People will adjust their spending habits in order to afford their mortgage

ukcarper

Graham_Devon wrote: »

This is alright, but look at the people thanking this. 6 out of the 8 of them celebrate high house prices and encourage debt. Hell, two of them appear to encourage outright fraud to take on debt.

That's what your little slur is really about here. YOU haven't given any solutions to the question posed, just gone to the other extreme and suggested they wash in birdbaths.

I can't compete with the support you are getting. I said it yesterday, I'm more of a lone voice on here. But you are the ones coming up with the suggestions that people will cut back, yet you are the very same ones who won't answer how and instead post responses such as above which do nothing but belittle the person asking the question.

Cooking your own soup, driving less, cutting the heating down one notch on ther thermometer are all great moneysaving exercises and I'm not dismissing them, not at all. What I am saying though is that these very sensible cost saving measures won't come anywhere near the amount your expenditure has increased in the example of a 2% mortgage rate rise. People are currently talking on 4x their income mortgages at today's rate. I think, when looking at these people, my point is valid. I've never suggested I;m looking at anyone else, other people have suggested I am.

Do your best with the slurs back, you'll get lots of support....but deep down you know these people will be in trouble. I'm just not sure you really give a damn.

The thing is the £1068 figure I gave and you used in your example is based on 7.5% mortgage rates. If rates rise 2% from now making mortgage rate 6% that £1068 increases to £1212 meaning that in your example they have £412 to pay for additional items.

And what is to say if base rate rises 2% mortgage rate will rise 2%.

　

wotsthat

Graham_Devon wrote: »

Do your best with the slurs back, you'll get lots of support....but deep down you know these people will be in trouble. I'm just not sure you really give a damn.

I've not provided a full family budget because I know full well that it won't meet with your satisfaction. Sensible people will just look at their own particular outgoings and try and cut out luxuries, if that doesn't work they'll have to re-evaluate the difference between essentials and 'essentials', then they could try and earn more, negotiate with their lender, sell and clear debts (if there's enough equity) etc. etc. If all that fails, and it will for some, they're in trouble.

I don't dispute that some people will find themselves in trouble but, realistically, the numbers are going to be low because a) most people are sensible and b) we're really talking about the cohort that bought at peak on IO. Older mortgages will be at lower LTV's and more recent mortgages have been issued on more stringent terms. They've had 4 years of lower rates and maybe the same again before they're paying another 2% on their mortgage rate. If rates rise they'll be cheesed off but there has been plenty of opportunity to get sorted.

Why don't you put this to bed and provide a household budget for your family with a £150k mortgage showing how they wouldn't be able to cope with a 2% rate rise?

wotsthat

wotsthat wrote: »

Why don't you put this to bed and provide a household budget for your family with a £150k mortgage showing how they wouldn't be able to cope with a 2% rate rise?

Maybe do it over the weekend then.

Jack_Johnson_the_acorn

N1AK wrote: »

You shouldn't use incredulous like that, although it is a great word and should be used more. Sorry to start with a somewhat nit-picky point

There are many, many people who are rubbish at financial planning and some of them are extremely wealthy. The problem is that as long as we offer a safety net for when things go wrong it is in our vested interest to help people with poor financial management skills avoid that.

My OH works in an office where around half of the team are counting the days down to payday. These are well educated, decently paid and intelligent people and either have or could get mortgages easily.

Do explain how incredulous should be used

dtsazza

Graham_Devon wrote: »

That's what your little slur is really about here. YOU haven't given any solutions to the question posed, just gone to the other extreme and suggested they wash in birdbaths.

I thought the answer was the only one that can be given, really (and am quite surprised this thread has lasted for so many pages).

If mortgage monthly payments rise, then people will reduce their discretionary spending accordingly. Those who have enough slack in their budget (above the absolute essentials) will just do this and get on with it; those who don't, can't.

In order to give a more detailed answer you'd need a comprehensive breakdown of the financial status and household budget of every mortgage holder. Which is both impractical, and chances are, not very insightful.

I think that "those with very tight budgets would default, everyone else would cope" is a perfectly fine answer to the question.

dtsazza

Jack_Johnson_the_acorn wrote: »

Do explain how incredulous should be used

You would be incredulous, rather than find something incredulous.

(The latter might be grammatically, but it means that you think the fact has a hard time believing things...)

HAMISH_MCTAVISH

Graham_Devon wrote: »

People are currently talking on 4x their income mortgages at today's rate. I think, when looking at these people, my point is valid..

When we first took on a mortgage, it was almost 4 times joint income and rates then rose to 15%.

We managed.

Why do you think people today would struggle if rates rose to 2%?

grizzly1911

HAMISH_MCTAVISH wrote: »

Why do you think people today would struggle if rates rose to 2%?

I doubt many would default, struggle means different things to different people, but interesting how the markets collapse at the thought of rates, in general, going up.

GhIFA

But you are the ones coming up with the suggestions that people will cut back, yet you are the very same ones who won't answer how

As has been pointed out, you ask for suggestions, you get them, along with suggestions as to why the situation won't be as dire as you so clearly dearly wish it will be and then....well, you just ignore or dismiss them. As I said earlier, it's very difficult to have a meaningful debate on that basis. As a case in point, you've already dismissed spending on "luxuries" as they're not essential and not everyone will have them. Then on page 6 Mundibananas gave a comprehensive (not exhaustive) list of some moneysaving ideas which may not give much saving each in isolation but in together and along with some of the "luxuries" that don't count would certainly constitute some of the "cutbacks" you refer to. Your response....

Cooking your own soup, driving less, cutting the heating down one notch on ther thermometer are all great moneysaving exercises and I'm not dismissing them, not at all. What I am saying though is that these very sensible cost saving measures won't come anywhere near the amount your expenditure has increased in the example of a 2% mortgage rate rise.

So, you're dismissing them then, rather than accepting they can legitimately be considered some of the cutbacks you asked about.

but deep down you know these people will be in trouble

It's been said so many times, but once more in the hope it sinks in - SOME, just some of these people Graham. Those who have mortgaged themselves to the hilt, have made no planning, have not considered or put in place a contingency plan - these people have always existed and will continue to do so, even when the economy recovers. This does not apply to everyone that holds a mortgage, no matter how many times you try to suggest it does.

Yorkie1

Genuinely curious, as I haven't looked in to the details at all, but is there likely to be a delayed problem with these help to buy mortgages? Does the initial loan from the government have to be paid off at a particular point? And if so, what happens if people have not saved enough to do so?