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0 sats \ 7 replies \ @orthzar 3 Jul 2023 \ parent \ on: Daily discussion thread
Here in the UK I have been reading many horror stories of rapidly increasing mortgage payments, which is all further compounded by the rising costs of food and energy. It's not uncommon for people to be paying +£1000 PCM more now than they were a couple of years ago.
It sounds like a lot of UK home owners have variable rate mortgages. I don't know why anyone would sign up for that kind of mortgage, especially considering how badly people were burned during the 2007 housing crisis. Those who don't learn from history...
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0 sats \ 4 replies \ @nullama 3 Jul 2023
I don't know why anyone would sign up for that kind of mortgage
If it's the only option available in the country, then that's your answer.
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10 sats \ 3 replies \ @orthzar 3 Jul 2023
We're talking about the UK, where variable rate mortgages are not the only option.
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100 sats \ 2 replies \ @nullama 3 Jul 2023
They only have fixed for a few years only, then it turns to variable.
Example: HSBC UK has up to 5 years fixed, plus if you have a fixed mortgage there are fees like early repayment fee, booking fee, etc
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100 sats \ 1 reply \ @orthzar 3 Jul 2023
I stand corrected. That's actually completely insane. With a 25 year mortgage, you'd be guaranteed to have to deal with at least 2 recessions (which are typically 7-11 years apart), any one of which could push your mortgage payment beyond what you can afford. In the best case scenario, you're savings would get wrecked partway through the mortgage term.
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0 sats \ 0 replies \ @l0k18 4 Jul 2023
And they call you a conspiracy theorist when you say the banks are bleeding us dry!
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0 sats \ 1 reply \ @kepford 3 Jul 2023
It blew my mind the first time I heard about the rarity of fixed rate mortgages like we have here in the US. I don't know if the US has more fixed rate mortgages due to free market forces or regulation. My guess is a bit of both. I can't imagine taking out a 20 year variable rate loan. Makes me wonder if variable rate mortgages lead would lead to less debt which might lead to lower real estate prices (a force driving down market price).
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10 sats \ 0 replies \ @orthwyrm 3 Jul 2023
Likewise, I was surprised to learn that you guys in the US had access to such long term fixed rate mortgages! I'd assume that your system promotes a greater accumulation of debt and thus pushes up house prices.
Ten years ago the average UK house price was ~£170k, and now it is sitting at around ~£290k (a ~70% total increase, or ~5% / year). Which doesn't seem so bad, until you realise that average wages have only risen by ~20% in the same time period.
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