Mortgage rates going up

Timm

Sibley wrote: »

Anyone cheering the rate rises is a scumbag.

(...)

To a certain extent, I agree.

Laughing at people who can't afford to keep their home is nasty. But then you like to laugh at people who can't afford to buy a home in the first place. What does that make you?

But anyway, this has rather little to do with individuals and more to do with financial institutions trying to look solvent so that they don't experience a run / takeover by the state.

RenovationMan wrote: »

Man #1 on £65k - @3.5x = £227,500 @5% = £1345 pm mortgage.
Man #2 on £25k - @3.5x = £87,500 @ 5% = £517 pm mortgage.

Food bill is £300pm for both, utility bills are £200pm for both, travel costs to and from work are £70pm for both.

Man #1 after tax = £4083 pm. After outgoings = £2168 left over.
Man #2 after tax = £1824 pm. After outgoings = £737 left over.

Man #1 proportion of income spent on Living costs: 47%
Man #2 proportion of income spent on Living costs: 60%

Conclusion: That food, utilities, travel expenses do not increase proportionally with income and so someone on a higher salary has a much higher proportion of disposible income left at the end of the month than someone on a lower salary.

The 3.5x salary mortgage multiple results in someone on a lower salary taking on much more financial risk than someone with a higher salary. Fundamentally this seems wrong to me. I'd suggest a calculation that based the maximum salary as a PROPORTION of income rather than as a MULTIPLE of income, which woud be much fairer and much safer all around.

Isn't that what they call the affordability matrix these days?

DervProf wrote: »

Fine.

However, I seem to remember a lot of problems around the time that this "creative" bank hit the buffers. Did the taxpayer not have to come to the rescue ? Would it not have been better to not allow this bank to be so creative with their lending, which would almost certainly have resulted in it not requiring drastic intervention from the government ?

Yes it would.

Still, we can hope and pray that the snotgobbler left the aristocrat with a golden opportunity to sell the nuts and bolts to the beardy one and keep the gold for the proles. :shocked:





Pre-edit: Hmm. I hope that makes sense...