Millions face £250 monthly mortgage rise next year

Aberdeenangarse

This is ghastly, absolutely ghastly! Add in inflation, increased energy prices and well below inflation pay increases, Many are really going to suffer.

About four million UK households will face higher mortgage payments next year, the Bank of England has said, with the typical payment up by £250.

The average monthly mortgage bill would go up from £750 to £1,000, the Bank's Financial Stability Report said.

The rising cost would cause severe financial difficulties for another 220,000 households, the Bank said.

Businesses would also be under "significant pressure" owing to rising prices and borrowing costs, it added.

"Falling real incomes, increase in mortgage costs and higher unemployment will place significant pressure on household finances and weigh on their ability to service debt," Bank of England governor Andrew Bailey said in a letter to the Treasury.

https://www.bbc.co.uk/news/business-63961179

dunstonh

Only £250?   that isnt too bad.   Of course, the problem with average/medians is that the majority are either side of that.

Many are really going to suffer.

Being blunt about it, they shouldn't.   The average mortgage interest rate is around 7%.   Affordability checks should be made against 7% as you pretty much knew we would be heading towards that at some point.

The last decade has been a good time to borrow but it could not last.

housebuyer143

What's the typical mortgage amount? If we know it gives a good indication of what they think they rate might get to.

ACG

dunstonh said:

Only £250?   that isnt too bad.   Of course, the problem with average/medians is that the majority are either side of that.

Many are really going to suffer.

Being blunt about it, they shouldn't.   The average mortgage interest rate is around 7%.   Affordability checks should be made against 7% as you pretty much knew we would be heading towards that at some point.

The last decade has been a good time to borrow but it could not last.

The problem with this however is that when it was stress tested it was tested with ONS figures at the time. 
I tied into a new 5 year fixed mortgage back in April time and my payment went up by around £100. 
Since then my gas and electric bill have gone up - by more than my mortgage payment up. 
My food shop is more expensive. 
No doubt council tax will go up April. 
Compared to January I reckon I am about £300-350 a month worse off. 

I can afford it but I am definitely noticing it and I was lucky in that I secured a mortgage rate of 2.5%.

I dont think there will be many people who struggle personally. But I am also conscious that that does not help the people who will be struggling. Its not a great time, but ultimately this time had to come. 

RelievedSheff

Equally millions of mortgage holders on fixed rates won't be paying any extra.

Doesn't make such a good headline though does it.

Gycraig

dunstonh said:

Only £250?   that isnt too bad.   Of course, the problem with average/medians is that the majority are either side of that.

Many are really going to suffer.

Being blunt about it, they shouldn't.   The average mortgage interest rate is around 7%.   Affordability checks should be made against 7% as you pretty much knew we would be heading towards that at some point.

The last decade has been a good time to borrow but it could not last.

Why shouldn’t they suffer ? I’m doing ok but my mortgage is going from 450 up to 650-700. That’s nearly 50% more than I signed up for my electric bill has gone from 20-30 quid up to 100-120 ish. Everything I buy has massively gone up and my wage is the same as 5 years ago, stress testing another 250 quid a month on a mortgage is one thing, you can’t stress test for the fact everything has sky rocketed except wages. 

Someone who had 5-600 a month disposable income 5 years ago could easily be down to 100 quid a month today without making any life style changes. 

It also hasn’t been “a good time to borrow” at all as all low interest rates did was massively inflate house prices. 

Renting instead of buying also wouldn’t have helped as most landlords will be putting up their rent to match the higher mortgages anyway. 

sevenhills

Aberdeenangarse said:

This is ghastly, absolutely ghastly! Add in inflation, increased energy prices and well below inflation pay increases, Many are really going to suffer.

Surely most people earn more than they spend on necessary items? Necessary items such as food, energy, housing ect but they will need to cut somewhere.
Less paid into their pension, fewer holidays, no branded goods, turn down the heating, less alcohol and heating out.
Is suffer really the correct word?

Gycraig

sevenhills said:

Aberdeenangarse said:

This is ghastly, absolutely ghastly! Add in inflation, increased energy prices and well below inflation pay increases, Many are really going to suffer.

Surely most people earn more than they spend on necessary items? Necessary items such as food, energy, housing ect but they will need to cut somewhere.
Less paid into their pension, fewer holidays, no branded goods, turn down the heating, less alcohol and heating out.
Is suffer really the correct word?

working just as hard to scrape by instead of living a good lifestyle for a good portion of people sounds like suffering to me. 

diystarter7

RelievedSheff said:

Equally millions of mortgage holders on fixed rates won't be paying any extra.

Doesn't make such a good headline though does it.

Hi

We must see it in the context of what it is for millions over the past 2 months or so and millions in the following 3/5 years as they come off realtively low rates
Along with massive food price hikes almost daily - don't take my word for it ask people re their shopping baskets along with gas/eltric, and council tax rises, it will be the straw that breaks the camel's back.

They are reall headlines and you could easily have implied what you said to fuel prices and those that were on fixed prices - until they came of the fix, then bang.

In London, I'm not sure what the average loan is, but I don't know of anyone with less than 300k borrowed and a few people we know have mortgages in xess of 600k.  They are not rich people but people working hard and want to remain near their parents/family to support each other by buying ordinary houses.

250 quid for most is not a lot but in the scheme of things and paying this as interest payments, it is a lota of monies that could easily be 2 weeks shopping, 2/3 weeks heating. 2 new tyres etc

Thanks

sevenhills

diystarter7 said:

RelievedSheff said:

Equally millions of mortgage holders on fixed rates won't be paying any extra.

Doesn't make such a good headline though does it.

Hi

We must see it in the context of what it is for millions over the past 2 months or so and millions in the following 3/5 years as they come off realtively low rates
Along with massive food price hikes almost daily - don't take my word for it ask people re their shopping baskets along with gas/eltric, and council tax rises, it will be the straw that breaks the camel's back.

They are reall headlines and you could easily have implied what you said to fuel prices and those that were on fixed prices - until they came of the fix, then bang.

In London, I'm not sure what the average loan is, but I don't know of anyone with less than 300k borrowed and a few people we know have mortgages in xess of 600k.  They are not rich people but people working hard and want to remain near their parents/family to support each other by buying ordinary houses.

250 quid for most is not a lot but in the scheme of things and paying this as interest payments, it is a lota of monies that could easily be 2 weeks shopping, 2/3 weeks heating. 2 new tyres etc

Thanks

You are obviously more able than myself to make stress free savings if two tyres cost you £250, bog standard tyres are £50 each.

[Deleted User]

Gycraig said:

sevenhills said:

Aberdeenangarse said:

This is ghastly, absolutely ghastly! Add in inflation, increased energy prices and well below inflation pay increases, Many are really going to suffer.

Surely most people earn more than they spend on necessary items? Necessary items such as food, energy, housing ect but they will need to cut somewhere.
Less paid into their pension, fewer holidays, no branded goods, turn down the heating, less alcohol and heating out.
Is suffer really the correct word?

working just as hard to scrape by instead of living a good lifestyle for a good portion of people sounds like suffering to me. 

That's a luxury, i would say most live and scrape by.
As the previous poster alluded, holidays, branded goods, alcohol - those are luxuries and priorities should be made in relation to them aswell as other non essentials, once that's done it's surprising how much is left at the end of the week/month.