The UK Mortgage Crisis Is Here - Will This Crash The Market?

This video looks at the current UK Mortgage crisis caused by the interest rate rises by the Bank of England. What will new mortgage prices look like, will this cause a crash and should we be worried? I look at the latest data to really give you the answers and offer my analysis of the current situation.

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[valicourt]

Just did ours a few months ago. The mortgage advisers strongly recommend and even pushed us to go for a 2 year deal. We went for a 5 year deal and he wasn’t happy about it. Now I’m so happy we went for 5. But but it is crazy how mortgage advisers just concentrate on their commissions and not necessarily have your best interest at heart. Do your own research

[jonathan]

So happy that we get 30 year fixed rate in Denmark. I was so lucky to get 0.5%. Stay strong folks.

[bluebrakes]

I’m a first time buyer and got on in 2022. When I took out my mortgage I decided to go with a 10 year mortgage at 2.79%. To me, it was better to have certainty of affordability than to care if interests rates goes up or down, which is incredibly difficult to predict. The current rates do seem like madness.

[Stg]

Fixed for 10 years in 2018. I’m low risk and like certainty. Felt like a wrong move for the first 3 years. Now I’m just very thankful

[GeorgeAusters]

I don't know how more people didn't see this coming.. Interest rates were basically 0%... They were only going to head in 1 direction. That's why we fixed for 5 years and plan to pay off the mortgage in that 5 years

[rob]

We started on a 5.89% mortgage in 2005 and now after this attest rise are now back in n 5.89%. We have seen every day it’s been lower as a bonus. We have been over paying for the last 5 years which turns out was a great idea!

[the_loveable_fat_man]

As someone who works in the mortgage industry, yes it is going to crash. Even if the rates do start to come down, its going to be a slow decline (however im predicting further increases). The thing that has solidified this for me is jeremy hunts announcement around being able to go to an interest only or term extension without an affordability check. If there is one thing we learnt from payment holidays is people will take it without needing it and not listening / caring about the negatives until they come about and its too late. Im not going to give advice aa im not qualified or regulated too, but please before doing anything seek advice, stepchange has a dedicated mortgage advice line. Also please do aak your lenders to do an affordability check as this could open to more options which may be better suited to you. It might be a bit long and a bit of a crap phone call but it is legitimately in your best interest!

[jf]

I hope people are prepared to say bye bye to the nice shiny leased car.

[BBThemes]

the 30 year historical average rate is 5.63%, so actually where things are right now is around that average. Doesnt change the impact it will have on people of course, there has been quite a jump, but its more a situation of an end to cheap credit rather than daft high prices although it will of course feel that way.
The real problem isnt mortgages, but all the other credit thats variable such as credit cards etc, anyone will feel that right away where someone on a 10yr fix wont feel the mortgage rate change now, so i think its the other credit that`ll hurt first for most people generally.

[tommf]

I'm a fan of the show but I think it's important to put the Rightmove report (6:35) in context for what they're actually showing and how we interpret this. Rightmove report only on initial asking prices listed on their site, they do not report on any price reductions. So if you have a £200, 000 house and it's reduced by £180, 000 after failing to sell, they still report reported prices at £200, 000. The only way to measure house prices in the UK is the land registry, which is of sold prices and there's a 6-18 month lag in reporting, which means prices since the mini budget up to today will only be reported early 24'. I agree prices seem more resilient than expected currently, but 1.8m households will be rolling off sub 2% fixes in the next 18 months and remortgaging much higher will test this and will also strain first time buyer demand. Please do ignore Rightmove reporting as it is biased, focus only on the Land Registry data, thanks Toby! 🙂

[_mklein]

I’m 35 on a £45k salary and living with parents at the moment. Really not sure if I ever will sign up for a £400k flat mortgage in London! Its depressing!

[philipgreenwood]

I'm pausing. I paid my mortgage off just before the rates went silly high
My hope is that the high interest rates persist and start to hack away at house prices. I use multiple data sources but find Sonia swap rates really useful to plot the future. The future rates all drop but this doesn't automatically mean that house prices will change.
Once I see a solid downward shift in prices, I'll be planning next house buy, and current target is summer 2024 but things can and do change daily

[Pulpdiction]

The problem with rising interest rates means the cost of everything going up, raising interest rates helps to sustain inflation, companies borrow money and if that gets more expensive it needs to be covered by increasing prices. This is a self fulfilling prophecy and the BOE need to let things ride out a bit more before they increase rates, this was a rate rise too far and should have been left until September to see if interest rates start coming down naturally.

[ploppy]

I'd rather have low inflation and higher interest rates than high inflation and low interest rates.

[ouethojlkjn]

These things happen gradually then suddenly. I think we have yet to really see the problems and I would expect the Banking system / mortgage market is under extreme political pressure to take little or no action with defaults. I also think it is much worse in the commercial office sector where people are never going to go back to the office. The number one question asked where I am is if the role is remote and if not, they just hang up....

[edli]

Very balance analysis. Many YouTuber ignore the fact that insufficient homes and the raising demand, driving rent up, and the options for existing mortgage lender to restructure for longer duration or interest only plan. High inflation also support rent, which in turn supporting BTL and hence house prices. House prices may fall more in London and the surrounding areas, but the rest of the country houses is not that unaffordable.
Last thing from bank perspective, they don’t want people can’t pay back, repossession is not something the bank wants. Restructure the mortgage will give the back and the borrowers a win-win situation.

[DSonBlue]

Anyone else thinking of the catchphrase “you will own NOTHING and you will like it”?

[liam]

Tobes, I think the interest only options etc will help the market, then fingers crossed, the rates come down, not too much harm done

[nemomi]

10 year fixed mortgage some says here !! 😮 I didn’t realise you can lock your mortgage for 10 years. First time I took out for 2 years in 2014. Then another 2 years but it I felt it came so quickly so I decided to take out 5 years fixed on the third time. My mortgage is at less than 3%… still got 2 more years to go. Lets see what happens.

[bogstandardash]

Luckily i fixed for 5 years in 2022, but I feel like this is an inflection point for UK property. In reality with all this inflation, a 200k mortgage will feel much smaller in 5 years wirh wage rises to allow people to afford food that is rising in cost by 10 percent a year. There could ve be a weathering the storm period for a few years to help people get to the stage where their debt value against the dollar/gold has been inflated away.

Then there needs to be tougher affordability criteria to manage house prices down to what people can actually afford. Perhaps if you cant afford your mortgage at 7 percent, then you dont get the mortgage. This then will drive down house prices, and if there is a point in the future agreed when the policy starts people are forwarned.

When i was in my mid 20s around 2013 I'd have said let the market rip, and let the status quo benefit me for a change.

Since then ive worked my nuts off doing up houses and now live in a nice one, outside of the murdersville location my first one to was in..

Someone needs to get screwed by this, and i sympathise with the people stuck in the rent trap who want to invest in a house.