Today’s Mini Budget.

Kwartang is going to make a statement on 23rd November??.

That is 2 months away.

Guy Stallard

“This is nightmare for most of middle class - someone with a £250k mortgage currently paying 3% would see their interest rate rise to 6.5% or simple terms annual interest bill rise from £7,500 to £16,250 They would need to find over £700 extra per month to not lose their house.”

And all this in top of energy crises and good price rise.

Whitewavemark2

Guy Stallard

“This is nightmare for most of middle class - someone with a £250k mortgage currently paying 3% would see their interest rate rise to 6.5% or simple terms annual interest bill rise from £7,500 to £16,250 They would need to find over £700 extra per month to not lose their house.”

And all this in top of energy crises and good price rise.

If correct that’s a very scary figure he’s quoted Whitewavemark, particularly for the south east, where mortgages are so high.

The BBC is reporting that some Banks and Building Societies have suspended offering new mortgage packages to new customers.
What a mess!

RSPB have emailed us begging us to write to our MP about the prised deregulation plans. I’ve never known organisations like RSPB and the National Trust be so vocal before.

We must all contact our MPs over what the Tories are intending to do to our precious animals and natural world.

J52

The BBC is reporting that some Banks and Building Societies have suspended offering new mortgage packages to new customers.
What a mess!

It’s fixed rate options that have been suspended for now, probably next spring they will be available at realistic rates.
This will certainly put an end to house price inflation for a while then we will see where interest rates settle, to pay the inevitably higher rates wages are going to have to rise.

In the short term some borrowers are going to have to take a “repayments holiday” to cope.

When Kwarteng makes the next statement on Nov 23rd the OBR is going to have to make a credible plan for the UK economy, that is going to be a real challenge. So far Truss is seen as irresponsible, convincing investors otherwise is not going to be easy, so we could see further rate rises.

72% of voters are against Kwartang’s tax cuts.

Ref is You.gov btw

Katie59

J52

The BBC is reporting that some Banks and Building Societies have suspended offering new mortgage packages to new customers.
What a mess!

It’s fixed rate options that have been suspended for now, probably next spring they will be available at realistic rates.
This will certainly put an end to house price inflation for a while then we will see where interest rates settle, to pay the inevitably higher rates wages are going to have to rise.

In the short term some borrowers are going to have to take a “repayments holiday” to cope.

When Kwarteng makes the next statement on Nov 23rd the OBR is going to have to make a credible plan for the UK economy, that is going to be a real challenge. So far Truss is seen as irresponsible, convincing investors otherwise is not going to be easy, so we could see further rate rises.

Virgin and Skipton have stopped mortgages to new customers. The Halifax to products with fees attached, which are fixed terms.

J52

The BBC is reporting that some Banks and Building Societies have suspended offering new mortgage packages to new customers.
What a mess!

I wonder what will happen with offers already made but not actually started yet as completion has not taken place.
It's not unheard of for mortgage lenders to withdraw offers even after contracts have been exchanged.

As far as I know, anyone who has exchanged is ‘safe’, but as you say up until then money can be withdrawn.
Not sure what happens in Scotland after the Missives have been concluded, presumably the same.
Although we lived through horrendous interest rate, todays young home buyers seem to already pay a large percentage of their wages on mortgages. I really feel for them.

Katie59

J52

The BBC is reporting that some Banks and Building Societies have suspended offering new mortgage packages to new customers.
What a mess!

It’s fixed rate options that have been suspended for now, probably next spring they will be available at realistic rates.
This will certainly put an end to house price inflation for a while then we will see where interest rates settle, to pay the inevitably higher rates wages are going to have to rise.

In the short term some borrowers are going to have to take a “repayments holiday” to cope.

When Kwarteng makes the next statement on Nov 23rd the OBR is going to have to make a credible plan for the UK economy, that is going to be a real challenge. So far Truss is seen as irresponsible, convincing investors otherwise is not going to be easy, so we could see further rate rises.

... probably next spring they will be available at realistic rates. Have you any evidence for this Katie?

The increases will have to be paid by those with a fixed rate mortgage coming to an end, or they will have to elect to go on a variable rate mortgage and rely on your hopes coming true and those coming down fairly quickly and being able to fix at a lower rate later on.

With so much extra going on mortgages, it will take a huge amount of other spendings out of the economy. How does that help us grow?

Add to that the fact that we have no idea when the fixed rates will return, or at what level. I can imagine the housing market falling like a stone. And who will have the money to buy up these "homes"? Very wealthy far-right Tories with their new tax cuts, I would guess.

The new mortgage rates are still much lower than the rates in the late 80's when we paid over 14%

Dinahmo

The new mortgage rates are still much lower than the rates in the late 80's when we paid over 14%

I paid 16% back then, but on a far lower sum, even accounting for inflation.

What people will suffer at 6% will be relatively far higher.

probably next spring they will be available at realistic rates. Have you any evidence for this Katie?

More hope than anything else, hoping the climate has stabilized after a very difficult winter, the key is inflation and it’s relationship to interest rates. In 1990 when interest rate, were 15% inflation was 20% most of us survived, some negative equity but no widespread repossessions.

Wages are going to have to rise if interest rates stay high, regaining the balance is not going to be easy, an agreement in Ukraine will make it easier, an escalation much worse.

In 1990 when interest rate, were 15% inflation was 20% most of us survived, some negative equity but no widespread repossessions.

'Some negative equity' meant rather a lot to those who suffered it!

Without spending ages researching this.

Surely in 1990 the relationship between mortgages offered and income was much tighter than it has been since 2000? And wages were more equably distributed than they are now?

Don't forget that in real terms most public employees (who make up a very significant proportion of wage earners) have suffered no wage increases in real terms, in fact many have had a real terms drop in income? What with this, and ludicrously large mortgage offers, a great many people are struggling now to meet their payment obligations. Interest rate rises will finish them off and there is no guarantee that deferring payment, or paying interest only is going to help them in the long run.

As to 'wages are going to have to rise', this government is determined to prevent them doing so. And cutting the tax rate from 20% to 19% isn't going to free up much. With personal allowances frozen; any wage increase is immediately taxed.

I lack your confidence, Katie59

I can confirm that mortgage regulations are very tight now and have been for quite a while. You can only get a large mortgage offer if you have the salary and clear credit to back it up. The amount of paperwork and checks that now go into mortgages is huge.
Many mortgages are done on a fixed term so not all will be affected by these rate increases. A bit unfortunate if your rate is coming to an end.
I was expecting more muttering to be coming from our office this morning as my DH has been a broker for many years but so far really quiet. I did ask him if all fixed rate mortgages had been removed apparently not.
No doubt it’s going to be bumpy for a while
.

I remember when interest rates went up to 17% and it was an absolute nightmare for many. We were lucky because we only had a small mortgage in those days. Imagine if that happened now with the size of some of the mortgages that young ones have. My granddaughter has a mortgage of around $ 600,000 and they both work full time. She is pregnant and instead of looking forward to spending months home with her new baby she is already looking at when she will be forced back to the workforce if the interest rates do indeed spiral up.

MaizieD

^In 1990 when interest rate, were 15% inflation was 20% most of us survived, some negative equity but no widespread repossessions.^

'Some negative equity' meant rather a lot to those who suffered it!

Without spending ages researching this.

Surely in 1990 the relationship between mortgages offered and income was much tighter than it has been since 2000? And wages were more equably distributed than they are now?

Don't forget that in real terms most public employees (who make up a very significant proportion of wage earners) have suffered no wage increases in real terms, in fact many have had a real terms drop in income? What with this, and ludicrously large mortgage offers, a great many people are struggling now to meet their payment obligations. Interest rate rises will finish them off and there is no guarantee that deferring payment, or paying interest only is going to help them in the long run.

As to 'wages are going to have to rise', this government is determined to prevent them doing so. And cutting the tax rate from 20% to 19% isn't going to free up much. With personal allowances frozen; any wage increase is immediately taxed.

I lack your confidence, Katie59

Indeed! It will hardly help anybody. I've mentioned this before, but my partner is at the bottom end of the highest paid 10% of earners. He will benefit from the income tax reduction and the scrapping of the NI levy more than most. However, even for him, the increase won't even cover cost of living increases.

Yes the size of our mortgages was smaller in the 70s and 80s when interest rates were well into double figures, but of course salaries were also very small.
We could only have dreamed of just paying 5 or 6% then.

There just seems to be such a fuss made about everything these days.

Yes I accept times are hard, but they were for us all too without all this anguished hand-wringing.
We just got on with it.

Back in 1980s you would not have been allowed a mortgage at the level we have today and deposit would have been higher too. The level of borrowing is far to high, not just housing but cars and credit cards too, most of us are going to have to cut back on non essential spending drastically

One of the problems I believe is that our economy is over dependent on the housing market and increasing house prices. Unfortunately average salaries have not kept pace with house prices, whereas mortgages in the 70s were a more affordable 3 to 4 times average salary, they are now at least 11 times average salaries in London.
As you move north from London and SE and SW the average ratio drops but still much higher than it was in the 70s, making home ownership out of the reach for many.

It frequently needs two salaries to service a mortgage, and there are knock on expenses, ie for costly childcare.
No comparison for how it was when we first bought a house.

Katie59

Back in 1980s you would not have been allowed a mortgage at the level we have today and deposit would have been higher too. The level of borrowing is far to high, not just housing but cars and credit cards too, most of us are going to have to cut back on non essential spending drastically

Back in the 1980s loan to value was actually higher than it is today the average being 94%
We put down £800 on a £14.5k house
If I remember correctly we could borrow between 2.5 and 3 times salary.