"Mortgage ‘catastrophe’ will lose us the election, warn Tory MPs"

[Protagoras]

Do borrowers no longer comprehend interest rates?

https://www.theguardian.com/politics...n-warn-tory-mp

I always find in curious how general inflation is considered bad, yet house price inflation is seen as good.
Maybe some MPs will be pressing for another 'help to inflate prices' scheme?

Anyway, I'm sure that there are more factors than interest rates that will impact the government's chances of re-election!

[SueEllen]

It's the economy, stupid!

[SueEllen]

Average two-year mortgage rates hit 6%, what the brokers say Riz Malik, founder and director at R3 Mortgages, warns that rising mortgage rates are creating a ‘ticking time bomb’ in the UK property market:

We urgently needs a cross-party Mortgage Task Force to find potential solutions to this ticking time bomb.

This should be comprised of economists, lenders and other stakeholders who are actively involved in the mortgage market. We need action or the impending financial earthquake is going to send shockwaves across the country.

Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial, argues that the Bank of England should be given the leeway not to raise interest rates to squeeze inflation.


The Government need to change the mandate of the Bank of England so that they put more weight on the future of the economy and give their inflation target a longer term time horizon.

This would allow them to maintain their independence but take their foot off the accelerator when it comes to rate hikes. Confidence breeds confidence and a pause in rate rises will mean lenders stabilise their product offerings and the resultant competition drives prices downwards.

[the Bank’s target is to keep inflation at 2% – so is under pressure to keep raising interest rates as inflation was 8.7% in the year to April].


Source: The Guardian website

[SueEllen]

https://www.telegraph.co.uk/property...ecord-britain/

Why Britain’s mortgage crisis risks triggering the biggest house price crash on record
Years of cheap money put homeowners on course for a brutal reckoning

By
Alexa Phillips
19 June 2023 • 6:00am


Nikki Kopelman and her husband James Bore bought their £420,000 home in 2019, securing a five-year fixed mortgage at a bargain rate of 2.5pc.

But the era of cheap money is now coming to a brutal end for Britain’s homeowners. Kopelman – and millions of other borrowers – are facing rate rises that to many will be simply unaffordable.

As a result, the housing market is in for a terrible reckoning – with some forecasters predicting that the impending mortgage catastrophe could trigger a crash the likes of which have not been seen since records began. Last month, Britain’s biggest bank Lloyds said prices could fall by as much as 35pc in the worst-case scenario.

And now that the dust is settling on a grim picture for the housing market, economists say that this should all have been foreseeable – and even avoidable.

More than a decade of unprecedented ultra-low interest rates was always going to come to an abrupt end.

And then there were the ill-advised policy interventions. Critics say a stamp duty holiday in the pandemic poured fuel onto an already red-hot housing market. The Conservative Government’s heavy tax burden is furthermore adding insult to injury for already strained middle-class households.

And while this crisis has been simmering, the Bank of England and Britain’s politicians have failed repeatedly to get a handle on inflation.

[tazdevil]

Got my first mortgage in the 80's and for much of its life paid rates around 14% Money isn't free and a lot of people are now discovering this. Thankfully increased rates give savers something to work with and the taming of the house price bubble will ultimately be a good thing.

[Fraidycat]

Got my first mortgage in the 80's and for much of its life paid rates around 14%

But what was your actual monthly mortgage payment?, if it was say £500 in 1985, that would only be around £1500 in todays money. House prices were lower back then so 14% wasn't as scary as it would be now.

[TheDude]

I wonder how this will affect my part of Essex where there is no correlation between declared income, this size of ones mortgage or the cars one drives.

[Fraidycat]

I wonder how this will affect my part of Essex where there is no correlation between declared income, this size of ones mortgage

Is it even possible to get self certified mortgages these days, i thought they were no longer a thing?

[TheDude]

Is it even possible to get self certified mortgages these days, i thought they were no longer a thing?

Financial alchemy is what we do in Essex.

[dsc]

Well BoE can only change interest rates, so they are doing that, but apparently to some this is proof that:

"the Bank of England and Britain’s politicians have failed repeatedly to get a handle on inflation."

One solution would be to build more bloody houses / flats / whatever. Apart from London there's absolutely no investment in property in this country, nothing new is being built.