HELP Mortgage Declined

amnblog

If interest rates reached 7% it will be civil war anyway Thrug

Thrugelmir

amnblog wrote: »

If interest rates reached 7% it will be civil war anyway Thrug

Be there before people know it.

Brock_and_Roll

amnblog wrote: »

If interest rates reached 7% it will be civil war anyway Thrug

Really? in a way, there should be a civil war at the moment as all the hard pressed savers revolt at having to bail out the fe_c_kless!

From 1975 to 1991 (16 years) the Bank of England base rate averaged 11.1% - if you had asked people then if they could imagine a base rate of 0.5% there would probably have been the same sense of disbelief.

The future of the economy is very difficult to predict for the next 5 years never mind the 30 years of this mortgage term. It is entirely possible that rates at some point during that term will reach or exceed their historic average - it is prudent for borrowers to "stress test" their finances to see if they could pay the mortgage at say 5-7% for a while even if it meant living on bread and water.

But then I am an old fashioned banker who been through several booms and busts and no ones listens to me anymore!

Thrugelmir

Brock_and_Roll wrote: »

But then I am an old fashioned banker who been through several booms and busts and no ones listens to me anymore!

Old school is very much alive. Bringing a super tanker to a halt and turning it around is a long slow business. Simply not enough tugs available to speed the process up. The problem that currently exists is engineering a process that won't induce GFC2. UK banks are highly exposed to property on their balance sheets. So the air has to let out slowly.

Keekles

Can we make a reasonable assumption that by the time interest rates reach 7% or so the OP would've had at least some capital repayment on her property, potentially some equity growth and therefore a remortgage product would likely be affordable regardless?

Or are we banking on 7% tomorrow before OP applies for a mortgage

Thrugelmir

Keekles wrote: »

Can we make a reasonable assumption that by the time interest rates reach 7% or so the OP would've had at least some capital repayment on her property, potentially some equity growth and therefore a remortgage product would likely be affordable regardless?

Or are we banking on 7% tomorrow before OP applies for a mortgage

The point that BOE is making by asking lenders to stress test borrowers at 3% above the rate they are currently paying. Is that far too many people have become complacent about the level of interest rates. The general lack of increase in disposable income for many with pay rises not even matching inflation. Combined with auto enrolment into pension schemes and a budget deficit that still needs to be bridged. Taken together there's going to be an enormous squeeze over the next decade or so. While adjustment takes place.

May not effect everybody. However it was loose lending that created the over leveraged position the UK finds itself in today. Going to take some careful policy making to avoid a further recession or even a sharp crash / correction. .

kingstreet

Brock_and_Roll wrote: »

From 1975 to 1991 (16 years) the Bank of England base rate averaged 11.1% - if you had asked people then if they could imagine a base rate of 0.5% there would probably have been the same sense of disbelief

They would probably not have believed sub 2% inflation either.

You can have higher rates and high inflation, or you can have the alternative.

If you get a deflationary economy, investment returns in general are lower.

TBH I have no idea which is better, but as a child of the 80s, I was force-fed inflation is an evil, those economies trying to complete on the world stage cannot afford.

Until a devaluation is needed, that is...

Thrugelmir

kingstreet wrote: »

They would probably not have believed sub 2% inflation either.

You can have higher rates and high inflation, or you can have the alternative.

If you get a deflationary economy, investment returns in general are lower.

TBH I have no idea which is better, but as a child of the 80s, I was force-fed inflation is an evil, those economies trying to complete on the world stage cannot afford.

Until a devaluation is needed, that is...

Despite high inflation, like many you enjoyed real increases in take home pay. Thanks to increased productivity, a huge investment in technology and the ability to buy cheaper goods from China and other emerging markets. Different scenario now. We've had the party. But nobody wants to clear up.

densol_2

I'm an 80's child - first mortgage 1983 ( when 18- OMG !) .....Live for today x not years down the line ! If I had listened to my dad RIP - bless his soul - I'd be in a flat .... I'm mortgage free in 3 years (£300k) and yeah I did the whole self cert thing and NRAM as well - I'd be ripped to shreds on here now for some of the " opportunities " I took - queue ..... Talk of repossessions / interest rises etc

Thrugelmir

densol wrote: »

I'm an 80's child - first mortgage 1983 ( when 18- OMG !) .....Live for today x not years down the line ! If I had listened to my dad RIP - bless his soul - I'd be in a flat .... I'm mortgage free in 3 years (£300k) and yeah I did the whole self cert thing and NRAM as well - I'd be ripped to shreds on here now for some of the " opportunities " I took - queue ..... Talk of repossessions / interest rises etc

Hindsights a wonderful thing. As long as one keeps in perspective how much was luck and really how much was truly skill. There's still over 500,000 mortgages with NRAM. Post 2020 the average interest only mortgage will be redeeming at over £120k compared to £56k now. Liars loans didn't work for everybody.