Its the big End of IO mortgage Nudge Campaign

[spygirl]

I did wonder when BoE/Treasury throw the towel in and give up nagging IO mortgage holders to either - move to a repayment or get a RIO.

Hardly surprising its come as IR move from ~2% to 5%+

And theres an air of panic.

I've got an interest-only mortgage - and no way to pay it off: LUNCH MONEY

https://www.thisismoney.co.uk/money/lunchmoney/article-12809751/Ive-got-mortgage-no-way-pay-LUNCH-MONEY.html?ico=mol_desktop_money-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Findex.html&_gl=1*1dyeecb*_ga*OTQxMDA3MjU2LjE1Mzc1OTY2NjM.*_ga_XE0XLFFF16*MTcwMTQxNzI5OC4xMjguMS4xNzAxNDE3MzEyLjAuMC4w&_ga=2.5790387.1635285406.1701417298-941007256.1537596663

 

Happy 35th birthday to fixed rate mortgages! Here's how property and home loans have changed since 1988

https://www.thisismoney.co.uk/money/mortgageshome/article-12804871/Happy-35th-birthday-fixed-rate-mortgages-Heres-property-home-loans-changed-1988.html?ico=mol_desktop_money-newtab&molReferrerUrl=https%3A%2F%2Fwww.dailymail.co.uk%2Fmoney%2Findex.html&_gl=1*1dyeecb*_ga*OTQxMDA3MjU2LjE1Mzc1OTY2NjM.*_ga_XE0XLFFF16*MTcwMTQxNzI5OC4xMjguMS4xNzAxNDE3MzEyLjAuMC4w&_ga=2.5790387.1635285406.1701417298-941007256.1537596663

 

One from 2013 -

• May have to borrow money from family or friends to make up shortfall
• Others face extending their mortgages well into their 70s
• Financial Conduct Authority says mortgage 'timebomb' will hit 40,000 people a year between 2017 and 2032

https://www.dailymail.co.uk/news/article-2317994/1-3M-mortgage-face-losing-homes-failing-make-provisions-pay-capital.html

Now, Boe/FSA manage to get that 50% of those IO unto repayment in the last 10y.

Its to be seen whether they can afford those mortgages ow that rates are a lot higher.

, theres ~20k/y mortgages reaching the end this years. Plus a large number of people who cannot afford an SVR 5%+

 

[spygirl]

One from Sep 23, when I think the campaign started -

My daughter is terrified of losing her home, which she bought 15 years ago when she and her husband were newly married.

They took advice from a mortgage broker at that time and were advised to take an interest-only mortgage as they were on a fairly low income. 

Her marriage ended a couple of years later and she has been making the payments alone ever since. 

Her payments have been steadily going up from £280 per month to the current figure of £840 since the cost of living crisis and she is really struggling now as she has had to stop work due to various health problems and is now living on benefits. 

https://www.thisismoney.co.uk/money/mortgageshome/article-12540039/My-daughter-stuck-mortgage-avoid-homeless.html

 

Is there any possibility of her being able to remortgage whilst on benefits and therefore change to a repayment mortgage? Her current mortgage provider has said that it won't do that.

I realise that she still has several years but maybe there is something she could be doing now to avoid homelessness in the future? S.D, via email.

[spygirl]

Nov 23 -

My interest-only mortgage is ending: How do I keep my home? DAVID HOLLINGWORTH replies

https://www.thisismoney.co.uk/money/mortgageshome/article-12795783/My-mortgage-ending-home-DAVID-HOLLINGWORTH-replies.html

[One percent]

I always thought that you had to have some kind of vehicle in place to pay off the mortgage. Back in the day it was straight repayment or endowment (yeah I know). It seems the rules have been relaxed. How exactly did they think that would play out?   Exactly like it is doing I guess.  

[spygirl]

Until ~2014 mortgages were totally unregulated.

You might want to ponder that.

One reason was that mortgage only became a pleb product in the late 70s.

See that Happy bday fixed mortage story?

1988.

At that point the mass mortgage market i.e. for the common man had only existed less than 20y.

Mortgages were few n far between in the late 60s.

Mortgages for the single woman had only been a thing for 10y then (1988)

 

 

 

 

[M S E Refugee]

I don't think interest only mortgages are bad, unless you are useless with money.

I have and interest only mortgage fixed at 2.69% until 2028, I used salary sacrifice to build up my Pension to pay it off in 2027 when I take my Pension.

[Frank Hovis]

12 hours ago, M S E Refugee said:

I don't think interest only mortgages are bad, unless you are useless with money.

I have and interest only mortgage fixed at 2.69% until 2028, I used salary sacrifice to build up my Pension to pay it off in 2027 when I take my Pension.

 

Well played.

Yes, as long as you are saving into a tax free wrapper, as you are, and investing in equities then you are your own personal hedge fund and could make some serious money.

I would however have thought the number of people adopting your strategy is vanishingly few.

[SpectrumFX]

12 hours ago, M S E Refugee said:

I don't think interest only mortgages are bad, unless you are useless with money.

I have and interest only mortgage fixed at 2.69% until 2028, I used salary sacrifice to build up my Pension to pay it off in 2027 when I take my Pension.

Unfortunately most people are useless with money.

[sleepwello'nights]

On 01/12/2023 at 08:27, One percent said:

I always thought that you had to have some kind of vehicle in place to pay off the mortgage. Back in the day it was straight repayment or endowment (yeah I know). It seems the rules have been relaxed. How exactly did they think that would play out?   Exactly like it is doing I guess.  

Yes you do. When we took out IO mortgages the repayment vehicle we stated was sale of the property. 

[M S E Refugee]

14 minutes ago, SpectrumFX said:

Unfortunately most people are useless with money.

Trying to tell people that paying income tax is largely optional makes their heads explode.

I work with people who have 6 figure sums in deposit accounts,I've tried to explain Sipps to them but its a fool's errand.

They simply cannot comprehend that you receive tax back in a Sipp.

Edited December 3, 2023 by M S E Refugee

[Cold Cold Ground]

You have just blown my mind a little bit there. It’s seems easier as an option when you are a bit closer to retirement than in your 20s say.

[spygirl]

1 hour ago, M S E Refugee said:

Trying to tell people that paying income tax is largely optional makes their heads explode.

I work with people who have 6 figure sums in deposit accounts,I've tried to explain Sipps to them but its a fool's errand.

They simply cannot comprehend that you receive tax back in a Sipp.

Io mortgages are a financial product, suitable fir a very small   (under 5%) of the pop.

From 2000ish to 2008 they were 90% of mortgages sold.

No comedy repayment like an endowment. Plain naked IO

The early IO mortgages are niw maturing- a fair chunk sold with terms well under 25y. Idea was you'd take a position, <magic underpants> earn a lot more to pay off the capital 10 -20y later.

Of course, in true Brownianism uk hit  flat wages from 2000....

You will be bhearing continously stories of woe from now on.

[SpectrumFX]

12 minutes ago, spygirl said:

Io mortgages are a financial product, suitable fir a very small   (under 5%) of the pop.

From 2000ish to 2008 they were 90% of mortgages sold.

No comedy repayment like an endowment. Plain naked IO

The early IO mortgages are niw maturing- a fair chunk sold with terms well under 25y. Idea was you'd take a position, <magic underpants> earn a lot more to pay off the capital 10 -20y later.

Of course, in true Brownianism uk hit  flat wages from 2000....

You will be bhearing continously stories of woe from now on.

The feckless wankers will probably end up getting a bailout, after a shit ton of "It's my home!" sad face bullshit in the media.

 

[spygirl]

1 minute ago, SpectrumFX said:

The feckless wankers will probably end up getting a bailout, after a shit ton of "It's my home!" sad face bullshit in the media.

 

Theresno bail out.

Bail out for endowments was basically throwing the UK life industry under the a well deserved bus.

[SpectrumFX]

2 minutes ago, spygirl said:

Theresno bail out.

Bail out for endowments was basically throwing the UK life industry under the a well deserved bus.

We'll see. I can feel a Tony Blair "it's the right thing to do" style moment coming. Perhaps with Tony himself back at the wheel.

[Phil]

3 minutes ago, SpectrumFX said:

We'll see. I can feel a Tony Blair "it's the right thing to do" style moment coming. Perhaps with Tony himself back at the wheel.

Tony and Sir Kier. Dream team. Can't wait.

[Chewing Grass]

18 minutes ago, SpectrumFX said:

We'll see. I can feel a Tony Blair "it's the right thing to do" style moment coming. Perhaps with Tony himself back at the wheel.

 

14 minutes ago, Phil said:

Tony and Sir Kier. Dream team. Can't wait.

I worked it out a few weeks ago and posted elsewhere and will run like this.

Feckless Essex Cunt in McMansion mortgage reaches term, can't remortgage.

Government steps in and says we will put X% on the books and you will pay nominal rent and remortgage the rest (shared ownership).

Government then leverages its shiny new asset 40 times and gives money to Abdul down the road.

GDP magic number go up, shiny PCH EVs all round.

Miracle economy.

[Norfolk Variant]

On 02/12/2023 at 20:52, M S E Refugee said:

I don't think interest only mortgages are bad, unless you are useless with money.

I have and interest only mortgage fixed at 2.69% until 2028, I used salary sacrifice to build up my Pension to pay it off in 2027 when I take my Pension.

Most people who took out IO mortgages took them because they couldn't afford a repayment mortgage.

It was always going to end badly.

It's best described as "renting from the bank" with none of the benefits of renting.

But at least they can paint the walls and have a dog.

Edited December 6, 2023 by Norfolk Variant

[BurntBread]

2 hours ago, Norfolk Variant said:

Most people who took out IO mortgages took them because they couldn't afford a repayment mortgage.

It was always going to end badly.

It's best described as "renting from the bank" with none of the benefits of renting.

But at least they can paint the walls and have a dog.

While I agree with pretty much everything you say, it isn't just renting from the bank, as it also exposes you to the capital gains (or losses) on the asset, which renting doesn't.

Even for the people who got into it for bad reasons, it has probably been an OK investment, provided they remember that the exit strategy is to sell the house and go into rented accommodation. Any of these financially stretched people who imagined they would end up owning the house are going to hit hard reality, and if they were stupid enough to borrow against that impossible outcome (e.g. MEW for holidays), then they're financially shipwrecked.

[Wight Flight]

1 hour ago, BurntBread said:

provided they remember that the exit strategy is to sell the house and go into rented accommodation

Or downsize / downmove.

If you had bought a three bed terrace in London 25 years ago you would be feeling pretty smug right now.