Bring Back Boris?

[BeElBeeBub]

Back in the days of Thatcher I was paying 17.5% for a mortgage and 17.5% for a bridging loan.

Was it fun?  Looks like the equivalent rates are starting to hit that level.

[papasmurf]

My daughter has a fixed rate offer of 4.25%, unless they pull it.
My fixed rate was 6.25% in 2004 so there is nothing out of the norm for it to be 6%.

Back in the days of Thatcher I was paying 17.5% for a mortgage and 17.5% for a bridging loan.

[Borchester]

I'm not sure what the situation is with offers made, but the fixed rate deals are being pulled left right and center and then reissued with higher rates
This is a variation of the "rates were 15% in the Thatcher years and I dealt with it - kids are all snowflakes" argument

What's different now is the affordability of the mortgage as mortgages are typically bigger relative to incomes.

This is from Leeds Building Soc from last year during the Truss debacle.

The average pricing on a two-year fixed rate have hit 6.43% and the building society highlights that while this may be lower than the 15% borrowers paid in the 1980s, higher property values and debt makes the current environment more tough.

In 1980, the average UK house price was around £21,000 and mortgage costs accounted for 11.3% of disposable income.

Today, those figures are around £292,000 and 45.1% respectively.

Its research suggests the 6.43% mortgage rates of today are equivalent to a rate of 25.7% in 1980.

And this is from Ed Conway last year







You're daughter's interest rate of 4-5% will feel like yours did in the early 00's

If she were to fix at 6% it would feel like the early 90's

and we're hitting 6% now.

Your daughter will survive.

Scraping along on the ribs of your arse is all part of being young

[BeElBeeBub]

My daughter has a fixed rate offer of 4.25%, unless they pull it.
......

I'm not sure what the situation is with offers made, but the fixed rate deals are being pulled left right and center and then reissued with higher rates

My fixed rate was 6.25% in 2004 so there is nothing out of the norm for it to be 6%.

This is a variation of the "rates were 15% in the Thatcher years and I dealt with it - kids are all snowflakes" argument

What's different now is the affordability of the mortgage as mortgages are typically bigger relative to incomes.

This is from Leeds Building Soc from last year during the Truss debacle. 

The average pricing on a two-year fixed rate have hit 6.43% and the building society highlights that while this may be lower than the 15% borrowers paid in the 1980s, higher property values and debt makes the current environment more tough.

In 1980, the average UK house price was around £21,000 and mortgage costs accounted for 11.3% of disposable income. 

Today, those figures are around £292,000 and 45.1% respectively.

Its research suggests the 6.43% mortgage rates of today are equivalent to a rate of 25.7% in 1980.

And this is from Ed Conway last year

...for instance, take 1980. Back then, official BoE interest rates were on average 14.2%.

But because people were much less heavily indebted, because their incomes were much higher vs their repayments, that was, in affordability terms, EQUIVALENT to 3% in today's interest rates.

If rates went up to 6% (not currently forecast but these days who knows?!) it would be horrendous.
The mortgage burden would be very similar to the early 1990s - which precipitated the worst housing crash in modern history.
Prob even worse cos this data doesn't adjust for MIRAS.

You're daughter's interest rate of 4-5% will feel like yours did in the early 00's

If she were to fix at 6% it would feel like the early 90's 

and we're hitting 6% now.

[Nick]

The mortgage rate peaked at just under 9% in 1998, so there is still a way to go.

Actually, most crashes come when the rate is too low, not too high.

My daughter has a fixed rate offer of 4.25%, unless they pull it.
My fixed rate was 6.25% in 2004 so there is nothing out of the norm for it to be 6%. 

[Borchester]

On the subject of housing.

Look like an early 90's style crash might be on the cards.

Average mortgage rate has now passed 6%

https://www.bbc.co.uk/news/business-65931132

And.may climb further.

The mortgage rate peaked at just under 9% in 1998, so there is still a way to go.

Actually, most crashes come when the rate is too low, not too high.

[BeElBeeBub]

On the subject of housing.

Look like an early 90's style crash might be on the cards.

Average mortgage rate has now passed 6%

https://www.bbc.co.uk/news/business-65931132

And.may climb further.

[BeElBeeBub]

And by building more houses you need more schools, hospitals and supermarkets. All stop the rain getting into the ground, it skips off the surface straight into the rivers and causes flooding. We need less people not more housing.

All standard arguments and illustrative of why we don't have more homes built. Every time some are proposed, the locals come up with reasons why the houses shouldn't be built near them.

Human nature (and planning rules) mean nobody says "I don't want any houses spoiling my view", instead it's always about traffic, drainage, local services etc etc


We had some homes proposed near me.

There were some excellent arguments as to why they were in the wrong place.

But one of the arguments raised was "and it would put pressure on the local school".  I can say for a fact the number one issue facing the local school is lack of pupils, it's desperate for more pupils.

But still the argument is regularly advanced.

Drainage is an issue but only if it's not planned for. It's perfectly possible to build an estate of houses and have no or even a positive impact on the drainage situation. As long as it's properly planned for, and the necessary mitigations are installed. Of course, our unfit for purpose planning and building enforcement system means that often isn't the case, but it's not an intrinsic property of housing.

[papasmurf]

We need less people not more housing.

I came to that conclusion 63 years ago. 

[Nick]

And by building more houses you need more schools, hospitals and supermarkets. All stop the rain getting into the ground, it skips off the surface straight into the rivers and causes flooding. We need less people not more housing. 

[papasmurf]

There is a lack of affordable housing. Realistically there are enough dwellings for everyone but they are unevenly distributed.

2nd homes/ABnB places in rural areas can be a major issue if the % rises to high.

But that's a function of our poor planning laws. Everyone agrees there should be more housing, just not next to them!

Since the houses have been built around my home, in  the regular bad storms we get here, they get roof damage, my home no longer does. 

[BeElBeeBub]

There a massive lack of housing, that people can afford.  The country can only in the long term sustainable support a population of 22 million. Britain went past that in 1840. Where I live the lack of affordable housing is caused by too many second homes, holiday lets, AirBandB and far to many tourists.

There is no lack of housing, there's too many people in the country. This has been pointed out several times.

There is a lack of affordable housing. Realistically there are enough dwellings for everyone but they are unevenly distributed. 

2nd homes/ABnB places in rural areas can be a major issue if the % rises to high.

But that's a function of our poor planning laws. Everyone agrees there should be more housing, just not next to them!

[papasmurf]

There is no lack of housing, there's too many people in the country. This has been pointed out several times.

There a massive lack of housing, that people can afford.  The country can only in the long term sustainable support a population of 22 million. Britain went past that in 1840. Where I live the lack of affordable housing is caused by too many second homes, holiday lets, AirBandB and far to many tourists. 

[Nick]

There are two elephants in the room about the issue. Lack of housing, lack of infrastructure.

There is no lack of housing, there's too many people in the country. This has been pointed out several times. 

[papasmurf]

Not *just* my opinion. Also the opinion of pretty much every economist.

Aside from the obvious societal needs (families, returning citizens etc) the UK economy needs immigration.

Note how we have a large number of vacancies and employers are.comsining about not being able to find labour.

Our current and historical birthrates don't give us enough labour. The ratio of elderly non-workers to workers is increasing. There are only a few ways to address this.- increase birth rate (takes about 2 decades, increases dependent/worker ration in short term and is actively being opposed by policy), decrease elderly population (some *slight* ethical issues) or import labour.

There are two elephants in the room about the issue. Lack of housing, lack of infrastructure.