At what point does interest rates make you mortgage unaffordible

Redbedhead

Currently we could afford for our payments to triple or slightly more but that is because the mortgage is small because of the length of time we have had the house.

If we have our offer accepted on the house we want to buy, we could afford for interest rates to go up to about 12% without no changes to lifestyle. After that we would need to consider going out a bit less.

Pobby

Wouldn`t matter to eatmyfish.He earns 5.000 euro a week.That must give him a sore botty!

dolce_vita

Pobby wrote: »

Wouldn`t matter to eatmyfish.He earns 5.000 euro a week.That must give him a sore botty!

especially if he spends it on umbrellas

BrandNewDay

We could weather an increase up to 10% without altering our lifestyle, much. At that point, we could A) cut back on monthly budget/groceries put my earnings towards living expenses, rather than savings. I think we'd start to squirm at 12%, but I don't think we'd lose our home. I'd just have to put my earnings towards it. In fact, if I can bring in £80 a week, we can weather up to 16% or so. I guess that would be our limit, especially if petrol prices also increased significantly.

For that reason, I'd like to overpay our mortgage a bit while we can. That way, we can be braced for the worst.

I have to say, though... if interest rates went above 10% for any real length of time, that would probably trigger a huge recession. My husband works in a luxury retail industry and his job would likely be hit.

meanmachine_2

Er yes, meanwhile in the REAL WORLD, where lots of my friends are recent FTBers, anything above 6% would put many of them seriously into the red.

Remember, not all of us are baby boomers with teeny tiny mortgages on houses bought when properties went for 30K (but don't forget it was SO much harder then, than now, just stop whinging and forego that £99 MP3 player silly!).

[Deleted User]

very true mean machine.

Most people live in a world completely detached from planning for high interest rates.

Pobby

meanmachine wrote: »

Er yes, meanwhile in the REAL WORLD, where lots of my friends are recent FTBers, anything above 6% would put many of them seriously into the red.

Remember, not all of us are baby boomers with teeny tiny mortgages on houses bought when properties went for 30K (but don't forget it was SO much harder then, than now, just stop whinging and forego that £99 MP3 player silly!).

Baby boomer here.In fact when we first bought it was a struggle.Everything secondhand,black and white telly paid for by green shield stamps.Matress on the floor.No flash holidays,fancy cars on credit and so on.I worked 2 jobs ,music rep by day and musician by night to get the deposit but,looking at younger members of my family 2 huge differences.

My fave niece and boyfriend(do wish he wouldn`t wear a Burberry baseball cap)are talking about trying to get a ,cough,25% equity purchase on a place.However they are not prepared to give up continental holidays and the thought of them making do with cast offs is not even in the equation.

The other big thing was wage inflation.1970 I was earning 24 pound a week,by 1980 it was 200 a week.So my debt was wafted away.This is not going to happen this time.

Fulham_Mark

Even though lots of FTBs should be in the red if rates rose more, mortgages are more flexible than ten years ago and I guess most of the strugglers would switch to an interest-only one or are interest only already.

People would probably cut down on expensive bars and restaraunts...these would close....fewer new high-rise flats would be built

...and then all our cities would look like they did ten years ago!

dolce_vita

Fulham_Mark wrote: »

Even though lots of FTBs should be in the red if rates rose more, mortgages are more flexible than ten years ago and I guess most of the strugglers would switch to an interest-only one or are interest only already.
quote]

:think:

Which came first?

The creative lending practices or the high prices?

Or do they go hand-in-hand?

mystic_trev

Yant1 wrote: »

very true mean machine.

Most people live in a world completely detached from planning for high interest rates.

With two million people having to renew their fixed rates in the near future there's going to be a major problem. Even if only one in ten are unable to maintain the new rate,that's 200,000 defaulters! I think it'll be a lot worse than that.