. “People like me can’t sleep at night – it’s horrendous,” he says. “The mortgage for our three-bed cottage is up for renewal in December. We’ve geared our lives around the low interest rates of the past 13 years. I am the only earner in the family. If interest rates hit 6%, I’ll have to find an extra £1,480 per month – well over double what we pay now. That is totally catastrophic for our family, absolutely terrifying.”

The UK is experiencing the sharpest, fastest rise in interest rates since the 1980s, and markets and homeowners are having to digest yet another increase from the Bank of England, which raised rates by another 0.5 percentage points to 5% on Thursday to a 15-year high.

Financial markets are expecting the Bank of England will raise interest rates again at its next meeting in early August.

After more than a decade of rates at 0.75% or below, this has left many homeowners whose fixed deals are ending, and those on tracker mortgages, facing huge blows to their finances.

Many of the people who have got in touch with the Guardian are young couples and families, who are often worse affected than older homeowners by the interest rate hikes because they have repaid smaller parts of their often relatively large mortgages.

Steven, 52, and his wife have an interest-only mortgage. They bought their house 20 years ago, initially on an interest rate of 4.8%.

“But over the years, we’ve had to increase our mortgage for home improvements, and back then we had two incomes and no children,” Steven says. “We have a £480,000 mortgage remaining, and will probably end up paying around £19,000 extra per year just on interest. This is ruining people’s lives.”

Steven considers the Bank’s decision to raise interest rates for the 13th time in a row a grave mistake, because millions of homeowners’ mortgages are yet to be affected – thanks to the popularity of fixed-rate mortgages, struck during the ultra-low rates era, that have yet to expire.

 

Another one of Brown children.....

Hes only got ~5 y left onthat mortgage anyhow. FFS.

 

Fuckwits. 

[One percent]

2 hours ago, Frank Hovis said:

 

She wanted to remortgage at a cheaper rate two months ago, but went bankrupt shortly before the pandemic, which shredded her credit rating: “I have spoken to a broker and I will struggle to get a mortgage from a high-street lender.”

What makes this even worse is.....

A qualified accountant

She must have loads of equity in the place. I can’t see her problem. 

[Stuey]

8 minutes ago, eek said:

Yep - Sunak is an idiot for making the statement in the first place.

He failed to understand that most people are just idiots and that he understands inflation to be is very different from what other people believe it to be.

Inflation will be more than halved IMO and the pressure on the BoE to cut rates quickly will come from all quarters. 

Edited June 22, 2023 by Stuey

[AlfredTheLittle]

8 minutes ago, eek said:

Yep - Sunak is an idiot for making the statement in the first place.

He failed to understand that most people are just idiots and that he understands inflation to be is very different from what other people believe it to be.

He does understand that most people are idiots, that's why he made such a cynical pledge to try to take credit for something he thought would definitely happen. I really hope it backfires on him and inflation keeps going up rather than down.

[Ash4781b]

They have set that on a 35yr repayment model and also capped at 6%.  Not even worse case

[Wight Flight]

13 minutes ago, Ash4781b said:

They have set that on a 35yr repayment model and also capped at 6%.  Not even worse case

How does that work?

Interest on a £400k mortgage at 2% is £8k, at 6% is 24k. £16k per year differnce, but they are showing it as less than £12k.

[Bear Hug]

7 minutes ago, Wight Flight said:

How does that work?

Interest on a £400k mortgage at 2% is £8k, at 6% is 24k. £16k per year differnce, but they are showing it as less than £12k.

Slightly different figures as repayment, not interest-only mortgage? 

[spygirl]

Labour have a 5 point plan.

https://www.mirror.co.uk/news/politics/homeowners-should-able-switch-mortgages-30293231

1. Borrowers will be able to switch to interest-only

2. Borrowers will be able to increase mortgage length

3. Borrowers can undo No.s 1&2

4. Six months before lender can start a repossession

5. FCA to advise credit ratings should be unaffected

 

Those are all in place.

Heres a 5 point for high streets

https://brc.org.uk/news/corporate-affairs/brc-reacts-to-labours-five-point-plan-for-high-streets/

1. Cut business rates: high street businesses shouldn't face big tax hikes whilst online giants are let off the hook. Labour would cut business rates for small businesses on the high street, paid for by properly taxing online giants. Our policy would be worth over £2.6k to the average pub, café or restaurant. 
2. Cut energy bills:many beloved high street businesses face an uncertain future due to spiking energy bills. Labour will help them cut their bills for good with vouchers for energy efficiency measures – such as double glazing at a local cinema, a new heat pump in a café or an electric vehicle for a takeaway.  
3. Stamp out late payments:high street firms shouldn't be forced to wait months to be paid for work by big clients. Labour would introduce tough new laws to stamp out late payments and make sure more money gets to high street firms.  
4. Revamp empty shops:people won't visit high streets blighted by unsightly boarded up shops. Labour will give councils strong new powers to bring empty shops on their high streets back into use.  
5. Tackle anti-social behaviour:people should feel safe when they go out to shop, eat or have fun on their local high street. Labour will get 13,000 more neighbourhood police and PCSOs back on our streets and introduce tough new measures to crack down on anti-social behaviour that blights local high streets

 

 

[Petatep]

12 minutes ago, Wight Flight said:

How does that work?

Interest on a £400k mortgage at 2% is £8k, at 6% is 24k. £16k per year differnce, but they are showing it as less than £12k.

.

Edited June 22, 2023 by Petatep

[Wight Flight]

11 minutes ago, Bear Hug said:

Slightly different figures as repayment, not interest-only mortgage? 

I was only looking at the interest. Surely the repayment part doesn't change?

9 minutes ago, Petatep said:

.

Good point.

[JoeDavola]

5 hours ago, belfastchild said:

Errr,,,,

Joe....

Its all relative...

Rateable value was something to judge the size of the house as rates at the time were based on number of bedrooms, garage etc. If you go Planning permission it gets revalued to the next step up on 'rateable value'.

Rates go up every year regardless of rateable value, its just a fiddle factor they multiply by.

Yes I do understand that - I've just always thought of rates as an obvious tax of perceived wealth rather than actual useage of council facilities - hence a single person pays the same as a family of 6 or the same house, and hence the council estate beside my flat pays only 45% of the rates per square meter that the apartment owners do, because they're perceived as poorer.

So one way for the council to justify whacking up rates beyond the standard amount might be a re-balance of the ratings, to take into account increased values overall but also some places not being seen as posher/more popular than they were 15 years back.

"Your house is worth double the current rateable value; cough up money-bags we're upping your rates by 25% we know you're good for it."

Edited June 22, 2023 by JoeDavola

[AlfredTheLittle]

2 hours ago, Wight Flight said:

How does that work?

Interest on a £400k mortgage at 2% is £8k, at 6% is 24k. £16k per year differnce, but they are showing it as less than £12k.

You're not paying interest on £400k for the whole 35 years, after year 1 you've repaid a bit and so on.

[Wight Flight]

Just now, AlfredTheLittle said:

You're not paying interest on £400k for the whole 35 years, after year 1 you've repaid a bit and so on.

That is true, but they didn't say 8 years in to a £400k repayment mortgage when you owe £320k.

Shite innumerate journalism as ever.

 

[belfastchild]

59 minutes ago, JoeDavola said:

Yes I do understand that - I've just always thought of rates as an obvious tax of perceived wealth rather than actual useage of council facilities - hence a single person pays the same as a family of 6 or the same house, and hence the council estate beside my flat pays only 45% of the rates per square meter that the apartment owners do, because they're perceived as poorer.

So one way for the council to justify whacking up rates beyond the standard amount might be a re-balance of the ratings, to take into account increased values overall but also some places not being seen as posher/more popular than they were 15 years back.

"Your house is worth double the current rateable value; cough up money-bags we're upping your rates by 25% we know you're good for it."

Sort of. Agree about the single persons tax, no rebate like England but I'm paying less in a 3 bed semi than a friend in Liverpool in a 2 bed terrace, even with the single person discount.

Rateable value is relative to capital values in 2005. Any new property is ranked against the equivalent in that time. Do any planning permission improvements then that upgrades the rateable value, nothing to do with the price of the house or those improvements.

Apartments have a premium, which is why a 3 bed terrace in the markets will be less than a 2 bed apartment in the city centre and arguably the markets terrace now probably costs more to buy.

The location is a factor but only one of a few, as is access to services and size etc.

Also depends on your council as well.

Councils can and do put the rates up every year but are limited by law. Reevaluation of rateable value will.have no effect which is why it hasn't been done in 20 years.

Individuals can apply to be reassessed but its usually after taking a shed or garage away or going to 2 beds from 3 etc.

[MrXxxx]

2 hours ago, Ash4781b said:

They have set that on a 35yr repayment model and also capped at 6%.  Not even worse case

...and what has to be remembered is that those additional sums people need to find are net i.e. after tax, as we no longer have MIRAS, so an extra £112 a month [@4%] actually equates to £162.50 gross earnings...or put it another way [assuming lower tax band] for every additional £100 monthly increase [net] you need to earn another £145 gross earnings.