Get ready for the end of fixed rate mortgages

[Thomas Hearns]

5 hours ago, Social Justice League said:

Exactly, buying a house is a good idea if you pay in cash.  Renting off a bank for 30 years and being responsible for all the repairs and upgrades is a crushingly poor deal, but most are desperate to sign up because it's an "investment"..........lol.

You can't tell people though as most don't want to hear the reality of our bent financial system. 

 

So mortgage at £475pm on average for the last 10 years, equivalent rent would be £850pm. £375pm saved is £45,000 saved, house insurance is about £120 a year, replaced windows £3,500. Newer efficient boiler £1500. Total cost of ownership £6,200.

Renter: could use Deposit of £13,000 to be invested.

Mortgagee: in 10 years house 'value' has increased £110,000.

But the mortgage has a crushing poor deal.

[Thomas Hearns]

19 hours ago, nero120 said:

Much to learn young one. Paying rent is not bondage, your landlord does not own you.

Generally, If you want to live in a house that you don't own outright you will need to pay somebody else.... for over 10 years I've paid the bank £300-£400 month less than I would have paid a landlord. But the bank owns me?!?! It's been a sound financial decision for me. I'm not really sure you should be patronising others with "young one" when you frequently post nonsense.

[markyh]

21 hours ago, nero120 said:

My tenancy agreement is for a year, usually with a 6 month break clause. What do I lose if I don't pay? What do you lose if you don't pay your mortgage?

Honestly you lot are stupidity defined.

You will be evited and living on the streets, I have the remaining balance of my £212k mortgage as cash in a few savings accounts waiting for my 5 year fix to end in June 2023, when i shall be clearing it in full.  I shall be in a mortgage free £700k house under 55 years old just living life. 

Renting is a mugs game, how do you propose to pay the market rent from your small state pension once you turn 67 ?  You plan to try and keep working until you die?  

[Pmax2020]

23 hours ago, nero120 said:

With what, and how did those hedges work out in 2008? Try again.

I don’t follow. I’ve never known a time where there haven’t been any fixed rate mortgages. 

The base rate is sitting at 1.75% with a further 0.5% hike likely this year. That’s exactly why fixed rates are now sitting at 3.5% to 4.25%. To insulate lenders against further incremental increases in the base rate over the next couple of years. 

What makes you think fixed rates will no longer be available?!

[bomberbrown]

This thread has raised something that was always bugging me too.  I don’t recollect fixed rate mortgages in the 80s and late 80s/early 90s either.  I remember everyone was on SVR. Happy to be proved wrong. Hence why when interest rates went to 15% ALL mortgagee’s were affected by the rise.  I don’t remember any smug fixed rate mortgagee’s on lower rates. 

[JDI]

On 05/08/2022 at 09:56, nero120 said:

https://mortgage.icalculator.info/guides/history-of-mortgages.html

As interest rates will inevitably continue to rise and rise, money becomes more expensive and capital becomes scarce, the types of mortgages on offer will drastically reduce. Before the 90s (when this mess started), you couldn't get fixed rate mortgages only variable rate. This makes sense, what lender would lend out their precious capital for 25+ years for a fixed rate of return?! This is just one example of the unreality that has been the markets for the longest time. As the past 40 years is undone, the housing market will inevitably return to how it function pre-1990.

What does this mean in practice? Well, obviously house prices will crater, and for those debt slaves who took out large mortgages over the past 10 years - can you spell "SVR"? 

 

Wouldn't it be great if this was also the end of BTL mortgages, as they were introduced fairly recently (mid 90's?) 

Edited August 6, 2022 by Just_Do_It
Typo

[Insane]

25 minutes ago, bomberbrown said:

This thread has raised something that was always bugging me too.  I don’t recollect fixed rate mortgages in the 80s and late 80s/early 90s either.  I remember everyone was on SVR. Happy to be proved wrong. Hence why when interest rates went to 15% ALL mortgagee’s were affected by the rise.  I don’t remember any smug fixed rate mortgagee’s on lower rates. 

As far as I remember it was all SVR.

I do remember right at the end of 88 hearing about fixed rates. A guy I worked with was taking one with C&G for something like 10% but then his chain collapsed so he did not move and did not take it. He was very pis-ed off a few months later when still in his old house he was paying 15%. 

A few years later someone else I knew was moaning as he had fixed in at 14% around 1990 for 5 years by 1992 the rates were 8%. 

[bomberbrown]

5 minutes ago, Insane said:

As far as I remember it was all SVR.

I do remember right at the end of 88 hearing about fixed rates. A guy I worked with was taking one with C&G for something like 10% but then his chain collapsed so he did not move and did not take it. He was very pis-ed off a few months later when still in his old house he was paying 15%. 

A few years later someone else I knew was moaning as he had fixed in at 14% around 1990 for 5 years by 1992 the rates were 8%. 

Great insight Insane, thanks. I was late teens/early 20s at the time and mortgages were far from my mind at that time, so memory was quite hazy.  

[markyh]

46 minutes ago, bomberbrown said:

Great insight Insane, thanks. I was late teens/early 20s at the time and mortgages were far from my mind at that time, so memory was quite hazy.  

Fixed and capped mortgages were both on the table when i bought my 1st house in 1996 in my late 20's. Ended up with a 7% Halifax variable cashback PEP mortgage i seem to remember. 

[nero120]

10 hours ago, Just_Do_It said:

 

Wouldn't it be great if this was also the end of BTL mortgages, as they were introduced fairly recently (mid 90's?) 

Indeed, perhaps one of the most immoral things any government could do (with regards to housing at least) is to allow people to borrow money to speculate in shelter at rates preferential to those available to people wanting to simply put a roof over their heads.

As far as I'm concerned, anyone who participated in this abhorrent scheme is culpable. Let them all burn.

[hotblack42]

18 hours ago, markyh said:

You will be evited and living on the streets, I have the remaining balance of my £212k mortgage as cash in a few savings accounts waiting for my 5 year fix to end in June 2023, when i shall be clearing it in full.  I shall be in a mortgage free £700k house under 55 years old just living life. 

Renting is a mugs game, how do you propose to pay the market rent from your small state pension once you turn 67 ?  You plan to try and keep working until you die?  

It's not fair to set the parameters to suit your argument.  Yes our corrupt system favours home owners, but its too simplistic to define success as a large, mortgage free house house in middle age.

And stop comparing an upper middle income homeowners with low income tenants, its ridiculous.

There are tenants with strong incomes.  Crucially they don't stretch themselves,  but they do get a nice place & are valued by professional landlords.  They leverage the flexibility & freedom from maintainence to build wealth in a business, pensions & investments.

We don't hear about them much because their quiet success is drowned out by the legions of sob stories generated by median income tenants with bad landlords.

Their embedded wealth won't crash when the property market does.  They will buy something modest for retirement, & then do much more interesting things than sit in a big house, feeling smug.

Paying the big bills.

[Badhairday]

16 hours ago, bomberbrown said:

This thread has raised something that was always bugging me too.  I don’t recollect fixed rate mortgages in the 80s and late 80s/early 90s either.  I remember everyone was on SVR. Happy to be proved wrong. Hence why when interest rates went to 15% ALL mortgagee’s were affected by the rise.  I don’t remember any smug fixed rate mortgagee’s on lower rates. 

Here in Germany, all mortgages are fixed rate mortgages. I've fixed mine for 25 years and that is not unusual.

There is also no concept of interest-only.
 

[nero120]

28 minutes ago, Badhairday said:

Here in Germany, all mortgages are fixed rate mortgages. I've fixed mine for 25 years and that is not unusual.

There is also no concept of interest-only.
 

And at what interest rate is a bank insane enough to lend a German a huge chunk of money for 25 years?

[Speed1987]

On 8/5/2022 at 1:10 PM, nero120 said:

Much to learn young one. Paying rent is not bondage, your landlord does not own you.

That logic doesn't work...

Unless you simply don't need a place to live and don't mind being homeless indefinitely.

1. You are a slave to a landlord, who is a slave to a bank.

2. We are a slave to a bank.

2. Is a much better postion to be in, anyone who says different is delusional.

 

Edited August 7, 2022 by Speed1987

[henry the king]

15 minutes ago, Speed1987 said:

That logic doesn't work...

Unless you simply don't need a place to live and don't mind being homeless indefinitely.

1. You are a slave to a landlord, who is a slave to a bank.

2. We are a slave to a bank.

2. Is a much better postion to be in, anyone who says different is delusional.

 

Depends. If prices go up you want to be a home owner. The debt doesn't matter as you are winning net.

If house prices go down you don't want to own a home as you will potentially be in net-negative (i.e. negative equity)

[spyguy]

35 minutes ago, nero120 said:

And at what interest rate is a bank insane enough to lend a German a huge chunk of money for 25 years?

They sell bonds to a 3rd party. The bank is just a bundler uper.

 

[shlomo]

3 minutes ago, spyguy said:

They sell bonds to a 3rd party. The bank is just a bundler uper.

 

Do you think that the economic problems on the horizon will cause a big crash in the living standards

[spyguy]

1 minute ago, shlomo said:

Do you think that the economic problems on the horizon will cause a big crash in the living standards

Will?
Stuff that was ~150/m is now ~400/m.

Thats a big chunk out of peoples income.

Ditto an extra ~3k/y or each 100k of mortgage of debt.

Going bankrupt a little by little then all of a sudden - bust!

The biggy for UKGOV is the index linked liabilities esp. unfunded public sector pensions.

If we continue with CPI 5%+ and growth at 2%, aT some point in the near future UKGOV will have to declare public pensions bust and default.

 

 

[2buyornot2buy]

28 minutes ago, Speed1987 said:

That logic doesn't work...

Unless you simply don't need a place to live and don't mind being homeless indefinitely.

1. You are a slave to a landlord, who is a slave to a bank.

2. We are a slave to a bank.

2. Is a much better postion to be in, anyone who says different is delusional.

 

It really depends. There will be massive regional differences. Take here in NI. It's significantly cheaper to rent a "big" house in Belfast than buy it. 

[shlomo]

17 minutes ago, spyguy said:

Will?
Stuff that was ~150/m is now ~400/m.

Thats a big chunk out of peoples income.

Ditto an extra ~3k/y or each 100k of mortgage of debt.

Going bankrupt a little by little then all of a sudden - bust!

The biggy for UKGOV is the index linked liabilities esp. unfunded public sector pensions.

If we continue with CPI 5%+ and growth at 2%, aT some point in the near future UKGOV will have to declare public pensions bust and default.

 

 

I have noticed a lot more poor people about, people begging that do not fit the profile, I think coming after Covid some people have just not recovered and now these increases in living costs

It seems like going back to days of the 70s

[scottbeard]

1 hour ago, nero120 said:

And at what interest rate is a bank insane enough to lend a German a huge chunk of money for 25 years?

Why is lending for 25 years at a fixed rate “insane”?  There is a huge market from pension schemes for long dated debt so the banks can easily hedge that risk by selling on loans or bonds.

[Riedquat]

1 hour ago, henry the king said:

Depends. If prices go up you want to be a home owner. The debt doesn't matter as you are winning net.

If house prices go down you don't want to own a home as you will potentially be in net-negative (i.e. negative equity)

Depends whether or not you're planning on staying there long term (which you've got a better chance of doing with a mortgage). If you are what house prices do once you're in is irrelevant.

[dances with sheeple]

21 hours ago, markyh said:

You will be evited and living on the streets, I have the remaining balance of my £212k mortgage as cash in a few savings accounts waiting for my 5 year fix to end in June 2023, when i shall be clearing it in full.  I shall be in a mortgage free £700k house under 55 years old just living life. 

Renting is a mugs game, how do you propose to pay the market rent from your small state pension once you turn 67 ?  You plan to try and keep working until you die?  

Most people can`t clear their mortgage like that, and many FTB can`t even scrape up a decent deposit, you know that right? Therefore when recession, higher rates and cost of living increases kick in your house can`t still be worth 700k, because other less well off borrowers set the price.

[dances with sheeple]

23 minutes ago, Riedquat said:

Depends whether or not you're planning on staying there long term (which you've got a better chance of doing with a mortgage). If you are what house prices do once you're in is irrelevant.

If they go down, and rates go up you have taken on extra debt at an increasing interest rate?

[nero120]

1 hour ago, scottbeard said:

Why is lending for 25 years at a fixed rate “insane”?  There is a huge market from pension schemes for long dated debt so the banks can easily hedge that risk by selling on loans or bonds.

I am wrong or don't you work in the pensions industry?

Anyway, tell me how they are "easily hedging" against inflation rates of 15%+? In fact, I'm amazed anyone even believes this.

Is no one seeing what's happening right now? I feel like fricking Mugatu taking crazy pills. Such is life in clown world.