Mortgage Crisis 2022-23

[BOOT]

Has anyone been able to get one?

Lenders seem to have ceased lending.

Any good deals out there?

Any brokers you recommend?

Who to avoid?

[timbo343]

My fixed rate is due August 2023 and im kinda bricking it and would be welcome to hear what others are doing too.

 

I fixed at 2.2% 5 years ago with HSBC and paying £498 a month for i think 27 years.

 

Now 5 years later i dread to think what i'll be paying per month what with the % change.

 

I have my mortgage advisor ringing me tomorrow evening to go through some stuff.

 

Im not sure to exit my current mortgage with a 1% penanlty and take a new offer or hold out until June 2023 to see what the rates are.

 

I'd be looking at possibly a 5 year fix again.

[Anonymous2000]

Yep. We are fixed at 1.89%

Luckily til mid 2025 but who knows what it will look like by then.

We are overpaying each month on the hope we can shorten the term.

Surprising how much difference over paying by a regular small amount makes.

[Roberto]

Our remortgage completed yesterday, 2.9% for 5 years and feel luck we started looking at it when we did - accepted the offer in June and was just waiting to change without the early redemption on the old one.

 

I’d say, always look for a good independent mortgage advisor if you can, I’ve used the same one for years (happy to share details here if it’s useful/allowed) and she’s always been really good at finding the deal I need. Used her for 3 mortgages so far, 2 of which were while I was in education and she always found deals that were good and affordable (clearly that’s a relative term, can’t give you something the lenders aren’t willing to offer)

Edited October 4, 2022 by Roberto

[LincolnE]

I'm "fortunate" in that I had to renew a couple of months ago - My mortgage payments is going from £680 to just under £800 a month for another 5 year fixed deal.

Could be much worse, but still not ideal at the current time!

[BOOT]

As a mortgage prisoner, I've been stuck on 5.9% for the last decade. I still don't meet anyones affordability criteria. Seriously dreading the > 10% rates predicted. Haven't slept well since April.

[BOOT]

It's difficult not to pop a blood vessel in your brain trying to understand how, when the advisor tells you that, even though you've been paying £900 a month for 10 years, you cannot afford to pay £550...

[Roberto]

It's difficult not to pop a blood vessel in your brain trying to understand how, when the advisor tells you that, even though you've been paying £900 a month for 10 years, you cannot afford to pay £550...

 

I’m sorry. Just been reading the fca notes on this since I saw your first post, how terrible and infuriating it must be :-( this absolutely sucks.

[dhicks]

Any good deals out there?

 

You might want to try:

 

https://moneyfacts.co.uk/

 

I used to work for them, a long time ago - they've been doing savings / mortgage comparisions for longer than most others in the business (they used to be a magazine).

Edited October 4, 2022 by dhicks

[supportman]

Mortgage "crisis" hmm maybe...

 

When I got my first mortgage the rates were 6.5% and I was earning 18k a year! Borrowing was limited to 2.5x salary.

 

We have it incredibly good these days, even if it feels harder with interest rates on the rise.

 

Interest rates have been artificially low for a long time but 5% was normal for most of history. This is most likely the re-balance we need in the housing market. Cheap credit was never going to end well.

Edited October 5, 2022 by supportman

[garethEds]

We have a a mortgage advisor and have just gone through our third re-mortgage in 6 years. We were originally only fixing for two years at a time but this time we went for a 5 year fix with the same bank (less hassle). We completed in June so don't have to worry about it (sorry).

 

I echo what others have said about advisors - ours was worth his weight in gold and was very good. We have paid a fee for lifetime support for as long as we have a mortgage on the property. Managd to get it down this time from £650 to £518 however we didn't borrow any more this time as we're done with the house and any building work.

 

Good luck @BOOT3988 I hope you manage to sort it all out.

 

G

[Dos_Box]

I use a mortgage broker and have, just before all of this hapened locked myself in for a decent rate for the next 5 years. Certainly a lot less than I was paying before. @BOOT3988 Have you tried a broker? They often get access to deals you can't get direct from banks, building societies etc. Yes, you will have to pay a fee, but well worth it in the long run if they can get you a good deal.

[sigma]

Mortgage "crisis" hmm maybe...

 

When I got my first mortgage the rates were 6.5% and I was earning 18k a year! Borrowing was limited to 2.5x salary.

 

We have it incredibly good these days, even if it feels harder with interest rates on the rise.

 

Interest rates have been artificially low for a long time but 5% was normal for most of history. This is most likely the re-balance we need in the housing market. Cheap credit was never going to end well.

 

No, I think it's worse now than in my living memory. We have a housing crisis and have done for a while. The pain of correction alone would likely put the country into recession.

 

It's a shortage/cost of homes relative to pay that is way out of whack. Yes, interest rates spiked in the 80's and 90's, but nobody needed to borrow so many multiples of their income to buy somewhere decent to live as they do now. My first house (1980 £21K, borrowed £17.5K, age 21), was around twice our joint income (unimaginable now), so we could still manage our morgage payments when interest rates skyrocketed. The multiples of earnings that people can (have to) borrow now means that even a small shift in interest rates is a huge amount of extra repayment per month as a proportion of pay if not on a fixed mortgage deal. Some might be able to reduce payments by extending the term of their mortgages, but as in the 90's, there will likely be a huge rise in reposessions, and when property prices crash, a large number of people being trapped in negative equity for a few years, which makes selling difficult or impossible. Previously, where some had little equity in their homes, they simply handed the keys back to their lender as that was the best option at the time.

 

There's nothing really new this time around, and we know how it's ended previously.

 

Sorry to be so gloomy. I am an Economics grad that did my thesis on housing economics.

 

(Mortgage free for the last 25 years)

Edited October 5, 2022 by sigma

[chazzy2501]

from 2% to 4% what bad luck on me.. I usually just re-new every 2 years and it works out! I'll be paying an extra £850 over the next 2 years in interest. My mate locked his in last year at 1.7% for 5 years lucky gimboid.

[Koldov]

My first house (1980 £21K, borrowed £17.5K, age 21), was around twice our joint income (unimaginable now), so we could still manage our morgage payments when interest rates skyrocketed. The multiples of earnings that people can (have to) borrow now means that even a small shift in interest rates is a huge amount of extra repayment per month as a proportion of pay if not on a fixed mortgage deal. Some might be able to reduce payments by extending the term of their mortgages, but as in the 90's, there will likely be a huge rise in reposessions, and when property prices crash, a large number of people being trapped in negative equity for a few years, which makes selling difficult or impossible. Previously, where some had little equity in their homes, they simply handed the keys back to their lender as that was the best option at the time.

 

That's a really good point, I know everything is relative and house prices rise...

 

...but my house was c.£45,000 in the late 90s and I was earning c.£18,000 (so 2.5 x single salary) and that was a 100% mortgage which is rare these days.

 

Now my house is worth c.£300,000 (I don't actually know, but similar in the area sold for around that last year), but I'm actually not earning a huge amount more than I was back then (yes, I know that's probably my fault for going into I.T. support in a school)!

 

Meaning I would need roughly to borrow roughly 15 times my salary (let's say £20,000) to buy it now, or come up with a £250,000 deposit...

 

Even if I'd gone 'Private Sector' and earnt £50,000, it's still 6 times that salary (of course less with a deposit)!

 

Haven't even had to think about it for many years (paid my mortgage off early) so I'm actually not sure what the lending criteria is now.

 

EDIT: Quick Google** sorted that out...

 

Different lenders use different multipliers, but a rough rule of thumb for single applicants is around 4.5x your income.

 

So (very roughly), you need to earn £56,600 and have a £45,000 (what my house originally cost) deposit!

 

Meaning (unless my maths is way off) there is no way I could afford to buy my own house now...

 

**Other search engines available.

Edited October 5, 2022 by Koldov

[Roberto]

That's a really good point, I know everything is relative and house prices rise...

 

...but my house was c.£45,000 in the late 90s and I was earning c.£18,000 (so 2.5 x single salary) and that was a 100% mortgage which is rare these days.

 

Now my house is worth c.£300,000 (I don't actually know, but similar in the area sold for around that last year), but I'm actually not earning a huge amount more than I was back then (yes, I know that's probably my fault for going into I.T. support in a school)!

 

Meaning I would need roughly to borrow roughly 15 times my salary (let's say £20,000) to buy it now, or come up with a £250,000 deposit...

 

Even if I'd gone 'Private Sector' and earnt £50,000, it's still 6 times that salary (of course less with a deposit)!

 

Haven't even had to think about it for many years (paid my mortgage off early) so I'm actually not sure what the lending criteria is now.

 

EDIT: Quick Google** sorted that out...

 

Different lenders use different multipliers, but a rough rule of thumb for single applicants is around 4.5x your income.

 

So (very roughly), you need to earn £56,600 and have a £45,000 (what my house originally cost) deposit!

 

Meaning (unless my maths is way off) there is no way I could afford to buy my own house now...

 

**Other search engines available.

 

I'd probably be in a similar position if I was trying to buy our current house from scratch. Our mortgage is about 2x my current salary but to buy outright would be about 9x which is astonishing. The only reason we can afford this is because we've 'worked our way up the ladder' when doing so was much cheaper and easier. My partner's daughter and her partner have probably paid 5 or 6 times their salary for their first home (which tbf is a 3 bed family home).

 

We do have a housing crisis and housing is starting to be unaffordable unless you've already taken advantage of the good times like I've been fortunate to do, or if you're young you need a couple of good jobs in your family and probably people in your family who can give you a hand with your start in life.

 

This can't go on indefinately can it?

Edited October 5, 2022 by Roberto

[supportman]

This can't go on indefinately can it?

Nope but thats what artificially low interest rates does, just creates a bubble.

 

Its the same all over the world, we are certainly not on our own in terms of property and other asset bubbles.

 

It will be nice to actually get back to "normal" interest rates as hopefully that will reset the markets a little bit. People will soon get used to it.

[LincolnE]

I think we're too far down the line for "normal" interest rates to reset a market. I bought my house 7 years ago for £190kish, I wouldn't be able to afford it now with with the rate it's gone up in value, my latest remortgage valuation put it just above £300k

This isn't anything fancy, a basic 90's build 3 bed semi detached that was sold as a "starter" home.

 

As someone who's 32, on a /good/ wage and would be unable to get onto the ladder, let alone progress up it, long gone are the times of cheap housing.

 

I'm using my parents as an example, they bought their first house back in the 80s for £17K. Sold it a couple years later for £30k to buy a 3 bed terraced town house.

Sold that in '99 and bought a good, 4 bed detached property with big garden for just under £200k. It's now valued at just over £1m...

 

Wages have no where near gone up the same amount in this time - increases to interest rates will do naught more than leave many struggling and more people having their house reprocessed.

 

People were used to interest rates of 6,7 or higher, but the house prices were within reach of many people. 5% of £30k for example is much different to monthly payments than 5% on £300k.

[timbo343]

I spoke to my mortgage adviser last night and i got a shock!

 

A bit about my background to my mortgage which i'm happy to share.

 

Currently got 23 years to pay back £124,000 and paying ~£500 per month at 2.2%. This has been set since Sept 2018.

 

My fixed mortgage runs out at 1st September 2023 so i'm looking now to see what the options are. I'm with HSBC and they have a early exit policy of 3 months but heard that they are extending that to 4 months, maybe 6 months. By looking now, i'm able to secure current rates for 6 months though some don't include solicitor fees.

 

I'm planning on taking £22k off my mortgage to bring it down to £100,000. With this in mind, the best one i found was at 4.5% fixed for 5 years, for 23 years. This would be a repayment of £581 per month.

 

My LTV rate is currently around 53% so i am now in the 0% - 60% LTV value. My house is worth around £228k - £252k. It's a small 3 bed semi with a garage.

 

To come out of my current mortgage with HSBC, it would cost me 1% of my current mortgage.

 

With this information, i went on to comparison websites and they were all showing >5% rates, some even at 6%, with Mortgage setup fees.

 

Honestly, i do feel for those who mortgaged at 0.8% or 0.9% years ago with huge mortgages because they are going to get a massive shock!

 

My advice to anyone with a mortgage term ending in the next 6 to 12 months, start speaking to your mortgage advisor.

[Simcfc73]

Mine runs out next month as we fixed ours just for 2 years due to job uncertainty... its more uncertain now and the missus is giving up teaching as she hates it so that cushy income isn't there either.

 

My moms got a spare room so we can squeeze into that.

[supportman]

I spoke to my mortgage adviser last night and i got a shock!

 

A bit about my background to my mortgage which i'm happy to share.

 

Currently got 23 years to pay back £124,000 and paying ~£500 per month at 2.2%. This has been set since Sept 2018.

 

My fixed mortgage runs out at 1st September 2023 so i'm looking now to see what the options are. I'm with HSBC and they have a early exit policy of 3 months but heard that they are extending that to 4 months, maybe 6 months. By looking now, i'm able to secure current rates for 6 months though some don't include solicitor fees.

 

I'm planning on taking £22k off my mortgage to bring it down to £100,000. With this in mind, the best one i found was at 4.5% fixed for 5 years, for 23 years. This would be a repayment of £581 per month.

 

My LTV rate is currently around 53% so i am now in the 0% - 60% LTV value. My house is worth around £228k - £252k. It's a small 3 bed semi with a garage.

 

To come out of my current mortgage with HSBC, it would cost me 1% of my current mortgage.

 

With this information, i went on to comparison websites and they were all showing >5% rates, some even at 6%, with Mortgage setup fees.

 

Honestly, i do feel for those who mortgaged at 0.8% or 0.9% years ago with huge mortgages because they are going to get a massive shock!

 

My advice to anyone with a mortgage term ending in the next 6 to 12 months, start speaking to your mortgage advisor.

 

Ha! thats a lovely small mortgage, you should be quite safe. Got to love living up north!!

 

Meanwhile down south, I've got 1 mortgage on our main house for 400k and 2 buy to lets for 250k each (one is my girlfriends). All coming up for renewal in less than 12 months.

 

They have healthy LTV values on all of them and we can afford it luckily, but it really is going to impact our family finances quite a lot, possibly over £1,000 a month more all together.

 

Who I feel really sorry for are the renters, as the appartments I rent out have quickly increased in rent. They used to be about 900 a month but are now up to 1,300 a month in a few years. Very high demand is pushing them up particularly from international students in my specific area.

 

It really is some crazy times and I feel the whole housing market is going to react very soon, and in turn the economy all this cheap credit has been based on.

[Andrew_C]

Makes me really glad we fixed ours in June for 6 years - the end of the term. I really do feel for the rest of you.

[elsiegee40]

We bought our first flat in 1987 for £65,000 with a 95% endowment mortgage with interest rates at around 9%.

 

Just over a year later, interest rates hit 15% and then shortly after the housing market collapsed.

 

First job we had to do was to save our way out of negative equity and then save enough for a deposit on a house on top. The only thing that saved us really was my IT silly money for the millennium bug.

 

We sold the flat for £51,000 (it had lost 23% of its value) in 1992.

 

Later on we got caught up in the endowment scandal because there was no way our policies would pay out anything close to the sum that was originally hoped for. More saving and basically a ‘pay the mortgage or bust’ for many years until we finally paid it off not so long ago.

 

I am watching what’s happening now and feel really sorry for everyone. I really hoped what happened to us wouldn’t happen again. The scenario is slightly different this time, but the result is the same

[BOOT]

Another rate hike expected today. ...Adjusting food budget accordingly.

[dobbyit]

I am on a 2 year fix (1.4%) due to end with 10 years left, I have been advised to remortage (currently 6%) and take out 2 year fix but extend morgage to (25 or even 30years) this way still paying the same / similar for next 2 years and then when rates fall again reduce term again.