How are we supposed to afford an 40% increase in mortgage payments...this can't go on!

silvercar

Petriix said:

Unfortunately for many, the lack of affordability is exactly the point of increasing interest rates. That's how rate increases 'tackle inflation'; it's actually by design rather than being an unfortunate side effect.

But the full force is being felt by a very small section of the population, so it is unfair that that small group bear the brunt of it. As others have said, long term rate increase could be expected, but not the very swift increase we have had.

silvercar

Can I remind people of the forum rules, particularly rule 1.

”1. Keep it kind and keep it clean.

Be respectful, polite, friendly and mindful of the impact of your posts to other community members, Forum Ambassadors and MSE staff – everyone is human here. This rule is non-negotiable.”

user1977

Ryan_Holden said:

lojo1000 said:

Ryan_Holden said:

not everyone is as financially astute as they should be.

It has nothing to do with finance. All you need do is appreciate that a number can go up as well as down. Does that really require a financial mindset?

This is literally what I'm saying, the condescending tone is just not needed. You need to accept that some people didn't understand that the base rate could rise this much at all because they'd lived their entire adult life watching it stay at basically nothing. 

Not everyone has a keen interest in financial affairs. 

But like I said, I had the impression that these days any mortgage application involved a chat about how the borrower would cope if/when interest rates did rise significantly? So even if they thought that unlikely, the possibility should have been planted in their head somehow.

Flugelhorn

themanfromportobello said:

This is a hard reality check for many, but it does mean that some (most?) will really need to batten down the hatches and prioritise living expenses accordingly. This may mean taking a 2nd job, getting a lodger, go out less often, cheaper brands, cheaper (no?) holidays etc etc.

certainly this is the way to go - someone else mentioned lodgers and there is clearly huge demand for rooms and the tax break can really make a difference 

definitely economising on stuff / hols / cars etc  can make a huge difference. I am of the the wrinkly generation who had to economise to pay the mammoth mortgage - nowadays sometimes find it hard to spend the money I have as habits stick 

TheAble

Taking in lodgers will suit some but I can't imagine if you've got a family and kids you'd want to be having a lodger in the house. I wouldn't anyway.

I've got a lot of sympathy for people's predicaments. The fact that house prices were forced so high was not their fault. You end up borrowing a lot by virtue of prices being so high, or you rent, and we can see the mess that's been made of the rental market.

Now, I would say, rates are being moved up way too quickly by an inept central bank before they've had chance to filter through. People are eventually going to come off 2% fixes and onto 7% fixes and it's going to take them out at the knees.

I'd imagine an equally rapid unwinding but I guess we'll have to see.

Newbie_John

To everyone bringing data back from 70s.. worth also comparing average house price with average salaries - in 70s/80s it was 4x, now it's nearly 10x - so referring to data back in time it's not really relevant:
 

thriftytwosome

Going back to the high interest rates in the 1980s there was MIRAS ( mortgage interest relief at source). I can't remember how it worked though.

silvercar

thriftytwosome said:

Going back to the high interest rates in the 1980s there was MIRAS ( mortgage interest relief at source). I can't remember how it worked though.

Interest relief at your marginal rate on the mortgage interest. In those times, most mortgages were interest only for that reason and because endowment mortgages were popular. At some point it was restricted to the interest on upto £30k per person only and then it was further limited to £30k for a married couple. You confirmed with your lender that you were eligible and your monthly mortgage payment was adjusted, so you didn't need to involve hmrc directly unless you had a complex case. Back in the 80s a £30k or even £60k bought you a lot of house, unlike now.

Dandytf

Ryan_Holden said:

Everyone saying things like "what did the OP expect when things returned to normal" seems to forget that not everyone in the country paid attention to or took interest in the base interest rate, especially when it was so low and static for probably most of a lot of new buyer's adult lives.

Show a little empathy by realising that not everyone is as financially astute as they should be.

Rjhsteel, get a lodger. It will suck to share your home but you can earn up to £7500 from lodger rent (called a licence fee) and not have to pay any tax on it. Spareroom.co.uk is a good source for lodgers. Then, in a couple of years of giving up a bit of space the world may be more settled.

+ No One could guarantee what rates would be over 12mths later.

Ryan_Holden

The lack of compassion and comprehension by some people here is astonishing. 

Telling the OP to 'batten down the hatches' and 'cut back' on a 40% increase on mortgage costs is absurdly disconnected with the reality of what some mortgage holders are facing.

If you take the national average, you'd have to earn 10K more p/a before tax to accommodate for it and maintain your standard of living. That's just not a possibility for a lot of people.