The UK Mortgage Crisis Explained: Is the Housing Market About To Crash?

The UK housing market is facing a crisis as mortgage rates rise and house prices continue to plummet. With mortgage borrowing at record lows, existing homeowners are facing financial strain, while future buyers are holding off in hopes of a further price drop. As the crisis worsens, we explore the potential consequences for owners, buyers, renters, and the housing market.

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[ranep]

For newbies, be aware that this is a grossly oversimplified scenario. For one thing, you can't get a mortgage on an investment property without at least 25% down payment. Two, it's easy to see comps for house purchase prices, but it takes a lot of research to understand the comps on rent prices. The trick is to find a place where renting is more expensive than buying, but those places are less common because of this very type of scenario. Three, you have to remember that rent number he's using is supposed to be net income, not gross. So you have to think about costs for taxes, insurance, maintenance and vacancy when you're researching investments. All that said, real estate investing is a good tool for wealth accumulation. But it isn't foolproof.

[johnben]

It is difficult to make exact projections for the housing market as it is still unclear how quickly or to what degree the Federal Reserve will reduce inflation and borrowing costs without having a substantial negative impact on demand from consumers for anything from houses to cars.

[hersdera]

fear a housing crash due to people buying homes above asking prices with little equity. If prices drop, affordability and potential foreclosures may arise, worsened by future layoffs and rising living costs. I want to invest more than $300k, but I'm not sure on how to mitigate risk.

[alexsteven.m]

In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living

[WhichDoctor]

Rates for borrowers might be spiking. But interest on savings isn’t. Leading to record breaking profits for big banks. We don’t have a wage price spiral going on. We have a greed price spiral

[tnickknight]

Shame, they use to be able to blame the EU for everything 😂😂😂

[chrysik.]

It's not a housing market crashing! Prices that are insane is not a market! It's a bubble that should pop and go back to normal. It's crazy how we imply that these prices make any sense and shouldn't collapse

[betterthanitneeded]

"Truss Era"?, was it long enough to be considered an era ?

[thewhitefalcon]

They talk a lot about wage-price spirals, but we are firmly in the middle of a profit-price spiral and their masters won't allow them to say it.

[tazgecko]

these guys have done so much damage to the UK

[Bb]

In France, the vast majority of mortgage are fixed rate for the duration of the loan. I bought my apartment with a fixed rated for 25 years, and no matter what happened, I know exactly how much I will pay for that period.

[thomascuvillier]

Crazy that you borrow at a set rate only for a few years. In France, unless you choose otherwise for some reason, with mortgages you get a rate for the whole duration. And if rates go down you can have a bank buy out your loan from your current bank and give you a lower rate... This helps people buy even with the rates going up as you can plan and don't have to guess what the economy will look like in 5 years.

[sunil_de]

I dunno but i feel like calling it the Truss "era" is a bit of a stretch...

[D-S-]

Hang on, are you saying that continuous exponential growth is unsustainable long term?!

[jongarside]

They needs to be a massive correction. Houses are homes

[timmk]

Tldr, say it with me.
The wage price spiral is not a thing!

[footyball]

Prices of bricks are up, prices of windows are up, prices of every single material you need to build a house are up, a so the cost of building a house is up, a so I doubt there will be a crash, maybe a 10% further drop at worse.

[denisdavid]

My greatest concern is how to recover from all these economic and global troubles and stay afloat especially with the political power tussle going on in US.

[bassetts]

If you're a first time buyer then ultimately I don't think this will have a huge effect on you. Yes the house prices are going down, but your higher interest rates make up the difference. This really affects people with existing mortgages. They get to pay the higher mortgage interest without benefitting from the lower house prices.

[ManCatCheese]

The same thing is happening here in Australia. Interest rates are rising but house prices are remaining stable, or only lowering a little bit (overall). The reserve bank can increase interest rates until people begin defaulting on their homelands, however, even that won't fix the problem. Corporate profits have skyrocketed since covid began, and governments across the globe are refusing to acknowledge that most of the inflationary pressure is coming, not from wages, but excess corporate profits. I wonder why governments filled with wealthy people are ignoring this aye?