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Debt crisis rising in the population
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By *inn OP Man
over a year ago
edinburgh |
Whilst the Tory’s tell you the boats crossing from France is the big issue and media distracts you with the woes of a tv presenter, debit crisis is rising up through the working population. As mortgage costs rocket for those whose deal is coming to an end and the cost to those trying to get into the market is prohibitive the government turns a blind eye.
Is this what you voted for? |
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I was thinking about this yesterday with the Us debt ceiling deal going through.
Of the g7 Canada has best GDP to debt ratio of 30%.
The government's are in debt, the people are in debt.
Capitalism, in its present form, doesn't appear to be working well for the societies in which it takes hold. |
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By *otMe66Man
over a year ago
Terra Firma |
You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach. |
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"Whilst the Tory’s tell you the boats crossing from France is the big issue and media distracts you with the woes of a tv presenter, debit crisis is rising up through the working population. As mortgage costs rocket for those whose deal is coming to an end and the cost to those trying to get into the market is prohibitive the government turns a blind eye.
Is this what you voted for? "
No to be too funny. But the last 10 years are the outlier for the mortgage world not the norm |
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By (user no longer on site)
over a year ago
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"Whilst the Tory’s tell you the boats crossing from France is the big issue and media distracts you with the woes of a tv presenter, debit crisis is rising up through the working population. As mortgage costs rocket for those whose deal is coming to an end and the cost to those trying to get into the market is prohibitive the government turns a blind eye.
Is this what you voted for?
No to be too funny. But the last 10 years are the outlier for the mortgage world not the norm"
agreed. And it was wrong all round to support mortgages that were only affordable if interest rates were very low.
Likewise it used to piss me off where i saw money experts encourage flipping of credit card debts rather than encouraging getting out of debt. Like 0pc Apr periods were going to last forever ... |
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"Whilst the Tory’s tell you the boats crossing from France is the big issue and media distracts you with the woes of a tv presenter, debit crisis is rising up through the working population. As mortgage costs rocket for those whose deal is coming to an end and the cost to those trying to get into the market is prohibitive the government turns a blind eye.
Is this what you voted for?
No to be too funny. But the last 10 years are the outlier for the mortgage world not the normagreed. And it was wrong all round to support mortgages that were only affordable if interest rates were very low.
Likewise it used to piss me off where i saw money experts encourage flipping of credit card debts rather than encouraging getting out of debt. Like 0pc Apr periods were going to last forever ..."
I'm pretty sure they did rather than saying 'just keep flipping'. |
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach."
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages. |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages. "
I thought the stress test was scrapped early 2022? |
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages.
I thought the stress test was scrapped early 2022? "
You may be right. I thought the BoE told banks they could drop it but many banks (perhaps not all) retained the stress test? |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages.
I thought the stress test was scrapped early 2022?
You may be right. I thought the BoE told banks they could drop it but many banks (perhaps not all) retained the stress test?"
If they did stress test the mortgage and their household expenses too, we shouldn’t in theory have an issue because 8% has not been reached and should be affordable.
If news stories are to be believed and I can’t see why they shouldn’t, people are struggling with mortgages after fixed terms have come to an end.
I’m thinking maybe they wasn’t testing correctly, or people were not accounting for all out goings, something seems off. |
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"Capitalism, in its present form, doesn't appear to be working well for the societies in which it takes hold."
Would you care to give us an example of a non-capitalist society which is doing well for its people? |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages.
I thought the stress test was scrapped early 2022?
You may be right. I thought the BoE told banks they could drop it but many banks (perhaps not all) retained the stress test?
If they did stress test the mortgage and their household expenses too, we shouldn’t in theory have an issue because 8% has not been reached and should be affordable.
If news stories are to be believed and I can’t see why they shouldn’t, people are struggling with mortgages after fixed terms have come to an end.
I’m thinking maybe they wasn’t testing correctly, or people were not accounting for all out goings, something seems off. "
But it’s not just mortgages that have gone up. So have utilities, food, fuel, and pretty much everything else. It doesn’t matter if your mortgage affordability was stress tested at 8%, and that mortgage rates have “only” gone up to 5% if all your other expenses have gone up by 20+. |
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What needs to be looked at is the inflation target of 2%. For other European economies that are not as exposed as the UK is, the target works, For the UK, after Brexit, it is highly ambitious. chasing this figure is going to cause misery in terms of high mortgage repayments, and slowing the economy down.  |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages.
I thought the stress test was scrapped early 2022?
You may be right. I thought the BoE told banks they could drop it but many banks (perhaps not all) retained the stress test?
If they did stress test the mortgage and their household expenses too, we shouldn’t in theory have an issue because 8% has not been reached and should be affordable.
If news stories are to be believed and I can’t see why they shouldn’t, people are struggling with mortgages after fixed terms have come to an end.
I’m thinking maybe they wasn’t testing correctly, or people were not accounting for all out goings, something seems off.
But it’s not just mortgages that have gone up. So have utilities, food, fuel, and pretty much everything else. It doesn’t matter if your mortgage affordability was stress tested at 8%, and that mortgage rates have “only” gone up to 5% if all your other expenses have gone up by 20+. "
I believe Stress testing the ability to pay was supposed to be against your mortgage going up to 8% and household expenditure increasing with inflation too.
Whatever it was, it isn't there now and I think a mortgage should be a more robust measure of affordability not a less of one. |
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By *inn OP Man
over a year ago
edinburgh |
Not many of the replies or comments show any empathy for people (hard working people) facing financial troubles, made by the Tory government and deluded brexiteers.
The UK is in deep trouble. There is no indicators that the economy will recover. The sheer stupidity in government going back 10 plus years has turned the title “Great Britain” into a joke to outsiders and a travesty to the people living here.
Stress tests - that made me laugh. |
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Try Norway
"Capitalism, in its present form, doesn't appear to be working well for the societies in which it takes hold.
Would you care to give us an example of a non-capitalist society which is doing well for its people?"
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Just have stick to the Mr Micawber principle: "Annual income 20 pounds, annual expenditure 19 pounds 19 shillings and sixpence, result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery."
It's no different today that it was in Dicken's day. |
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"Just have stick to the Mr Micawber principle: "Annual income 20 pounds, annual expenditure 19 pounds 19 shillings and sixpence, result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery."
It's no different today that it was in Dicken's day."
Exactly. The very poorest will struggle with everyday essentials but the vast majority of people in this "debt crisis" earn a reasonable wage but just live beyond their means.
If people saved up for things and only bought things that they could afford then many of the problems wouldn't happen.
Taking easy credit to buy stuff is way too common. |
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By *otMe66Man
over a year ago
Terra Firma |
"Not many of the replies or comments show any empathy for people (hard working people) facing financial troubles, made by the Tory government and deluded brexiteers.
The UK is in deep trouble. There is no indicators that the economy will recover. The sheer stupidity in government going back 10 plus years has turned the title “Great Britain” into a joke to outsiders and a travesty to the people living here.
Stress tests - that made me laugh. "
Why did the mention of stress tests make you laugh? Your OP mentions people who face mortgage rate increases not being able to afford them...
You sound very much like a lot of others who have no solutions but revel in the hatred of a government run by a party you despise.
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" Capitalism, in its present form, doesn't appear to be working well for the societies in which it takes hold."
"Would you care to give us an example of a non-capitalist society which is doing well for its people?"
"Try Norway"
Norway has a free-market capitalist economy. Yes, it has a large welfare state, and yes, some industry is owned by the state, but it's still a capitalist country.
Maybe what you think capitalism is doesn't match what other people think capitalism is. |
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By (user no longer on site)
over a year ago
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Err isn’t that what the mortgage stress test does? Pretty sure when avg 2yr fixes were around 2.5% the stress test was around 8%? I think I recall some talk of relaxing this but also that many banks decided not to.
On top of that I am old enough to remember mortgage lending being 3x salary and 2.5x joint salary. We now have lifetime mortgages and even inter-generational mortgages.
I thought the stress test was scrapped early 2022?
You may be right. I thought the BoE told banks they could drop it but many banks (perhaps not all) retained the stress test?
If they did stress test the mortgage and their household expenses too, we shouldn’t in theory have an issue because 8% has not been reached and should be affordable.
If news stories are to be believed and I can’t see why they shouldn’t, people are struggling with mortgages after fixed terms have come to an end.
I’m thinking maybe they wasn’t testing correctly, or people were not accounting for all out goings, something seems off. "
Banks don't lend, they don't make money. The whole system is about boom and bust. Then at the end of cycle the big fish can swoop up the assets of the bust companies on the cheap.
The only way you can stop this cycle is controlled growth. But the current system is about max growth. So we either accept the inevitable flaws of the capitalist system or try and invent something better. |
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"What needs to be looked at is the inflation target of 2%. For other European economies that are not as exposed as the UK is, the target works, For the UK, after Brexit, it is highly ambitious. chasing this figure is going to cause misery in terms of high mortgage repayments, and slowing the economy down. "
Please can you go deeper I to this thinking?
The eurozone for example is more exposed.
Countries have no control over money supply,(broad and narrow) domestic interest rates,inflation, spending muat be within commiasion approved ratios to national debt ( unless your france according to juncker)
I'm not sure how you think the uk is more exposed chasing the 2% than individual countries in the union |
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"Not many of the replies or comments show any empathy for people (hard working people) facing financial troubles, made by the Tory government and deluded brexiteers.
The UK is in deep trouble. There is no indicators that the economy will recover. The sheer stupidity in government going back 10 plus years has turned the title “Great Britain” into a joke to outsiders and a travesty to the people living here.
Stress tests - that made me laugh. "
The current proble is multi faceted.
Those wanting harsher lockdowns and more money printing are reaping what the sewed. Whenever you print money. Inflation follows.
I'm not entirely sure what people thought would come from usa for exmaple printing all dollars in existence in 2 years and similarly in the uk.
We had working examples in Turkey, Venezuela, Argentina of what money printing leads to.
This was not a new occurrence.
I dont know what they thought would happens to goods when demand rose and supply went to pretty much 0 through no one working.
The bofe is I charge of inflation. It should have re
Aimed it's borrowing rates higher earlier to stop the housing market becoming nonsense.
Free money, no expenditure for several months. What did they think people would do. They saw the mortgage numbers month on month from Halifax go up. And they sat idly by.
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Sadly it's not about sympathy.
It's about being a responsible adult.vand for many it's seemingly to difficult to self reflect.
People complain about the mortgage rates.
Many on furlough got mortgage holidays.
What did they do with that spare cash?
Eople got 80% of their income up to 30k paid for by the governemnt.
Yet in the uk. A lbrador went from £800 to £3000 in lockdown.
Jacuzzis and outdoor pools sold out.
Weight lifting equipment sold out.
B and Q made a killing when it re opened .
People took that free cash. And they spunked it.
I have sympathy for any one who built up a little pot in lockdown and if its almost gone.
But tbe majority of tbe people I knew and I saw were frivolous. |
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By (user no longer on site)
over a year ago
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Most of the people complaining about the cost of living crisis and the increase in repossessions will be the same ones cheering on COVID lockdowns, furlough, and more government spending.
Maybe an economics lesson or two might come in useful.
But given that the Governor of the Bank of England seems to be economically illiterate I'm not holding my breath. |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach."
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise. |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise."
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures. |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures. "
I don't recall a stress test 25 years ago. I used common sense.  |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise."
Sadly we've raised 2 or 3 generations without it. Whi expect the hard working and the stste to pick them up after their fuck ups |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures. "
Which stress test are you discussing sorry? |
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As far as I am aware stress tests for institutions have gone further. And not incorporate non financial institutions.
Is the stress test you feel is cancelled the home owner one?
In reality on this. There's a lot of reform that needs to happen. |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?"
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage. |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage."
I dont agree with scrapping this. But I agree somethig needed changing
I thoguht you meant the bank stress tests.
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage."
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test? |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?"
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling. |
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling."
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
"
I agree with this, I'm reading about people struggling but what I'm seeing doesn't reflect this. |
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
I agree with this, I'm reading about people struggling but what I'm seeing doesn't reflect this. "
I totally get that lower income people and those who rent are facing significant challenges. But mortgage owners less so? Not nice seeing mortgage jump obviously and I suppose it is easy to judge from a high horse? |
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By *otMe66Man
over a year ago
Terra Firma |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
I agree with this, I'm reading about people struggling but what I'm seeing doesn't reflect this.
I totally get that lower income people and those who rent are facing significant challenges. But mortgage owners less so? Not nice seeing mortgage jump obviously and I suppose it is easy to judge from a high horse?"
Again I agree, the people I would imagine are the worst hit as you say are the renters who are having property they rent sold, creating a shortfall available rentals.
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
I agree with this, I'm reading about people struggling but what I'm seeing doesn't reflect this.
I totally get that lower income people and those who rent are facing significant challenges. But mortgage owners less so? Not nice seeing mortgage jump obviously and I suppose it is easy to judge from a high horse?
Again I agree, the people I would imagine are the worst hit as you say are the renters who are having property they rent sold, creating a shortfall available rentals.
"
I think small scale buy-to-let landlords were already fucked but it is getting worse so they are dumping property. Large scale landlords will snap up. |
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"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
"
I bet there are many working class people who have mortgages. There have been times when it was more economical to have a mortgage than rent. I had a mortgage while I was working class. Now that I'm in a middle class profession, I'm mortgage free  . I actually became mortgage free when I started uni. |
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By *irldnCouple
over a year ago
Brighton |
"You are not going to find anyone who would say they voted for high interest rates and debt….
I do however think it is time that mortgages are better structured to prevent markets shocks impacting people so badly.
I would suggest that mortgage affordability should be based on the ability to pay the mortgage should the interest rates increase by X%.
The argument will be it prices people out, but the counter is it provides a safety net and prevents financial overreach.
Anyone with common sense would factor that in their repayments, and not go for the maximum they can afford.
Anyone with common sense would have looked at historic percentage rates and know the ultra low percentages were an anomaly and would definitely rise.
You would think so but history tells us wild greedy lending has a market in those that can least afford it, hence the stress tests on banks and individuals to avoid another crash….
A few years later and the BoE has scrapped the need to stress test the ability to repay under higher inflationary pressures.
Which stress test are you discussing sorry?
The affordability test on mortgage repayments was scrapped. The test was basically can a person afford to repay their mortgage if the interest rate climbed up by 3% due to inflation.
BoE said this was preventing people from getting a mortgage.
So we talked about this above. The BoE told banks they could scrap the (homeowner) mortgage stress test but my understanding was that many banks have not done so and still apply it as part of their process on top of the standard affordability test?
It should have also covered outgoings, and if that is the case how are we seeing so many people not being able to cope once their mortgages have come to renewal?
I would have hoped the test showed they could afford the uplift, it doesn't seem that way reading the news on people struggling.
Nothing I am about to say is fact. Nor do I have anything more than anecdotal evidence (before either of our resident experts start schooling me).
I doubt the mortgage stress test accounted for other dramatic increases in the cost of living. So as well as higher mortgages we have seen unprecedented rises in utility costs.
The inflation we have been experiencing us supply driven not consumer driven. Companies appear to not only be passing on their increased supply chain costs but also appear to be price gouging/profiteering (eg. Own brand “value range” supermarket products have seen some of the highest % increases. Why?
So overall pressure on households has increased not just mortgages.
Saying all that though...while I acknowledge that I am well off and live in an affluent area that is generally far above national average, based on the restaurants, bars and cafes round here, it doesn’t look like a cost of living crisis for the “middle classes” (ie mortgage holders)!
I bet there are many working class people who have mortgages. There have been times when it was more economical to have a mortgage than rent. I had a mortgage while I was working class. Now that I'm in a middle class profession, I'm mortgage free . I actually became mortgage free when I started uni."
I deliberately put middle class inside “” as it isn’t really a class thing, more an income thing. Probably better if I had said middle income. |
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Is it just me or would it not be more helpful if houses weren’t so expensive and therefore much lower multiples of people’s incomes?
Interest rates would be less catastrophic for many if the ratios went back thirty years.
Failing to build enough houses and lower relative incomes is what has got us into this situation.
I’m sure the 25% of the Tory party income coming from property developers has not influenced this in any way.
Cutting stamp duty during covid didn’t keep anyone in work it just kept the housing market buoyant and therefore land banks valuable. Cynical of me I know. |
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The biggest problem with this is not the short term inflation problem. I believe that it is public sector pension schemes. About 20 years ago the whole of the private sector realised people are living long and final salary / average salary pensions were stopped and changed to defined contribution pensions where in general the employee pays around 5% and the company matches it. However, many public sector roles still have final salary / average salary schemes which are just not affordable. A nurse pays 6 - 8% contribution but the NHS pay nearly 21%. The math just does not work and until they change this the UK will continue to have a ongoing problem. |
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By (user no longer on site)
over a year ago
|
"The biggest problem with this is not the short term inflation problem. I believe that it is public sector pension schemes. About 20 years ago the whole of the private sector realised people are living long and final salary / average salary pensions were stopped and changed to defined contribution pensions where in general the employee pays around 5% and the company matches it. However, many public sector roles still have final salary / average salary schemes which are just not affordable. A nurse pays 6 - 8% contribution but the NHS pay nearly 21%. The math just does not work and until they change this the UK will continue to have a ongoing problem. "
If I joined a job which paid lower than the private sector equivalent, but with a very attractive pension scheme, I’d be miffed when people tried to come for my pension. Especially if said pension was one of the structure features of that job.
Generalising hugely, but Boomers and elder Gen-X got the pensions, the cheap housing, the free education. Now they say we can’t afford any of the above. |
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"Is it just me or would it not be more helpful if houses weren’t so expensive and therefore much lower multiples of people’s incomes?
Interest rates would be less catastrophic for many if the ratios went back thirty years.
Failing to build enough houses and lower relative incomes is what has got us into this situation.
I’m sure the 25% of the Tory party income coming from property developers has not influenced this in any way.
Cutting stamp duty during covid didn’t keep anyone in work it just kept the housing market buoyant and therefore land banks valuable. Cynical of me I know. "
I'd be very happy if the values went back 25 years, I could then afford better  . Back then a better/ bigger house was 7-10 grand more. Now it's at least fifty grand difference. |
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"Is it just me or would it not be more helpful if houses weren’t so expensive and therefore much lower multiples of people’s incomes?
Interest rates would be less catastrophic for many if the ratios went back thirty years.
Failing to build enough houses and lower relative incomes is what has got us into this situation.
I’m sure the 25% of the Tory party income coming from property developers has not influenced this in any way.
Cutting stamp duty during covid didn’t keep anyone in work it just kept the housing market buoyant and therefore land banks valuable. Cynical of me I know.
I'd be very happy if the values went back 25 years, I could then afford better . Back then a better/ bigger house was 7-10 grand more. Now it's at least fifty grand difference."
If affordability gets much worse house prices will inevitably drop as demand falls off . Competition may be hiding a lot the true affordability problems underlying in our economy.
The last time houses were such a large multiple of earnings was 150 years ago.
They fell as earnings improved and only levelled out at the end of the First World War.
Upward trajectory as a multiple ever since.
The last twenty five years has seen a doubling of the multiple relative to earnings .
So much for all the promises from governments of making life more affordable.
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Just a point of order. The government never said it would make life more affordable. They said they would haf inflation.
Which means prices are only going up half as fast as they are now, as opposed to going down at all.
It looks like they are going to even fail at that. |
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"Just a point of order. The government never said it would make life more affordable. They said they would haf inflation.
Which means prices are only going up half as fast as they are now, as opposed to going down at all.
It looks like they are going to even fail at that."
If they fail they'll probably blame the B of E, if they succeed, they'll take the credit. |
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