this post was submitted on 02 Jul 2023
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Just saw this linked on Reddit. The government have got all the big lenders to agree to a range of measures to support mortgage holders, including the option to switch to interest-only for 6 months to wait out the period until dates reduce, and various other borrower-friendly options. Have a look if you've been worrying about payments under the current rates

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[–] [email protected] 9 points 1 year ago (1 children)

Relevant FT article

UK’s mortgage relief measures risk a financial shortfall in later life

https://archive.is/SeSgL

[–] [email protected] 4 points 1 year ago (1 children)

This is going to be a timebomb, I'm sure of it. Rates are not going back to sub-2% for a long time, and more people are going to be looking at interest-only.

The banks are perfectly happy with this, provided people have at least some equity in the property, as it means more money long-term for them. But it is going to mean a lot of people passing retirement age with large interest-only payments still coming out.

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago)

Rates are not going back to sub-2% for a long time

I disagree quite strongly.

Economies limping along at ~1% GDP growth per year and little or no GDP per capita growth can't handle larger base rates for long. It's a self-correcting cycle - if base rates remain elevated for too long discretionary spending will collapse and many, many businesses/loans/credit with it.

Rishi promised to half inflation not because he's a financial genius with a secret trick, but because he knows two things: 1) what I said above, 2) inflation is often given as a YoY measure, so by December 2023 we're measuring inflation above the 10% inflation of December last year, and the country can't afford 10% inflation per year for long either.