The Uk's Mortgage Crisis: What You Need To Know

[@TheMichalaks]

Thanks for all your comments folks, It's fansinatinga reading them all.

[@syerye9748]

Please don’t go please stay long enough to vote the tories out 😂

[@kelvincasing5265]

@@syerye9748 Sadly, you'll just end up with another politician and there isn't much competence floating around nowadays!

[@loullouls89]

I'm glad someone is addressing this in a tone that is respectful and reflective of many

[@jenl2131]

It’s the same in Australia too - lots of people starting to worry and are already feeling the stress of mortgage rate rises! Our fixed term ends in December - going from 1.8% to 6.5%+. We’ve started paying the higher amount so that we know what we’re working with. It’s helped bring our budget in line with what’s to come - and we’re paying more off the mortgage until then. Tough times!! 😣

[@iluvpeaches2]

I would put the difference between the two mortgages into a savings account instead of sending it in. Then you will have a little cushion if you had a life event happen. If it’s already been sent to the mortgage company it’s harder money to liquidate and get to if you needed it.

[@GraceMarieBarry]

Same Jen, we're in Melbourne, going from 2.99 to 6.09 next month so not SO much of a jump but still significant increase in monthly payments. My partner and I spent the day at all the big banks on Friday, we negotiated our fees wavered, a free Qantas credit card (we hack for points) and a few grand cash back. Go and try your luck in Westpac, Bank of Melbourne and ANZ if you haven't locked already before they remove the cash incentive. Best of luck and hugs, I hope this is helpful! x

[@perle13930]

😱😱😱

[@movewithadam]

Stef, thanks for using your platform to raise awareness of this. I just recorded a similar video and then came across yours.. If homeowners don't 'bury their head in the sand', or if more people are aware of what is around the corner.. there are some changes people can make to reduce the impact. To do that, videos like these are so important!

[@midwestlakelife]

This is a fantastic conversation that people need to have much more often. I'm quite sure many people are going through the same things right now and unable to voice it as well as you do. Not only with homes, but with food and other expenses. Keep going with this. Offering up ideas for solutions... This would be a great series of videos from you.... Would be great to interview people who really understand how to survive serious downturns and economic strife? This would be great. Nobody is really doing this right now online that I've come across.

[@TheMichalaks]

This is a great idea. Thank you so much for the encouragement.

[@Anounceof]

Second this! Great idea!!!!

[@kelvincasing5265]

Some people are thinking about lodgers. Maybe. The government could also make mortgage payments tax deductible (as they used to be)

[@uktopcat]

It’s a bad situation but I only have so much sympathy for all those people who bought expensive houses when the base rate was 0.1% and now are surprised it didn’t stay at that unprecedented low rate forever.

[@stumac869]

What's the alternative, it's not their fault they were forced into a no win situation by corrupt central banks and incompetent governments.

[@kelvincasing5265]

True, but I would also add that the rate of increase was almost unprecendented. You might get a 5-year fix at 1.1% and be ready for 4%, but not many people will be ready for 8%. Not even the banks' own stress tests go that high. Furthermore, a lot of this inflation and now interest pain is due to the incompetent BoE, which failed to immediately and agressively raise rates when lockdown ended.

[@JK_Clark]

@@kelvincasing5265 look to history and you'll see sub 5% rates are not normal.

[@vihuelamig]

@@JK_Clark Part of the problem. They haven't been 'normal' for such a long time. Folk have become accustomed to paying huge house prices financed by very low interest rates. It always was a ticking bomb. Furlough may have exacerbated the problem but it's hardly the primary cause. The whole two decades of the 80's and 90's (20 years) saw interest rates from 16% down to around 7% at the end of the 90's.

[@JK_Clark]

@@vihuelamig a lot of people cognisant of historical IRs have been renting, in fact many sold because prices were ridiculous. The insanity during covid/HTB/SDLT cut was obviously a blow off top and anyone buying then were not using their brains, and anyone selling then was making a smart decision. Some people will lose in a HPC and some businesses will go to the wall, just like in recessions in the 70s, 80s, and 90s.

[@Barbara-yj5tl]

You said your mortgage will go up by THOUSANDS more each month. That means you’re already paying thousands per month. That’s a HUGE amount you must have borrowed. Surely you knew interest rates can go up as well as down…pandemic or no pandemic!

[@fleurmeston]

Yes! It's my first time commenting but I had to say thank you for being one of few people with common sense to link this to lockdowns! The UK is so depressing right now and I've been thinking about moving abroad for a while so have been engrossed in your videos about moving as well. I started watching when Grayson was a baby and have loved watching glimpses of your life journey so I really want the best for your family. I hope you find your way out of this mess because you so deserve it.

[@amberbiggs]

Same in Canada as well. I feel bad for those with variable mortgages as they didn't even have the lead time to plan! So rough. Thankfully I've got 3 more years left on my fixed rate of 1.89%, but the clock is ticking. I think this is a big lesson in not overextending yourself and taking the max you can afford, to live humbly and below your means because you just never know.

[@grace143ed]

Sorry to hear about how this is affecting you. In New Zealand our Reserve Bank (central bank) put up interest rates much faster than most countries. Mortgage interest rates went from 2.2% in 2021 to 6.5-8% now. There aren’t mass mortgagee sales though. People with mortgages are now just having all their discretionary money sucked up by mortgage payments.. which has pushed the country into recession. Also house prices have dropped about 20%. And high food prices are seeing food banks are absolutely overrun. Lots of very stressed out people 😢

[@davidgavin7280]

Don't worry, your dropping dead like flies in New Zealand too (so demand is definitely going to drop) but oddly the meejja in N Zealand aren't really covering it, hmmm, I wonder why...

[@joelawton123]

Sorry to hear this. I think forums like this are very useful for people though. It’s easy to think that this is a U.K. specific issue and it really isn’t Good to hear other perspectives.

[@Anounceof]

In the exact position as you, took an 8 month payment break. But have now just moved out of the UK and in process of selling our house!! You’re not alone! Been an absolute shit show. Glad to watch some real relatable content whilst I’m sleeping in my Air BnB.

[@kelliehudson5371]

Same in Australia, its bloody crazy and scary. My husband and I are both casual workers at the moment too which adds to the stress

[@tanyahagecoburn1140]

This breaks my heart! I have been watching your videos since you were in London, and I remember how you always wanted to own property. I know how hard you worked to get there, and that it is going to be taken away is criminal. The situation is very similar in Canada right now. My husband and I have saved for 10 years to get into the housing market, but luckily for us, we bought in early 2022, just before the Bank of Canada begin its rate hikes. Even so, we're already planning for our mortgage renewal in 4 years.

[@idaslpdhr]

I went through this sort of worry in 2008-2009, so I became pro-active, and dicided I was having NO life and every penny I could muster was going on the mortgage, I had 60k left on it to pay, last year was my final payment and I can't tell what the feeling was like, I don't blame you for moving good luck

[@irenethompson4076]

Thank you Stef for addressing this subject. Scary yes but there are options. I feel strongly that discussions are much needed and can be very helpful. People want to know they are not alone, especially when life experiences are not so positive. Social media wants happy, happy happy and positivity and perfection to often. Life is not that way. We have ups and downs and just need help from each other to get thru them. Keep sharing! 👏😘👏

[@DamianKeyes]

Great video dude, definitely worrying times ahead.

[@darrenmcdermott6443]

Your point made at 3.15 that people are not going to have any money left to spend on things has mortgages are so high is the intention, rates rise to dampen demand which then should have a negative effect on prices then lowers inflation. There is going to be a lot more pain as the BOE are going to raise rates at least another 3 times, they were too slow and called inflation transitory during lockdown. Most of the problems were are having now is due to lockdown as you said, as a financial adviser and lockdown sceptic in the UK i warned my clients in 2021 that this was going to happen and action was taken. Good luck everyone and remember we are on our own.

[@cp4512]

I’m very angry with the uk government too. They’ve made some shockingly bad decisions over the last couple of years that will haunt us for decades (whilst they partied away in Downing Street 🎉) 😤

[@davidgavin7280]

Change 'shockingly bad' for deliberate and instructed and you'd be closer to the truth. Your 'government' intends you, your family, your friends, your community and your country harm. Once you understand that, everything else 'bonkers' etc starts to make sense.

[@charlotteowen89]

I really appreciate how relatable and candid this video is - thank you. Finacially, things have been horrible recently and its been stressful for alot of people. Thank you for sharing.

[@glasgowchiropracticpaisley7340]

Amen 🙌🏼 Such beautiful clarity of such a f***ed up situation of government has dragged us into. I didn’t agree with the prison policy they imposed upon us and luckily my 2 year old son and I lived mostly in complete ignorance and made the best of the precious time we had together amidst the quietness. But the cliff was just pushed further back but here we are… tipping point is coming. Glad to hear you have made a decision about your future and look forward to watching you document your journey to Portugal. All the best 🙏🏼💪🏼😎

[@kellyallen3692]

Excellent information for those with mortgages Stef...My heart goes out to this younger generation.

[@macmaniac3080]

I’m from Portugal and will make you aware of two very different realities: visiting Portugal and livin in Portugal are two very different realities, beware and good luck, I share and sympathise with your pain

[@TheMikeymcg]

When I bought my home, although the interest rate were around 1.5% I checked what the repayments would be at 4% to check if o could afford it. I understand it’s higher than that now but it gave me an idea of what I could actually afford.

[@nick4uuk]

I have friends who borrowed as much as they could to buy a house as big as possible. I chose to raise my family in the flat which is still my first home. It's just enough space and really all we need. Well, now that the chickens have come home to roost (they were always going to) everyone seems unprepared and shocked. I don't get it, why weren't people paying down their mortgages hard, or factoring eventual rate rises if they weren't? I don't blame the people, but they need to take *some* responsibility. The rest sits with the mortgage advisors and banks for pushing people beyond their financial limits.

[@CraigPerks]

No one ever prepares themselves for the party ending unfortunately and financial education in schools is abysmal. When I first applied for a mortgage I was offered nearly £300k (in Manchester) and ended up taking out a mortgage for £165k at around 2.4%. Like many others, my fixed term ends next year, but unlike people who spent up to (and beyond) their limit I'm hoping I can weather the shock of a mortgage increase.

[@nick4uuk]

@@CraigPerks Sounds like you did similar to me. Since you've paid it down a bit the rise in payments should be manageable. My payments are 780 with a out 73 of that interest at 5.29%. A lot people will be paying 500+ on interest on much, much larger mortgages.

[@unclejezza]

Must be a nice view from that high horse eh Captain Smuggy-Arse :)

[@nick4uuk]

@@unclejezza Nothing stopping people downsizing to a large flat. Imagine the savings!

[@Paul9]

Same ones with two £50k cars sat on the driveway they funded on PCP.

[@myrtleesther8855]

I think debt and bailouts are part of the not so gr8 reset plan....it will be like a bankruptcy, agreement to not own any assets in future but the we were told 'you will own nothing but you will be happy.'

[@jackiewolf5206]

It’s loans like yours that were the basis for the crash back in 2008, or at least that was the case here in the US. They’ve basically done away with variable rate mortgages here-meaning you get in at a low percent for 5 years or so and then it adjusts to current rates. I’m surprised they allow those over there. We bought our house in 2018 and got a 15 yr loan at 3.4% and it’s not allowed to change. While we have equity in our home we can’t afford to move now because home prices and interest rates have gone so high here in Vegas. We wouldn’t be able to touch our house at the price it would be today! Chin up Stef! You’ll make the right decision for you and your family.

[@mommommom2020]

The terminology is different in the US. A fixed loan is fixed for the life of the loan, an arm is an adjustable rate mortgage. The 2008 bad mortgages were in large part, interest only loans (basically you are renting your house from the bank) and no documentation loans which were mortgages given out with no evidence the new owners would be able or willing to make a single payment. When you don't make a payment on your house or you're not paying down the equity and the housing market dips you end up being upside down in your mortgage (the amount you owe is more than the house is worth) and that's when foreclosures start to happen. You can still get an adjustable rate mortgage in the United States but they haven't been very popular because mortgage rates were at an all-time low for a very long time and nd there has been a lot of uncertainty about a lot of things in the US for a number of reasons which would make people not want to bet against the future.

[@HealthyWealthy808]

I believe one of the end goals is no privately owned property. They want the public to get sick of “greedy landlords” too. They want people renting everything from the powers that be. When you start connecting the dots it will start to make sense.

[@LuLuBeeBah]

The powers that be ARE the greedy landlords. So many private landlords in the Tory party

[@HealthyWealthy808]

@@LuLuBeeBah I agree. I know plenty of working class people in the building trade who have built up portfolios, too.

[@davidgavin7280]

​​​@@LuLuBeeBah they really aren't, you're clueless, many of these 'greedy' landlords are getting squeezed out too. Wait until till Black Rock is your landlord- then you'll know all about greed.

[@LuLuBeeBah]

@@davidgavin7280 I don't have a landlord, thank god. How is it clueless to say that there are many private landlords in the Tory Party, you only need to do a minimal amount of research to find this out.

[@davidgavin7280]

@@LuLuBeeBah I was referencing your use of the word 'greedy', though obviously financially motivated- many are far from greedy, and they're being raped by a Tory government- there's 189 different regulations that they need to comply with now and that's only going to get worse. 97% of UK rentals are owned by landlords with 3 or less properties, wait until they're all squeezed out- then you'll see greedy landlords

[@emilyscott6312]

Love that you cover these subjects as well as the silkies - so important 👏🏼👏🏼👏🏼

[@alicelouisable]

One of the scariest things is the older generations saying ‘back in my day interest rates were xx’ but even when rates were as high as 30% in 1980s mortgage repayments were a lower percentage of household income than they are on a 6% rate now! We listed last week, because we can’t afford the 80%pm hike on our repayments in October so now trying to get out before the prices crash 😢

[@tash7033]

Great discussion piece. Think it's an issue across the world - feel for those who borrowed as much as they possibly could from the bank, with minimum repayments (when rates were at an all time low) and are now feeling the pinch. Definitely a common experience here in NZ. Even we, who were/are luck enough to be able to pay off ours in bigger chunks, are feeling a bit stressed about things. When you mentioned the interest rates when you bought, I was shocked! I wish ours were ever that low her in NZ! We bought nearly 5 years ago at roughly 3% fixed, it has now gone up to low 6s - high 7s, with one more hike predicted. This coupled with the insane prices of every day essentials is really scary. It blows my mind the price of groceries these days. Sending love to your family. Very much enjoy your content and am a regular follower. Look forward to seeing where your relocation takes you and your next adventures :)

[@DarkJonas33]

The reason interest rates are going up is because we have given banks the ability to create new money in the form of debt (see the Bank of England report on money creation). This combined with quantitative easing (money printing) has lead to devaluing currency in the form of inflation. This inflation has been occuring in the housing market and stock and commodity markets since the 90's. Now it is happening in the wider economy due to QE in response to covid. The inflation has also been exacerbated by raising energy prices due to depletion of conventional oil and failing supply chains due to the Ukraine war and covid.

[@ThatMarkGilroy]

Well said Stef. I’m REALLY angry too. Good idea to sell up and take the equity you’ve got. I think this whole episode will end with a big housing crash leaving people who are (understandably) rapidly remortgaging in negative equity. Damned if you do… Important bit of ‘how we got here’ was Truss’ short but catastrophic reign as PM - the economy is still recovering from her mince-thick decisions.

[@TheMichalaks]

You’re right, I should’ve mentioned Liz, I think I’m trying to block her out.

[@davidgavin7280]

Oh dear Mark, you really don't understand anything. Truss wasn't ousted for her economic plans, they were considerably better (though still terrible) than Hunt & Sunak- she was pushed out by the Parasite Class because she wasn't doing what she was told. They want this situation.

[@stumac869]

The disaster has been zero interest rate policies since 2008 which has pushed up asset prices including houses way beyond their long term average making the rich much richer. A 5% interest rate is normal and will help normalise prices. It'll be a painful transition for some but it needs to happen for the sake of future generations.

[@elizabethandrus3848]

In America we call that Balloon Mortgage. A low rate gets the buyer in the home not realizing a drop in the economy and balloon rate on the horizon will sink the home owner. Usually it takes a year to be kicked out. Banks don't want the homes empty.Fixed rates don't change in the USA. Sell your home quickly before the rates go up. Move to Portugal and find a home well below what you perhaps can afford. Live cheap, save all!!!!!

[@mommommom2020]

This is an adjustable rate mortgage not a balloon payment. A balloon payment is a large payment that comes due at a certain period of time in the future (usually at the end of the loan term) It has nothing to do with the interest rate which is fixed. It is like a down payment but on the other end of the loan.

[@willcerny8596]

At least in the US, you’re locked in with your fixed rate for the term of the whole loan. The only thing that really changes are property taxes and insurance rates. Glad I was able to buy when I did at 3% for a 30 year mortgage. Although I plan on paying it off a lot sooner than that.

[@Goodman849]

I read home insurance has gone to the moon in florida and property taxes are generally expensive in the US?

[@willcerny8596]

@@Goodman849 Insurance costs depends on a lot of factors. My insurance is about $2K a year and my property taxes are about the same. Maybe a little more like $2.5K a year. Overall not bad for my location. Basically, the larger the house and closer you are to the water, you’re going to pay for it. Maybe in a linear rather than exponential factor.

[@Goodman849]

@willcerny8596 your taxes sounds OK. A little less than my tax bill was in the uk. But France or Ireland might be 400 euro a year or less. Insurance might be 150 euro a year in Netherlands for example.

[@willcerny8596]

@@Goodman849 that sounds pretty good. Also, there is no state income tax here which is probably why property taxes are higher. The tax system here is dumb. For the most part there are both state and federal income taxes.

[@laurenbrook2121]

We're looking at spending 6 months renting in Portugal potentially, we're renting a house in the UK currently but the contract will come up for renewal in October. We don't want to be in a situation where our landlords massively increase our rent because their own mortgage has increased! Looking forward to your videos from your trip to Portugal.

[@pixiepetal-jennie2038]

Hubs bought first house joint with brother in 1989. Interest rates went up to 11%! Sold his half share back to his brother at no loss to him as agreed. House prices dropped big time by 1993 when we bought our first family home and interest rate was ok. A small 3 bed terraced house, nothing impressive but within our price range if interest rates went up again. House prices climbed and its now worth 6x what we paid. Mortgage free after 25 years, we rented it out as moved into family farmhouse rent free with hubs work. Now 29yr old daughter is moving in, low rent as she can’t afford a home in any other way. It’s sad

[@Goodman849]

Kids have it worse now that previous generations

[@em......]

It breaks my heart, the state of the world. I am sad that you most likely will sell your beautiful house. Sending hugs from Australia.

[@craftpea]

Our mortgage is up in Nov but we’re scrabbling to refix ASAP. We’re set to talk with our bank on Friday but already the rate changes mean we’d be paying £70 more p/m than if we’d fixed last week, so by Friday we’ll likely be paying even more again. Imagine how many tubs or Lurpack we could buy with that?! I really do see us going back to the 1930s, baking our own cakes and snacks and making our own butter (easy btw, just shake the shit out of some double cream). Best wishes to you guys for the future x

[@Mel-ol1vq]

haha I gotta try this 'shake the shit out of some double cream' 🤣

[@Barbara-yj5tl]

@craftpea No need to go back to the 1930s, just go back to the 1970s/80s Those days we didn’t feel it was “our right” to have everything. Now people feel ‘entitled’ to have what everyone else has, even when they can’t afford it ie the latest mobile phone, big screen tv’s, Netflix, Takeaway’s, holidays etc etc. If people can’t afford them they shouldn’t have them…they won’t die!

[@Goodman849]

The last decade or so I have been a saver. My savings have been disappearing for years. Now finally I get a small return from my savings. I'll wait 6 or 12 months before I buy a house for cash. 3 years ago my dream was to own my own house no mortgage. Wanted to pay it off

[@maggieward5916]

I’m shocked at how many people have adjustable rates! Most people I know in US just do fixed 30 years mortgages. 2008 was a great learning lesson. Inflation is hitting us hard though.

[@sofiabravo1994]

Here in the states it’s not going too hot either…at least for our family…we have been living here almost 5 years, mortgage is over 1300 on top of bills medical bills car insurance we are barely scraping it. We couldn’t spend over 100 bucks for groceries. When I was a kid in 2006 a hundred dollars used to go be enough for 2-3 week groceries. Now it’s barely making a week worth..anyways we are at a point of selling our little home and living on our in laws property…it’s just too much and yet my husband makes good money…700k a year…selling everything may be our only way to pay our debt….we don’t qualify for government support either.. loans are not an option due to interest being too expensive the middle class is dead.

[@Goodman849]

Thats shocking. 700k is a lot. The US must be super expensive now

[@hh5050]

'You'll own nothing, and you'll be happy'

[@Nicstarmoore]

Exactly the same situation is happening here in Australia. Those that took advantage of the low-interest rates are now having to make hard decisions. The end of 2023 will be interesting (globally) that's for sure.

[@frmcf]

It makes no sense (outside the UK) to say that your "fixed rate will change". A fixed rate doesn't change: it's fixed. The UK "fixed rate" is a horrible misnomer. It's a variable rate with an introductory offer. That's what it would be sold as in other countries. Now, in some countries, they're trying to market something similar as a 'mixed' or 'hybrid' mortgage. 'Fixed', in most of the world, means fixed for the duration of the loan. To be clear, my point is not that you're wrong in any way, it's to highlight the distortion of the system in the UK.

[@rileykeff]

In America, I bought my first house last summer (26 years old) with my partner. We live in a rural area, but the interest rate is double what my older brother’s is. My hope is that here, the economy will hit the shit, then I’ll refinance my mortgage loan for a lower rate whenever we hit a recession (5.5% currently). Just wanted to share for any Americans, lots of areas are way more expensive than mine. Hope you both find a good new start in Europe.

[@Rougepelt]

Sorry to hear this, but at least you seem to have plans and look to the future. Amazing to think even a successful YT channel host is impacted by all this too.

[@daisysj]

It’s so important to keep talking about this and not allow the tories to distract us with banning boats. Our mortgage will increase by £700. People will downsize and downsize so what is left for FTB and renters? Nothing.

[@mikeparrott8304]

People like me told you all lockdowns were a wealth grab. You all called us conspiracy theorists. You got your way guys congratulations

[@mikeparrott8304]

FYI Large corporations will buy up most of the property after rates go even higher and the market crashes 25% (minimum). People will be renting forever. Then comes the digital currency and the devaluation of any savings you have .

[@alanoakden4817]

Good video. So many people are in houses they could only just afford with low % rates. Going from 1.7% to 6% is going to see lot of peoples mortgages almost double. I don't see how anything other than mass sales is going to occur. I'm not sure if this means house prices will go down due to the flash sales (which is bad , but also finally good news for first time buyers i guess) , orrrr if rich people buying everything up / people clambering for smaller properties will just drive prices further still. It's not like moving abroad necessarily solves the issue either, other countries have rates going up too, but to not quite the same extent.

[@babsalabs3984]

Yep, myself and my partner basically did this. We brought in 2022 and started looking August 2021, finally brought around a year later. We fought for every house but was out bid every time by cash buyers and landlords. Was honestly so awful. We ended up buying a small house at the same price as what a larger house was the year before. Absolute madness.

[@alanoakden4817]

@@babsalabs3984 Yeah i feel incredibly grateful we got the house I'm in now. The purchase almost fell through and when I took a look at other houses still available for the same price they were already so much worse. We got the house we wanted in the end, at the right price and for a low interest too all in April last year JUST before rates went up again. I feel very lucky, but also dread the renewal even if it is nearly 4 years away, I don't see things getting better soon.

[@creatingbalancefinance]

Great video. Our fixed mortgage came to an end recently and it’s eye watering how much more it’s costing us. Looking forward to hearing more about your potential move to Portugal. Will be interrelating to hear how it’ll work with schooling/ healthcare etc.

[@bluedragonfly550]

Thanks for this Stef. I’m not a homeowner (yet) but it’s good to know what’s going on in the property market. Perversely, does that mean that property prices are likely to fall in the near future? Incoming swings and roundabouts for homeowners and renters alike, it seems..

[@MrDuncl]

By the late 1990s First Time Buyers were skipping starter homes and going straight for three beds etc. Not surprising when they could buy my South coast three bed for £70000, just £5000 more than I paid for it ten years earlier.

[@babsalabs3984]

Also, anyone noticed how expensive it's got to shop at places like Lidl and Aldi?!

[@gabrielalibanio]

Doubled the prices...

[@Goodman849]

In 2019 I shopped at lidl in England 2021 lidl in Ireland. Prices were low. Now shopping in lidl in the Netherlands. I'm happy with the prices of bread and milk. Other items are a bit pricey

[@anadujmovic__]

Hi Stef! Thank you for an informative video, it was really interesting to watch. Was wondering if you have thoughts on the horrible housing crisis in Portugal, as you are considering moving there?

[@emma8526]

its the exact same here in Canada, it feels like the whole country is about to collapse. Housing is now in the millions, rent is absolutely insane, and food prices are so unaffordable that food banks are now overrun. Scary times.

[@MrDuncl]

Is the common connection Mark Carney ? (Governor of the Bank of England from 2013 to 2020).

[@imrang6055]

Thing is interest rates should never have gone lower than 3-4% they went to 0.10% this would have stopped Asset Bubble in House Prices here in UK. Lower interest Rates coupled with QE from 2007 has given us High Inflation. We need a asset price deflation 20-40% to adjust assets back to what Asset prices should be. Lower interest rates allowed people to be more risky and take on higher mortgages, thinking that mortgage rates could always stay low

[@mommommom2020]

In the US a fixed rate mortgage is a loan where the rate stays the same for the length of the loan. What you are talking about is called an arm in the US, an adjustable rate mortgage. You can traditionally get a three five or 7 year arm after which time your mortgage rate adjusts based on current interest rates. The arm allows people to purchase a home that they cannot afford now with a lower payment/interest rate under the expectation that they will earn more in the future or sell before the arm is up. I mean no one with a 30 year fixed rate (us) mortgage was paying 1.6% for the last few years. So it seems to me your mortgage product worked exactly as expected. If this was misrepresented to you, that is fraud and half of what caused our 2008 housing crash in the US. I am honestly shocked that they were able to move that loan product at all when 30 and 15 year rates were at a historic low.

[@EmGeniusz]

So sorry to hear how much you're struggling - I've been following you for what feels like forever and remember how excited you were to move into your current home and how much being able to buy a house meant to you. It feels incredibly scary atm, watching everything going up and up, not sure how everyone is meant to carry on apart from the super rich and people who own their houses outright 😬 the way food prices are rising is worrying and I feel for everyone who is struggling. I will say though, UK has had some of the cheapest and most affordable food in the world for a really long time. When you look at the earnings vs what has been spent on food in the UK and then US, Slovakia or any other European country, we're almost always the cheapest (that is, when you look at people who earn and pay tax in those countries, not immigrants that are higher earners in their home countries whilst living in cheaper locations worldwide - not trying to throw shade or anything, just think it's important to address that there is a big disparity there in what is affordable and to who). Name brands aside, we can still buy relatively cheap produce and basic pantry items in the UK. Wish I could say the same about the interest rates and energy prices...

[@OurlifeinNZ]

Yes agree, food in the UK in general is still comparatively cheap. I moved from the UK to NZ 6 years ago. The interest rates on residential mortgages here are currently 6 - 7%, up from 2 - 3% last year. Our farm commercial overdraft is currently 11%! Food is so expensive. 3L of milk currently $6.75 (around 3.50gbp).

[@Goodman849]

Moved from England too the Netherlands and English food prices are catching up or overstaking Netherlands prices with staples

[@diieold]

The same is happening in Canada. I worry for my mom, who has had to continue working past retirement age. She was able to lock in a better rate two years ago before the rates got astronomical, but I think the rates will be high for a long, long time and I fear for what will happen then. I’m anticipating lending a help on the monthly mortgage when that happens. This is a global issue, as you said, and it’s going to be its own pandemic of sorts when current low interest rate payers buckle under higher rates at renewal time.

[@Rawdil]

I remember when they introduced furlough. I work in a department with over 150 colleagues. I told as many people as I could to not take the Mick. Some were deliberately going around with their Track n Trace app looking for time off from work. I told them it's gonna bite back and we're all gonna have to pay for it one or another. Did they heed my advice? Of course not.

[@Fanny.Lattinger]

Same in Sweden. Luckily for us we can still manage but.. not everyone can. It’s so sad.

[@mrskfk6492]

You speak a lot of sense! I get exactly where you’re coming from. Good luck with your next adventure x

[@lnelliott]

Right observation that the £700bn injected into the UK economy through covid was "expensive". What I think your analysis misses is the fact that the vast majority of that money ended up in the hands of the rich and the mega rich. It's created a situation where wealth inequality is at one of its worst points in British history, which is a huge factor behind both inflation and the BoE's blunt tool to tackle it

[@maithaahmed5500]

The problem is this isn’t just a UK issue. A lot of currencies/economies are linked to the £ and $ so mortgages going up and cost of living becoming a real concern is affecting most places in the world. And if not that then lack of adequate healthcare or schooling etc…

[@ryangibson4226]

I like your content and I largely agree with your sentiments throughout. The property market is unsustainable and it does need some sort of correction. What I would add however is that you should perform some type of personal stress test when taking out a mortgage. A property should only be a specific % of your net worth and you should be in a position where you can afford the repayments should the interest rates increase. This is mortgage 101 really. I appreciate the rates have risen rapidly due to a number of factors but your housing costs should be only a fraction of your outgoings. Furthermore, overseas holidays, campervans, Tesla's are all extreme luxuries which many don't have and further stretch your monthly outgoings. It's no surprise that this has come as a shock. As much as the incompetent government is to blame you need to have personal accountability by keeping your mandatory spending as moderate as possible. Expensive car finance and mortgages are always open to these types of Global financial crises. I feel for you but hopefully a lesson in making sure you have adequate reserves to ride these types of situations.

[@LuLuBeeBah]

If you live in the South West of England I don't think it's possible for your housing costs to be a 'fraction' of your income. I work full time, single income and want to be near family. I was fortunate to get on the property ladder 17 years ago. I couldn't afford to live where I do if I was starting out now.

[@ryangibson4226]

@@LuLuBeeBah I completely understand Lucy and can emphasise with the situation. But there's also an argument that many have inflated their outgoings and haven't stress-tested their mortgage. It's a really important financial literacy lesson which more need to be taught. Interest rates were at an all-time low. It was clear they would eventually rise. Granted not as quickly as they have but you need to make sure you can afford your financial commitment.

[@LuLuBeeBah]

@@ryangibson4226 I agree with you, but unfortunately we can't stress-test for everything. When I first got my mortgage I was paying 8%, I didn't earn a huge income, but I didn't have any dependants so most of my salary went on my mortgage. In 2019 I considered moving to a bigger property, and crunched the numbers if interest rates were to rise back up to 8%.Thankfully I decided the risk on one income wasn't worth extending my mortgage so much. So glad I made that decision, but I did A LOT of research and I in no way have financial expertise. The problem I think is the rapid rise, and the fact that wages haven't risen to keep up.

[@vvkzaveri]

Sad to see this mate but I would blame all the buyers who were bidding up against each other to inflate the house prices without any respect for their affordability.. If people loose their homes, seriously no pity for them cos they should have done appropriate due diligence and shouldn't have stretched themselves up to the limit of borrowing.. You can still go and speak to many people out there who still believe that house prices will only ever go up with small blips of 5% here and there!

[@Jadestonk]

Hope those people get financially destroyed

[@davideyres955]

I do feel very sorry for people that have suffered with the house prices in recent times. The cheap borrowing has jacked house prices up so much that they painted themselves into a corner. The house prices were only sustainable with low mortgage rates, but with inflation hiking up there is no alternative to putting interest rates up and unfortunately it’s the mortgage payers that will pay the penalty. This comes from the housing cost being excluded from inflation measurement by new labour and the house price rise because of that and other manipulations they did to fund their spending spree effectively funding it all of false growth via hidden indirect borrowing. The best advice I gave to plenty of people is to pay down your mortgage and get the payments reduced rather than the term of the loan. You see the result in your next payment directly and although it is not big figures it’s not years in the future either and if you invest that extra money it’s going to work out the same in the end with the added bonus that if you have to stop you have the resultant lower payments now and that may keep your head above water rather than having to move to a smaller place. Don’t get me wrong the Conservatives have equally screwed the market with help to buy but they could not put the inflation manipulation genie back in the bottle, but help to buy was idiotic and I said so at the time. The trouble is that overpayments take a while to really show difference, but if you have time on your repayment then for the love of god overpay. If you don’t If house prices start to fall badly you may find that your loan to value ratio goes up to a level that means that you won’t qualify for the cheaper loan s and will be even more screwed when your fixed ends. I over paid by not spending for about 3 years and pushed my mortgage payments down so that the remainder of my fixed deal was silly cheap and ended up clearing it years early. I do wish all affected by this insanity the best of luck but don’t just ignore it and hope interest rates will come down by the time you come to remortgage.

[@bonditltd5346]

With the new agreement from the government, there are more options to ride out the storm. The U.K. still has one of the highest gdp and jobs, so plenty of opportunities. Portugal is cheap to live and a good option if you can find work or work remotely, but the golden visa I think has ended. Downsizing, moving to cheaper areas ( there are low crime, low cost areas) will help. Don’t despair

[@julieparker5043]

To anyone struggling with finances, remember you are not alone. It’s an absolute shit show. I will say though that the 1-2% mortgages were never going to last forever. My parents paid 15% interest on their mortgage, although admittedly our wages haven’t been rising in line with inflation for some time (from my experience anyway). Thanks Stef for raising the issue and the shitty Tory party.

[@LuLuBeeBah]

Well said

[@Jayboy1983]

The whole thing about rates previously being 15% isn't relevant. As the 15% on a mortgage that was only a fraction of the average mortgage today and the house costs vs wage is so much higher than back then that this 6% today is worse than the 15% back then

[@seandunderdale]

The point still stands, that mortgage rates were at historical lows and would not stay there. To spend your max on a house at historical low mortgage rates is naive.

[@JK_Clark]

@@seandunderdale 'Rates can't go as high because loans are so much bigger today' is such a dangerous and reckless way to look at your liabilities.

[@JK_Clark]

@@Jayboy1983 'Rates can't go as high because loans are so much bigger today' is such a dangerous and reckless way to look at your liabilities.

[@jemmah4723]

Great video. Things are going to get very, very bad. Millions of people won’t be able to afford their mortgages when their fixed rates end. It’s extremely worrying. I am sorry to hear you are going to have to sell your house but I think it is absolutely the right decision as this situation isn’t likely to get better anytime soon.

[@ruthbindas2039]

Our fixed rate came to an end in May just gone 😓 shocker, our new fixed rate deal is hundreds more per months than previously

[@mattjackson777]

The real problem is people for the last 20 years have been paying way over the odds for houses as the banks allowed people to borrow far more than historically allowed. What’s happened is people have effectively been bidding against each other for houses using tonnes of debt they’re going to struggle to pay back. What needs to happen is for house prices to crash and halve in price and for restrictions to be implemented going forward to prevent banks from lending more than people can afford. The government are mostly to blame as they’ve done everything possible to blow up the housing bubble and keep it inflated even though it was unsustainable over the long term and ultra cheap debt wasn’t going to be around forever. The average house should be around 4 times the average salary, but houses have been selling for 9 times average salary and in some areas even more. The prices need to come down, it’s as simple as that.

[@carathomas8398]

I’ve been following your channel for a very long time. I’m hoping that things work out and you land on strong ground, wherever that may be!

[@helenobrien4596]

I have never been able to understand mortgages and interest rates but i do now after listening to you Stef, i am sorry you might have to sell up but i hope you find your happy place in Portugal x

[@evahalkova2859]

Just an idea, would it be possible to rent your house while living abroad? You'd have the extra income to pay your mortgage with. Sorry if I am being too naive suggesting this, but I remember how much effort and ideas went into the reconstruction of your home so it feels quite sad that you want to sell it.

[@Kavita_826]

Thanks for this Stef, the whole thing is a nightmare. Im so sorry that you have to sell up & Exit. But won't you have to pay school fees in Portugal for the boys? And will you buy out there or rent? I believe you need to purchase a property minimum €250,000. We were looking into it ourselves. I wish you ALL the best and tbh don't blame you. Thanks again for the video

[@gabrielalibanio]

School is free, except if you go to private schools, but at least they will have a wonderful education. They are allowed to be, dress and groom as they wish. It's wonderful education...

[@Kavita_826]

​@@gabrielalibanioare you in Portugal? 😊

[@mehnaz8949]

This is happening in Canada as well exactly!

[@robinrdale8318]

The shocking thing with all this is that if the Uk news had reported more on the inflation in the US last year a inflation wave which was clearly going to hit the UK then people could have changed there mortgage last year to a fixed rate to get thru this. When it happens in America it also hit us next

[@stevenrobinson5864]

Anchor price gone up whilst size gone down from 250g to 200g, that's the real issue at the minute.

[@insidiousinflation8605]

I feel your sentiment. The UK is in one hell of a mess. The west is coming to an end but I can see a big depression in the horizon. Get some gold and silver

[@rebeccan.8235]

My family is in a very similar position to yours. We live the other side of the world and your story mirrors what we are going through also. We are so angry with the corrupt, f*cked up decisions that have led to this - like you we have worked so hard for our home and when our fixed rate finishes in 6 months we are screwed as there is no affordable housing here! Luckly we live in a hot climate so looking into tiny house living. Its bad in australia but the UK seems to have really lost the plot!

[@autumndroplet9776]

Fantastic video Stefan, loved the conversation and please keep it up!

[@andrewfoster4359]

America is in a slightly different position - people usually take out 20/30 year mortgages there and the rates are set for the entirety of the loan period so aren't as badly affected by what is probably most people's most significant payment changing due to inflationary cycles. Obviously they will still suffer the impact of inflation on other spend although inflation is reducing there now. The key issue this time compared to other times we had rampant inflation and mortgage hikes is the relative increase - people talk about the 90s going up to 15/17% rates but that was from a usual 5-8% rate, so the increase bad as it was, was usually a doubling impact. For people now going from under 2% (Like my current fixed term rate) to over 6% is that this is at least tripling if not quadrupling for a lot of people. Add to that is that a lot of mortgages are already at 30 year lengths and that government ineptitude as you correctly state pumping billions in with 'free' loans made house prices increase even faster - remember the previous couple of years of madness with 20% plus house inflation?? It all adds to an unsustainable position. On general inflation the various companies impacted by 'the war' have seen their costs come down to levels around the start of the war (look at wholesale gas/electric prices now back to where we were 2 years ago more or less) but haven't then reduced their costs back to the same level, we've had the reports that Supermarkets are ALL making an extra 6p/litre margin on their fuel compared to last year so fuel should be down to around 135p/litre by now, etc etc, this is where the government could be a lot stronger for sure if only threatening all these companies with a windfall tax if they don't reduce their costs to the public for instance. like you said, no idea where this will all end 😞

[@Tomahawkfalcone]

We are moving to Australia in September/October, can't wait to get out of here. Been planning to go there for the last 4 years, everyone says how expensive it is there, but when we were there end of last year everything was either cheaper or the same price as the UK. UK is broken

[@Lander76]

Why would you move to Oz? Property prices there are the most expensive in the world!

[@Tomahawkfalcone]

@@Lander76 depends where you live in Oz, like everywhere else in the world there's cheaper property and expensive. Like comparing London with the rest of the UK, totally different

[@pataleno]

I live in the North of UK. Had a friend living in Surrey asking were are good areas to live. They are looking to downsize and move up north as they said they won’t be able to afford their 2k a month mortgage When their rate ends.

[@daddo1600]

Question - If the banks extended the current rates for 12 more months wouldn't that make sense rather than people not paying at all for 12 months?

[@annapage1410]

It's happening already here in Australia. I will never own a house. And those who do can know longer afford their mortgages. Suicide rates are through the roof. Makes me sad

[@kittygvlogs]

Glad to hear we’re all on the same boat. It really sucks right now! Thank you for making this and giving some reassurance that we’re all worried!

[@johnmunro4952]

Interest rates are soaring ( relative to what it's been since 2008) and values are going to drop. The rising waters have finally reached the haves.

[@bogstandardash3751]

What I'm struggling to understand is were lots of people to lose their homes, who would be in the position to buy them? If people with decent jobs lose their homes because they cannot afford the mortgage based on the internet rate and property value, nobody else afford them either... So the price of them falls to a level where people can afford them? So... The people with decent jobs buy them again? If it just corrects itself once there is a price correction, why have the blood bath in the first place?

[@NebMotion]

because people who bought property at inflated prices and cant afford the repayments will go into negative equity and be forced to sell at a loss, most likely to some rich cash buyer / property investment firm

[@bogstandardash3751]

@@NebMotion thanks for shedding some light. But I struggle to understand your point because people are getting out of BTL in their droves, so why would someone but them as an investment with the high interest rates. I suppose you are referring to the tipping point where property prices start to rise because of the demand?

[@NebMotion]

@@bogstandardash3751 the people who will be buying are people or corporate entities with enough capital to buy homes as investments without needing to take out a mortgage, the fact that no normal person can afford the high interest rates will result in market crash and high drop in property prices, those who cant afford current mortgage rates will be forced to sell at a loss to cash buyers who will swoop in and profit off the collapse in house prices like they always have done

[@sebastianvagabond4692]

Bought a house in Bulgaria 5 years ago and have never returned to the UK. Europe’s best kept secret.

[@Goodman849]

How are you getting on with the language barrier?

[@lovelifementoring5399]

It's so good to talk about as it's happening to all of us. 😢😊

[@Tomm9y]

For new build homes mortgages need to be based on the construction cost, not the hugely inflated prices created by the cartel of land bankers, developers and financiers. Houses require maintenance, repair and ultimately rebuilding. Cars are a example of something which devalues, banks won't lend you £20,000 on 10 year old mondeo. The mortgage industry is a form of taxation, the banks make a lot of money on all of the interest, they hold only a small fraction of assets to back up the lending. I think you are wise to get out of property, but do put even small amounts in very well diversified investments, including metals, indian investments, currencies, etc.

[@pippipster6767]

Called my bank the other day about my mortgage coming to an end and needing to refix. It’s going to cost me 4 x more per month !!! Like a lot of this financial shenanigans that goes on … my question is WHY? This is just going to lead to tremendous profits for the bank. Just as it is with the utility companies. There was a lot of apparent helping out over Covid, but this is absolute payback time people. No such thing as a free lunch. But if this country is not careful, it will destroy itself. It is already in the most dreadful state.

[@veroniquefaison]

Great info Stef. ❤

[@user-gz6tx6yp3v]

Most people tend to focus on the here and now. These rates riaes are coming thick and fast in their attempt to shock the system to crash the rate of inflation. Once it settles down, interest rates will come down, and I believe that will happen within 18 months. They will probably settle at 3% with mortgages just above that level. Hence the 12 month home owner relief to tie people over. Remember the World's economies are not pegged to anything tangible, everything is run on debt. If that debt is too expensive there's no growth or money creation. Don't panic, work with your lender, go temporary interest only etc. Good luck all.

[@user-gz6tx6yp3v]

@@swhiting100 The interest rate won't do anything to inflation from a consumer perspective, although it is hitting them this is cost based inflation. Where it is having a real effect is in business and commercial lending. Companies can't expand without debt, many can't maintain their business without it and will contract as a result. I work in finance and construction and we are already feeling it and costs are dropping as supplies overtake demand. So inflation will fall, just not for the reasons most realise. They can't very well talk about the unemployment that's going to hit, because that would add further worry.

[@wildgeeseod67]

My fixed rate finishes next week. I can’t wait because I’m going to pay the mortgage off in full - 11 years early. I live in a seaside town and worked all the way through Covid as I’m self-employed and was entitled to no support. I couldn’t believe the amount of people visiting the town after lockdown ended, living it up on free Covid money. That’s when I thought ‘this isn’t going to end well’. So my wife got a full time job and we started saving and saving for the moment things go wrong. We upgraded our boiler which saw our bills drop by 40% when everyone else’s bills were going up. And next week we’ll be completely debt free. I just can’t believe everyone didn’t see this coming and try to prepare. It’s been years coming. I don’t work in the money industry, so don’t have any expert knowledge - I just put it down to common sense.

[@decoyrev3219]

You absolute genius

[@ratttttyyy]

Didn't see the study on the effectiveness of lockdowns mentioned on the BBC.

[@LuLuBeeBah]

Massive inflation, profligate spending of taxpayers money on unusable PPE and the next to useless Track and Trace thing, Truss and Kwarteng crashing the economy, Brexit, the lack of social housing, and over a decade of wage stagnation is the perfect storm for this utter shit show we find ourselves in. The next government will have to try to undo years of erosion. I live in Bristol it's the 2nd most expensive city to live in after London. I'm extremely fortunate to have a low mortgage on a 2 bed flat, but I'm a single parent with one full-time income and a child who eats treats for England. I don't take my situation for granted though. It's scary times. Wishing you luck 🙏😁

[@lodersdriving]

Totally agree with you!