Interest rates going up soon...

[egor110]

The deposit is the killer not the actual mortgage.

Saving 16k whilst at the same time paying 600-700 rent plus the usual bills I don't see how they'd do it.

The deposit was very easy to get in the 90's even paying 6-7% on the mortgage was do able .

[Integroo]

egor110 said:

Really ?

Not a stter that needs renovation but somewhere you can actually move into.

1994 I got my 1st home for 29k , I think the deposit was around 5k so totally affordable, now although property has risen in price wages haven't so I just don't see where your ordinary worker is going to get the deposit at the same time as renting/ living .

Two lawyers (my girlfriend and I) will have to save for years to buy a one bed flat in Edinburgh (probably need 40-60k cash to buy). My parents, one a miner and one a bank teller, bought without a deposit in the late eighties.


No idea how people on more modest salaries could expect to buy in Edinburgh.

[Bigends]

Jockman said:

egor110 said:

But even so property was easier to buy.

A ordinary unskilled blue collar worker could of got a terraced 2 up 2 down , highly unlikely now .

There are large parts of the UK where this is still possible.

Exactly - I have relatives in Norfolk and Lincs - where brand new house prices are a third of what youll pay in the home counties

[anonymous-user]

egor110 said:

fblm said:

Yep. Only slightly over 1/3 of households have any mortgage debt at all which makes up the majority of consumer debt (1.3tr). Many of those near the end of their terms will have savings exceeding their debt (net savings). Even in the households with the other 200bn of consumer debt (credit cards, overdrafts, loans etc...) the vast majority have net savings (ranging from 70% to 90% from rich to poor deciles).

Anything to back that up ?

Numbers were from memory but...

27.2 million households (2015)
https://www.ons.gov.uk/peoplepopulationandcommunit...

11.1 million mortgages (including BTL)
https://www.finder.com/uk/mortgage-statistics

... 40% of households have a mortgage (including BTL)

"total consumer debt is now £207bn"
"The poorest tenth of households are also more likely to be in net debt, owing more on plastic or on overdrafts and loans than they hold in savings. About a third of the poorest homes are in net debt, compared with only 10% of the highest-income tenth."
https://www.theguardian.com/money/2018/jan/16/quar...

Another good piece in the Guardian worth looking at although from 2013...
"The UK might have a reputation as a nation of mortgage slaves – interest rates are often reported as if that's the case – but that's not the reality. The ONS figures reveal 9.2 million UK households had property debt in 2008/10 – that's 37.3% of the total. "

https://www.theguardian.com/news/datablog/2013/may...

[ScotHill]

Integroo said:

No idea how people on more modest salaries could expect to buy in Edinburgh.

Friends of mine bought a dumpy flat near the ring road about 6 years ago, made it look nice, sold it a few years ago to buy somewhere a little bigger not far from the zoo, are making that look nice, and after ten years they'll have built up enough equity to buy somewhere pretty nice rather than renting and whining for ten years that they can't afford to live somewhere pretty nice. It's possible most places outside the southeast of England I would think.

[Welshbeef]

[redacted]

[anonymous-user]

Welshbeef said:

Note you’d only do this IF you believed rates are going up if you didn’t then I see why you’d not change a thing.

It's not really that simple. Most of the time fixed rates are considerably higher than current variable rates; you need rates to move up higher or faster or both than the market expects and stay there for as long as possible for fixed to make sense; it hasn't for 30 years. These days the arrangement fees and early termination fees more or less make fixed rates economically unviable.

[turbobloke]

Welshbeef said:

Holding Cash - you need a reserve for sure but beyond a certain amount Bank goes pop you lose anything beyond IIRC £65/70k.

Fair enough there's a sensible limit for each person, with this in mind and in terms of the so-called guarantee, it applies per banking licence as you will know. If accounts are held in unrelated banks (no shared licence) then the same amount applies to each bank and if one of the accounts is jointly held then the amount is doubled.

[Jockman]

Integroo said:

egor110 said:

Really ?

Not a stter that needs renovation but somewhere you can actually move into.

1994 I got my 1st home for 29k , I think the deposit was around 5k so totally affordable, now although property has risen in price wages haven't so I just don't see where your ordinary worker is going to get the deposit at the same time as renting/ living .

Two lawyers (my girlfriend and I) will have to save for years to buy a one bed flat in Edinburgh (probably need 40-60k cash to buy). My parents, one a miner and one a bank teller, bought without a deposit in the late eighties.


No idea how people on more modest salaries could expect to buy in Edinburgh.

Just went on rightmove and looked at where I was born in Edinburgh and I reckon many people could afford starter homes there.

https://www.rightmove.co.uk/property-for-sale/find...

[Jockman]

fblm said:

Welshbeef said:

Note you’d only do this IF you believed rates are going up if you didn’t then I see why you’d not change a thing.

It's not really that simple. Most of the time fixed rates are considerably higher than current variable rates; you need rates to move up higher or faster or both than the market expects and stay there for as long as possible for fixed to make sense; it hasn't for 30 years. These days the arrangement fees and early termination fees more or less make fixed rates economically unviable.

Remember lifetime trackers are regarded as variable products with no restrictions or tie in fees. I recently moved from three of them onto fixed rates with HSBC as the latter were lower.

Bit quirky I agree but there are occasional examples that counter the general rule.

[ScotHill]

fblm said:

It's not really that simple. Most of the time fixed rates are considerably higher than current variable rates; you need rates to move up higher or faster or both than the market expects and stay there for as long as possible for fixed to make sense; it hasn't for 30 years. These days the arrangement fees and early termination fees more or less make fixed rates economically unviable.

5 year fixed rates tend to be about 0.5% higher than discounted variable rates for the same fees, for the couple of examples I'd looked at, so there doesn't need to be much of a rise over the next few years for that to be a rational choice, particularly if you want to lock out any risk. I went for variable 2 years ago and benefitted from the 0.25% drop, but just fixed for 5 years now in case things go haywire - they probably won't but now I don't have to worry about it.

[Welshbeef]

ScotHill said:

5 year fixed rates tend to be about 0.5% higher than discounted variable rates for the same fees, for the couple of examples I'd looked at, so there doesn't need to be much of a rise over the next few years for that to be a rational choice, particularly if you want to lock out any risk. I went for variable 2 years ago and benefitted from the 0.25% drop, but just fixed for 5 years now in case things go haywire - they probably won't but now I don't have to worry about it.

I understand the issue with potential rate rises BUT say a cliff edge Brexit next year you’d not see a rate rise at all likely big cut or -minus base rate to try to help people and companies

[NRS]

DELETED: Comment made by a member who's account has been deleted.

Flip side of the arguement is the rates need to start going up to stop people borrowing, which the super low rates encourage.

[anonymous-user]

ScotHill said:

fblm said:

It's not really that simple. Most of the time fixed rates are considerably higher than current variable rates; you need rates to move up higher or faster or both than the market expects and stay there for as long as possible for fixed to make sense; it hasn't for 30 years. These days the arrangement fees and early termination fees more or less make fixed rates economically unviable.

5 year fixed rates tend to be about 0.5% higher than discounted variable rates for the same fees, for the couple of examples I'd looked at, so there doesn't need to be much of a rise over the next few years for that to be a rational choice, particularly if you want to lock out any risk. I went for variable 2 years ago and benefitted from the 0.25% drop, but just fixed for 5 years now in case things go haywire - they probably won't but now I don't have to worry about it.

Until that point you are losing out. You then need variable rates even higher than your fix for the rest of the term for you to make up the difference. Hasn't worked for most of the last 30 years, granted now is more likely than ever. I had 2 fixed mortgages in the naughties because I was borrowed about 12x salary

[Rovinghawk]

fblm said:

Until that point you are losing out. You then need variable rates even higher than your fix for the rest of the term for you to make up the difference. Hasn't worked for most of the last 30 years, granted now is more likely than ever.

To some folks the extra price is worth it for the certainty.

[James_B]

Integroo said:

Two lawyers (my girlfriend and I) will have to save for years to buy a one bed flat in Edinburgh (probably need 40-60k cash to buy). My parents, one a miner and one a bank teller, bought without a deposit in the late eighties.


No idea how people on more modest salaries could expect to buy in Edinburgh.

How so? Loads of perfectly decent flats at around £150k. Why would you need such a big deposit?

[V8 Fettler]

Listening to Lamont raising rates from 10% to 12% and then 15% in one day in the previous century was a bit disheartening. On balance, most chancellors are useless, some are dangerously useless. I doubt if those at the BoE who currently make these decisions are any better.

[Welshbeef]

James_B said:

Integroo said:

Two lawyers (my girlfriend and I) will have to save for years to buy a one bed flat in Edinburgh (probably need 40-60k cash to buy). My parents, one a miner and one a bank teller, bought without a deposit in the late eighties.


No idea how people on more modest salaries could expect to buy in Edinburgh.

How so? Loads of perfectly decent flats at around £150k. Why would you need such a big deposit?

I though that too - at a guess with £50-60k deposit they are trying to buy a what £500-609k house hardly the route of someone buying their first ever property especially as they have a deficit in deposit.
Likewise it’s wanting it all straight away rather than build up as you progress over the years.

[anonymous-user]

V8 Fettler said:

I doubt if those at the BoE who currently make these decisions are any better.

Having studied every peep from the MPC for 20 years I have no doubt they are considerably better. Possibly the only good decision Brown made as chancellor!

[BlackLabel]

The US Fed cuts interest rates for the first time in a decade.

https://www.theguardian.com/business/2019/jul/31/f...