Could you afford your mortgage under a Corbyn government?
Comments
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The 'Debate' board is the right place for this.
Can one of the board guides move it over there...?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
As a newcomer here I hadn't realised this board doubled up as the comments section on the Daily Mail.
The Shadow Chancellor has announced that he is making contingency plans for a run on the pound should Labour get into power.
What is unreasonable about mortgage payers making similar plans?0 -
To be honest, a more appropriate question would be "Will my job be at risk under a Corbyn government?" as from my experience it is lack of income that is the issue not the mortgage cost!
If Corbyn were to introduce radical socialist policies, and borrow the money to do so (this is not certain as McDonald in currently on a charm offensive in the City try to explain why everything will be ok..........) then interest rates would of course rise pushing up mortgage rates in due course.
However, house (and other asset) prices are of function of the cost of money. So if rates rise significantly, asset prices will fall accordingly. For a new mortgage borrower the impact may not be that great - the mortgage will still account for a similar percentage of their monthly income.
I am old enough to remember the pain of the last time mortgage rates were 10%+. Basically we lived on bread & water for a year or so to ensure we kept up with the mortgage - EVERYTHING else had to go, which today would mean smart phones, meals out etc. Certainly not looking forward to this happening again, but we would do it again and survive.
....but if I lost my job in a post-Corbyn recession I would be ****ed !!0 -
They will never go up to 15% though. Why would the BoE intentionally put millions of people with unaffordable debt?
Back in the 80s and 90s, houses were much more affordable than they are now, so the comparison is fairly irrelevant.0 -
So sell your house, put your cash into the bank, and live off the massive interest returns (in your controlled-rent abode).I'm currently midway through a 5 year fixed rate mortgage and with the possibility of Corbyn rising to power I'm thinking about what could happen.
If we disregard Blair and Brown (generally regarded as centrist, with Thatcher describing Blair as her "greatest achievement"), the most recent Labour government was James Callaghan between 1976-1979.
During this time, the Bank of England base rate peaked at 15%.
My mortgage payments are currently about £1,400 a month.
If interest rates were at 15%, they would increase to about £3,900 a month according to the MSE mortgage rate calculator: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results0 -
I'm currently midway through a 5 year fixed rate mortgage and with the possibility of Corbyn rising to power I'm thinking about what could happen.
If we disregard Blair and Brown (generally regarded as centrist, with Thatcher describing Blair as her "greatest achievement"), the most recent Labour government was James Callaghan between 1976-1979.
During this time, the Bank of England base rate peaked at 15%.
My mortgage payments are currently about £1,400 a month.
If interest rates were at 15%, they would increase to about £3,900 a month according to the MSE mortgage rate calculator: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results
Frankly, I can see no other outcome to this than my house being repossessed.
How would everyone else get along?
I'm sorry, but this shows a remarkable lack of both political and historical understanding. It does suggest, however, that the right wing press are being quite successful with their propaganda.0 -
ValiantSon wrote: »however, that the right wing press are being quite successful with their propaganda.
There's none required for Corbyn.
Focus is currently on Brexit and the next move by the BOE (and the Fed, BOJ and the ECB). Central bankers are the ones steering the course not inept polticians.0 -
ValiantSon wrote: »I'm sorry, but this shows a remarkable lack of both political and historical understanding. .
Interesting. Care to elaborate?
Actually, I know. Corbyn is often praising Venezuela; it's a "socialist paradise", an "inspiration".
Perhaps we should look towards Venezuela for guidance?
Interest rates there are currently around 21%.
How would you fare with your mortgage repayments with interest rates at 21%. Better?
Or are they not around 21% in Venezuela, and that's another conspiracy of the "right wing press"?0 -
I'm currently midway through a 5 year fixed rate mortgage and with the possibility of Corbyn rising to power I'm thinking about what could happen.
If we disregard Blair and Brown (generally regarded as centrist, with Thatcher describing Blair as her "greatest achievement"), the most recent Labour government was James Callaghan between 1976-1979.
During this time, the Bank of England base rate peaked at 15%.
My mortgage payments are currently about £1,400 a month.
If interest rates were at 15%, they would increase to about £3,900 a month according to the MSE mortgage rate calculator: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator#results
Frankly, I can see no other outcome to this than my house being repossessed.
How would everyone else get along?
I can only assume you haven’t looked at historic interest rates and compared it with the party in power. In 1989 rates were 14.875% and I was buying a house in 1992 when the rates increased 3 times in a day to 15%.
The current situation is a complete abberation, but that’s no reason to get used to it. Pay down the mortgage while rates are low.0 -
Interesting. Care to elaborate?
Where to begin? (I normally charge £60 p/h for private tuition, but for you here's a freebie):
1) The interest rates you quoted originally are very selective re: Callaghan. Rates cotinued to be very high under Thatcher (a Conservative), with a slow decline upto 1984 when they began to rise again, reduce a little between 1986 and 1988, and then rise again to 1989. The problem of high interst rates continued under her (mis)management of the economy and into the prime ministership of Major (although reducing). Double digit interest rates existed for a very large proportion of Thatcher's time in power.
2) There is no valid evidence that Labour governments manage the economy particularly badly. Also, govenrments only have a limited impact on the economy, especially in an increasingly globalised world where (in develeoped countries) currencies are fiats.
3) Governments are constrained by the a wealth of diferent factors, including (but not limited to) the position taken by businesses and markets; the ability to act due to treasury receipts; the ability to act due to parliament; the ability to act due to civil service advice and capaity; the attitudes of trading partners and other global actors.......Actually, I know. Corbyn is often praising Venezuela; it's a "socialist paradise", an "inspiration".
Perhaps we should look towards Venezuela for guidance?
Interest rates there are currently around 21%.
How would you fare with your mortgage repayments with interest rates at 21%. Better?
No problem for me. Paid the mortgage off (and I am well under 60).
That isn't really the point though. There is absolutley no reason to assume that interest rates would rise to 21%. You are presenting a straw man argument full of formal fallacy.Or are they not around 21% in Venezuela, and that's another conspiracy of the "right wing press"?
See above.0
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