About the existential crumbling of the British pound and the destruction of the housing market/personal savings of millions of British people?
I think a lot of people are going to fall into negative equity and this is not the time to sell your house either. The rise in interest rates is going to screw the sub primes royally. And quite a few of their lenders/debt insurers to boot. There are pluses to stagnation or even a fall in house prices. Winners to go with those losers. First time buyers for example. The freeing up of second homes for first time buyers. But pfft... it's hard to think that adds up to the misery of so many people losing their home. Savings? Meh. The rise in interest rates benefits savers and has been a long time coming. They do not however eclipse the losses from inflation rising. Although they do serve as a minor mitigation to that. On the plus side, high inflation is wiping out the value of a lot of people's debt. Assuming of course, you can get a pay rise of some description. The falling Pound? That's a bit of bonus. The positives to my mind greatly outweigh the negatives.
The pound over the centuries climbed and collapsed. It continues to do so and the pound will rise and fall over the decades and centuries to come. The housing market collapses and gains, probably more gains than collapsing over the centuries. As to home owners and first time buyers, my advice has always been the same, go get a mortgage quote for 16%, and base your budget on that. So whatever mortgage value your wage could afford if interest rates climbed to 16%, then that's the maximum mortgage I suggest people should stay under. Historically, interest rates have hit those dizzy heights, so use the knowledge of the past to give you a better future. People are crying because interest rates going up, no where near 16%? Why did they take an unaffordable mortgage in the first place? So the economy trickles along, governments try to keep them on track with fiscal and monetary policies, and many will always blame the government. Well, it's the easiest option
No, what I'm saying is, go to your bank and say, "Mr. Bank Manager, I'm on £2,500 a month nett, what size of mortgage could I afford if the interest rate was 16%". So the bank would suggest you could afford, say, £1,750 per month on mortgage repayments, and at 16%, the size of the mortgage is, say, £100,000. All these are plucked out of the air and are just used for argument sake. So despite you being able to currently afford a, say, a £150,000 mortgage at, say 3%, as rates rise, you then start to struggle with the repayments. But if you took a maximum £100,000 mortgage, rates can carry on all the way up to 16% and the repayments are still within your budget So never max out, never try to get the biggest mortgage at the current rate. Be modest. Interest rates in the UK have been up to 16% in around 1980, so my advice is, pretend the mortgage rate is 16%, find out off the bank what size of mortgage would your salary support if interest rates were 16%, and that's the maximum value of mortgage you should consider. It's irrelevant that your current salary and current interest rate means you could get a larger mortgage, but be wise and prudent. I did that, my son's have done that. It means you buy a slightly smaller modest house, but it also means you don't get into financial difficulties and blame the government.
This is one of those issues that revolves around the population density of the UK as a whole - my kids cannot even think of buying houses in London/Southeast purely because of cost; no matter how "modest" the house. There is very little that is affordable (or decent) for young people to buy or rent in places anywhere near to where they work. A small two bed house in Medway costs upwards of £370K. There are simply to many people and not enough land to build house on anymore without concreting over the whole area.
