Britain’s Mortgage Crisis!

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Rising mortgage payments are squeezing the finances of millions of borrowers in Britain, threatening to undermine household spending and the broader economy.
The dream of a soft landing that would have the Bank of England squeeze out inflation without condemning the country to a recession looks increasingly remote. Inflation has been more stubborn than expected and is forcing the central bank to go with a bigger-than-expected rate hike that took the key rate to 5%.
What does this mean for British housing affordability?
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Опубликовано:

30 сен 2024

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Комментарии : 1,2 тыс.

@PBoyle Год назад

Get Surfshark VPN at surfshark.deals/BOYLE. Enter promo code BOYLE for 83% off and 3 extra months FREE!

@dan438 Год назад

I just love the picture you used for "food in Germany" (15:54) As a German, I have to say, though: Mettigel is worth every penny! :)

@gabakusa Год назад

please make audio version of your books!!

@phumkhmertv2028 Год назад

Financial comedian 😁 as a compliment

@Rejistania Год назад

I would suggest not to partner with a service that can be used to circumvent RU-vid advertising by switching to a country that is not a monetised market.

@Rejistania Год назад

@@dan438 Yes! I miss Mett since emigrating to Ireland.

@HowMoneyWorks Год назад

Stopped watching after you doxxed me with that photo at 0:15

@thepeff Год назад

"Math isn't for everyone." -Patrick Boyle, Economist and Badass Emcee

@thepeff Год назад

@@darrinito According to Bing the average home price in the UK in 1970 was £4,057 so maybe math isn't your thing either...

@thepeff Год назад

@@darrinito Look if you're gonna go after someone's math you should be prepared with some numbers. That should go without saying. Keep your UKIP math to yourself it's done enough damage already

@RemusKingOfRome Год назад

Some say maths is WACIST ! :D

@PabloTBrave Год назад

@@thepeff1970 was pre decimalisation that pound bears no relation to the current pound except in name .

@thepeff Год назад

@@PabloTBrave except for on decimalization day the pound, shilling, and pence was converted directly with the same currency in circulation… 🤪

@marcoz326 Год назад

Not just the UK. Canada is mainly on 5 year terms, and the debt load here is astronomical. Massive problems ahead.

@kennyg1358 Год назад

The party is over

@TheCatherineCC Год назад

@@strange-universe Yup. It's all "fuck you" and people are going to lose their homes. But at least wealthy multinationals will profit by buying up housing and renting. $2,775 is the average cost of a 1 bedroom rental in Vancouver, similar rates in other major cities, no jobs anywhere else. We live in hell.

@andrewmccoll1582 Год назад

@@TheCatherineCCBanks will just let people spread their mortgages out to 60 or 70 years. The US system of permanent interest rate locks is asinine.

@TheCatherineCC Год назад

@@andrewmccoll1582 or that. Less work than renting it out and they will just grab it when it goes to estate.

@AnhNguyen-hn9vj Год назад

I still remember a coworker he just got a job after graduation a few months and started to buy a house. damn. lol Many people worked for years with savings and still didn't risk to buy a house. All i can say is many people are just over confidence when there are so much uncertainty. They make too much risks and will lose everything if things are not going well with borrowing and debts on their back.

@ninjagaiden2277 Год назад

One thing to note : most of the U.K lenders over the last few years have publicly come out stating their intention to become landlords - Lloyds bank for example stated it intends to be the largest landlord in the U.K. by 2030.

@davidpaterson2309 Год назад

Of course. If you were in the business of lending money at interest to people buying houses, and you noticed a demographic trend (“noticed” is too mild - it jumped up and bit you) called “generation rent”, whereby first-purchase house prices were becoming an unachievable goal for many younger people, you might conclude that the market for new lending (your product) was going to shrink but the market for rented accommodation was going to grow. Business strategy 101.

@royalbiscuits8442 Год назад

@@davidpaterson2309I would argue that the banks willingness to lend such large sums of money is one of the reasons that we have such high property prices. Fix the average mortgage at 2.5 times the average income for a household and property prices would drop.

@davidpaterson2309 Год назад

@@royalbiscuits8442 You might have a point there. But just from a business strategy and competitive point of view, if money is cheap because of government policies, lenders will have to find ever more creative ways to compete with one another because the their basic proposition (interest rate x loan duration) is blown up by universal availability and low price. You might reasonably say that the consequence of that is inevitable - people get into debts they can’t subsequently afford when the government changes policy - but while interest rates are historically low, what were banks to do to enable them to compete with other lenders? Taking the moral high ground might have been admirable, but it would have lost them market share by the truck load.

@royalbiscuits8442 Год назад

@@davidpaterson2309 oh absolutely the governments interest rates are influencing the banks, and I appreciate that business need to survive. But could the government not step in with regulations to suggest banks that offer more money than 2.5x household income are un-stable? I feel we are in a bit of a catch 22 here as house prices are just off the scale and need to fall, but if they did rapidly drop a big % of the population would be in negative equity, which in turn creates a whole new host of problems.

@HIYAharry Год назад

Lloyd's, L&G and M&G have, mainly for their insurance business. They all want long term stable cashflows.

@MattMcQueen1 Год назад

The eighties were terrible for UK mortgage holders - high interest rates, negative equity, and the endowment mortgage scandal were quite a heady mix. However, low house prices and the low multiple of your salary you were allowed to borrow certainly mean that the eighties can't be compared to the situation today.

@stainlesssteellemming3885 Год назад

Yep - I remember the day in 1992 when my adjustable-rate mortgage hit 15% for a few hours before England withdrew from the ERM and it settled down to a barely-bearable 10%.

@BSideWasTaken Год назад

Once again for the Gen Xers in the back lol

@paulivankovich7349 Год назад

Same on Australia in the 80s I couldn't get a mortgage for more than 1.5 to debt to income ratio today they think nothing of a 6 to 1 ratio it's over leveraged and the govt can afford to fix it as it's now a Ponzi scheme

@jedg4746 Год назад

I had a mortgage between 1992 and 1996 at 10% on a house which was worth the same amount 4 years later when sold - no capital growth. It would have been much cheaper to rent. It looks like it’s going to happen again. But renting is much more expensive now due to highly leveraged buy to let’s.

@mb-3faze Год назад

In 1988 I was offered a 9.9% mortgage but by the time the contract was completed it was 10.5%. Within a year and a half it was close to 15%. Even in 1997 when I was in the market again the rates were in the 6.9% range - and that was in the States. The consensus then was that anything under 6% was 'free money'. The lack of Netflix, Starbucks and avocado toast made all this affordable (well, sort of).

@robertmckinlay7242 Год назад

I've sympathy for the lady who missed her opportunity to fix her mortgage interest rate at 1.1% for 10 years only to get burned with a renewal deal at 5.63% for a year. In the UK, homeowners with mortgages are encouraged to look for deals. In the very recent mortgage market, all the competition was fixed at extremely low rates, so I understand her decision to gamble on preserving mobility over stability. It's true maths isn't for everyone, and as I include myself in this, neither is economic forecasting.

@jago5373 Год назад

I am not sure this is correct. She was 'trapped' by buying her house, the mortgage was a side effect of this. The 10yr deal was a method of handling the consequences of her decision to entrap herself. She was bad at maths and not too great at understanding the language used in her purchasing contract.

@robertmckinlay7242 Год назад

@jago5373 A mortgage isn't a side effect, it's a loan. Very few people in the UK have the luxury of being able to buy a home outright. As Patrick said in the video most UK mortgages revert to a variable rate when the fixed period ends. As a UK subject I can tell you the UK BoE interest rate rise has been sudden and rapid after a relatively stable low interest period that lasted several years.

@hypothalapotamus5293 Год назад

" In the very recent mortgage market, all the competition was fixed at extremely low rates, so I understand her decision to gamble on preserving mobility over stability." It's always summer until it isn't.

@yokomotooto1255 Год назад

I've none at all. 1.1% is free borrowing.

@James-yl3kk Год назад

1.1% for 10 years at the time would've have cost her more. she chose to save money in the short term, very big mistake.

@nerd_abroad Год назад

Millennials who bought a home in the last few years have been so unlucky. First of all facing sky high house prices due to a decade of the lowest interest rates in history. And now facing massive rises in their mortgage bills AND potentially a large imminent drop in the value of their house. Plus much higher cost of living, plus huge student debts that previous generations didn’t have. Financially this is such an unlucky generation…

@ordoabchao4202 Год назад

Yup. And the government encouraged them to do so with stamp duty holidays in 2021 and 95% mortgage guaranteed. They got truly f***ed. But hey, at least they can have unlimited genders ;P

@quixomega Год назад

I live in Canada, and this sounds suspiciously like the current state of our housing market. Lots bad mortgages sitting on the books of major banks all rolling over in the next 1-4 years.

@tobybrown1179 Год назад

And Australia’s are rolling over this year and next

@samsonsoturian6013 Год назад

Come on. We all know you'd say that regardless if it were true

@crashingatom6755 Год назад

@@samsonsoturian6013what? 😆

@graham1034 Год назад

While it's a big deal for the UK I'm sure, affordability is still much worse in Canada, Australia, and New Zealand, which are dealing with similar interest rate increases. E.g. for my region in Canada the average household income is C$72,000 while the average condo price is over C$800,000. Meaning a condo is over 11x the average household income. For houses its almost 20x. Our interest rates are in the 5.5 - 6% range currently with another hike or 2 expected this year.

@philmckay9973 Год назад

The english are in a situation probably x2 australia/canada combined…they literally voted to stab themselves economically

@Indigo_Gaming Год назад

Love your content, Patrick. Never been more interested in Finance until I heard you talk about it in detail on one of CoffeeZilla's videos. I am very thankful to have become a homeowner last year in the States, but I couldn't imagine signing a mortgage whose rates and terms could randomly change in the future. It's already a lifelong commitment, I had no idea of the variable rate in the UK. That sounds nerve-wracking.

@milkboccle Год назад

You can do either variable or fixed, variable until recently didn’t move very much, and you can jump ship to another lender quite easily, usually for a small admin fee, so the market would dictate the price to a certain degree, but you can fix for 2, 5 or 10 years and it only costs a little bit extra, but it locks you in, and to get out of a fixed mortgage, you will usually pay a penalty percentage back which decreases every year (could be 1% for every year remaining) TBH, I thought these were both options in the US, are all mortgages fixed then?, How much to get out and go to new lender for a better interest rate or is that not possible?

@e2rqey Год назад

Didn't expect to see you here!

@MichaelCampbell01 Год назад

@@milkboccle You can do variable or fixed in the US as well, but when someone in the US says "mortgage" with no qualifiers, they will almost always mean "30 year fixed". 15 year fixed are becoming more popular, and ARM's (as we would call any adjustable rate mortgage for any term) were getting super popular prior to 2008.

@bonwatcher Год назад

@@MichaelCampbell01 Exactly. The worst part about the mortgage market right before the crash in 2008 was that the banks were giving loans out to anyone that had a heartbeat... and maybe even some that didn't.

@jdrancho1864 Год назад

You should know that in the history of the United States, the 30-year mortgage is a relatively recent invention. It was made possible as part of the wide-ranging changes brought about by FDR's New Deal. Prior to that, real estate transactions in most cases meant a significant down payment (30-50%) and payments for no longer than about five years.

@ordoabchao4202 Год назад

The UK Government lured first time buyers into property in 2021 with stamp duty holidays and with guaranteeing 95% LTV mortgages. Now the first 2y fixed rates will start rolling off. Nice prank 😂

@ninjagaiden2277 Год назад

back in day at 10-15% on a 40k - 80k mortgage, I could have worked in Woolworths as a shelf stacker and still afforded a 2-3 bed flat or house. Today I wouldn’t stand a chance - now even two doctors would struggle to get a mortgage for a detached house in a modest to affluent area. Ie Chiswick.

@salkoharper2908 Год назад

Yeah most of the entire South of England is now unaffordable. While the North of England has better housing costs, the lack of jobs prevents younger people finding employment. England is really only run for the benefit of the rich and the old. The postwar dream of hardworking young people being able to progress with social mobility and have a better life than their parents is over. If you want that dream it's better to leave the country.

@leonhenry4861 Год назад

London is for the really rich and the poor so it’s not comparable to the average of the uk. Those 2 drs could move to say Nottingham and they’ll be just fine.

@windup78 Год назад

House price are inflated. They are completely disconnected from real economy. None of this will be fixed, until a major market correction.

@samsonsoturian6013 Год назад

Come on. We all know you'd say that no matter what prices were

@clinthufkie3242 Год назад

Market won't self correct and government answer to inflation can't always be interest rate hikes. Capitalism is busy eating it's own head.

@poornoodle9851 Год назад

Another perspective is that incomes are deflated…

@intruder313 Год назад

@@poornoodle9851 Both are true.

@PBoyle Год назад

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@jdrancho1864 Год назад

That was the main headscratcher in the story I read just this morning. Being used to a fixed rate mortgage , I wondered how rising mortgage interest rates could pose a problem if a borrower already had a mortgage, unless their mortgage was adjustable, in which case they should have known that an increase would be a possibility at some point in the future. But that would only be a fraction of all the mortgages out there, or so I thought. So thanks, Mr. Patrick, for clarifying a point that the reporters thought didn't need clarifying.

@wolfen210959 Год назад

@@pointvector1951 The reason why the UK market operates the way that it does, is largely down to the way that governments offer little or no support for banks/building societies to offer cheap mortgages, and the baffling decision to repress new house building to maintain a constant increase in house prices, year on year. Such measures are clearly not sustainable, in the long term, but in the short term, typically 4-5 years which is the usual term of the government, the population generally feel better off than they actually are, simply because their home has seen a large increase in value. There are occasional bouts of market re-adjustment, where house prices will fall due to higher interest rates for mortgages, but generally houses are seen as a good investment, rather than as a place to call home. Obviously at some point in the future, and the signs are currently not looking good, there will be a large collapse in house prices, simply because there will be no one to sell to, as any first time buyers will be unable to afford the mortgage needed to purchase an excessively high-value house. As Patrick pointed out, banks/building societies have steadily been increasing the amount of buying power that they are allowiing for new house purchasers, 2x annual salary in the 1970s, up to the current 4.5x annual salary, with subsequent increases in the minimum deposit required to secure a loan. The results of which has led to an ever decreasing circle of people who can actually afford the deposit, let alone the repayments. In effect the largest proportion of new mortgages issued are actually being issued to existing mortgage holders, who are cashing in on their investment and downsizing to a smaller family home.

@clearsmashdrop5829 Год назад

I also appreciate the explanation of how it works differently in the UK vs US. I saw some tweets from the UK discussing how this will hurt mortgage payments and I wondered why folks had used a ARM vs 30 year when rates are so historically low.

@AvoidTheCadaver Год назад

Variable rates are the norm in Australia as well. Is only a problem for people if they don't talk to their bank and just ride the rate. During the Pandemic years the reserve bank of Australia kept dropping rates so I kept asking my bank to review my mortgage rate. If the Pandemic had gone on for another year my interest rate would have gone below 2%

@andrewstorm8240 Год назад

My fixed rate is 2% but that ends soon

@awijntje14 Год назад

@@pointvector1951in I believe 2019 we had a number of banks in the Netherlands that had negative interest mortgages due to variable rates (from memory).

@heathermorrow3871 Год назад

I'm sure Patrick's aware that the first hen to get culled in Chicken Run was named Edwina. Comments like the one he brought up are the reason why. "Math isn't for everyone." 😆

@foobarFR Год назад

In France >95% of mortgages are fixed rates so there is no problem with rising rates... except no one can get new loans now. The legal rule that strictly limits the interest rate on loans blocks everything, because the limit is updated too slowly. The total number of transactions just plummeted - the market crashed and we already see bankruptcies in the real estate and construction sector

@richardbloemenkamp8532 Год назад

I reserved some money to improve thermal insulation of my house in France. In that sense the crashing market is good for me because now it is easier and a bit cheaper to find a BTP company to do it even though the value of my house decreased. I think the French system with fixed interest until the loan is paid off is a lot better and more secure than the British and Dutch systems which are fundamental risky and bring financially tight household into big problems.

@danz1182 Год назад

The UKs problem is the term, not that the rates float. The US let's you finance a purchase for a term that results in a payment you can afford till the loan amortizes completely (you can also get a rate that floats, but fixed rate loans for 30 or more years are available). The UK does not have a product like that and I think in Canada they actually are illegal. So even though you have a fixed rate loan you only retire a tiny portion of the principal during the loan term, forcing you to refinance at current rates every few years. If rates go up a lot between refis, you can find yourself unable to afford the new loan. That is the problem now in the UK.

@samsonsoturian6013 Год назад

Banks in the American breadbasket don't even allow floating rate mortgages. They simply force you to get a fixed rate and slightly overcharge you for the insurance they buy.

@KevinJDildonik Год назад

This. In America, tell people that rising rates just means nobody buys houses. And people lose their minds. "That's unamerican!", "Builders will be out of jobs!", "The market will crash!"... when a capitalist system isn't allowed to fail, only corruption can possibly be used to prop things up.

@TitusAzzurro Год назад

I bought in 2019 in FR. I was surprised to find out how difficult it was to secure a loan with a minimum wage. Can you be specific about the new 'rules'?

@brianyule1289 Год назад

The insertion of that King Charles reaction photo is fine art.

@pushslice Год назад

Uh Oh!! ….is this a segue to a masterworks sponsor pitch??? Say it ain’t so, Patrick !!!!

@beckenhamboy1995 Год назад

My girlfriend and I are in the UK and just bought our first house. Put it this way....the house I own, is worth the same as the house my father bought in 2006..his house has 2 more bedrooms than mine and is in London, I live in Surrey (County outside of London) - his rate was around 1% and mine is 5.2%. When we were looking at houses, the interest rate rose by 1% and suddenly half the properties I had booked to view...I could no longer afford 😂, the boomers had it a lot better and that's as simple as equating the value of the property they were purchasing vs the interest they were paying, new buyers in the UK now have half the interest rate but tripple the house price....and many of those buyers are on relatively the same salary.

@Danji_Coppersmoke Год назад

6:20 Thanks Patrick for giving closure about that poor startup founder. Otherwise we all will be left worried on such a terrible cliff hanger.

@multitaskingmaren Год назад

I got a 1.6% mortage rate fixed for 30 years back in 2015. Lucky timing. Greetings from germany.

@rhuephus Год назад

it's all relative.

@ordoabchao4202 Год назад

@oen2786 congrats but not necessarily financially smart. You missed out on borrowing money basically for free.

@MichaelCampbell01 Год назад

Wait, what now? *DIDN'T* lock in at 1.1%... for 10 years? Sweet mercy, I'd've given a body part for a rate like that. She deserved what she gets.

@jedg4746 Год назад

No one will make that mistake again. Not because of the new rate of interest per se but because no one, and I mean no one, could have predicted that the UK government would ever raise base rates so quickly. It has never happened before and everyone assumed that this was the de facto rule. The gov has now broken this previously rock solid social contract. Everyone was entitled to expect a period of adjustment to refinance to new market rates but this adjustment period has not happened for the first time ever due to the speed of base rate rise. For this reason, borrowers are entitled to gov compensation for third -party (jurisdiction) breach of contract. Also do not forget that fixed rate mortgages are not portable. And have very large early exit penalties - like the balance of interest that would have been paid for the whole term. This means that you commit yourself to not moving location or trading up for 10 years. Long term 10 plus year mortgages need to be portable otherwise they are useless for most buyers.

@NotKimiRaikkonen1 Год назад

Fun fact, 1-in-7 people have an IQ below 85.

@cardboardcartel5910 Год назад

Math isn't for everyone......

@wolfen210959 Год назад

@@jedg4746 No one is entitled to any government compensation, no such scheme exists, and no one could afford to sue the government anyway. The fact that we don't usually commit to staying in one home is purely due to the fact that government policy is to keep house prices artificially high, due to restricting new house building numbers, so that people who can afford to, use those houses as a short term investment opportunity and not as a long term family home. If millions of people are constantly moving home, this brings in a large amount of steady taxes for the government, whereas those people who only buy one home and stay in it for many years, contribute very little to the government coffers. Of course they will pay a large amount of other taxes over the years, but they won't be having to pay additional taxes for re-mortgaging every few years.

@christryst Год назад

@@jedg4746Everybody knew they couldn't go lower though - which is why we saw record numbers of people opting for fixed rate loans in countries like Australia despite the RBA saying rate would not go higher before 2024. Many clearly didn't believe them.

@RachelScalfani Год назад

The burns are fire in this one. Thank you Patrick for calling it as it is.

@ArbitraryConstant Год назад

I have a 30-year fixed at 2.5% and I am getting 2-3 refi offers per week. 🤣

@jimbojimbo6873 Год назад

That is mental

@lukerees281 Год назад

Stay winning chief

@rhuephus Год назад

I bet you are... at 20% I bet

@n00dle_king Год назад

My idiot bank gave me a 2.25% 30 year fixed loan at the height of the insanity. I'm so damn glad I don't live in the UK.

@paulhayles6947 Год назад

Brilliant Patrick, fellow Irishman living in the UK. The difference two weeks have made here. This crisis which a lot of people knew was coming has burst onto stage. It so reminds me of Ireland in early 2008 when the whispers turned into shouts of a crash. We didn’t realise what lay ahead! I lost everything then but I learned so much. Never ever ever over extend yourself. There’s a price for everything.

@radigeorgiev9662 Год назад

We tend to predict future crises on past ones. It shouldn't be anything like 2008 because we are prepared for it. It will be something different which only few can see and none will listen to.

@krzysztofbosak7027 Год назад

@@raggedredfibres Then don't buy. Steal, make it yourself or inherit, or emmigrate.

@VViatro Год назад

Is Patrick Irish?

@freedomunltd Год назад

@@VViatroThere’s a slight lilt in his accent, I’d say definitely 100% Irish but one which indicates Patrick has worked and travelled abroad extensively hence only the slight traces of his Irish accent (hope Patrick doesn’t mind the assessment!)

@freedomunltd Год назад

Great to hear you got back up there after those particularly awful years from 2008 - it was pretty bad for so many with many taking their own lives, it was as bad as that. Learning from such catastrophes is brilliant so such a nightmare can never happen again. However we are being led like sheep into the hideous clutches of the World Economic Forum whose tyrannical agenda is a dystopian world of totalitarian control where everything including how, what, where and how much we are allowed to spend, down to food choices including where and how far we can travel beyond 15 minute cities etc will be dictated by a Chinese-style surveillance CBDC system unlike anything ever experienced before by humanity on a global scale which includes the indoctrination of all children with parents’ control over their own chikdrens’ lives being over-ridden by school authorities, particularly in Ireland and the UK. This is an all-out assault on fundamental human rights with ultimate control leveraged via the financial system through CBDC’s - it is appalling and people need to oppose these tyrants with every ounce of their being, if they value their freedom and those whom they care for. It will make what happened in 2008 look like a particularly bad thunderstorm

@wishteria234 Год назад

banks in Canada are not raising interest on savings accounts, so they are just raking it in.

@thomas316 Год назад

They don't need to, after decades of low rates the world is drowning in liquidity.

@pouetpouet941 Год назад

Move your cash to money market funds then.

@stevens9625 Год назад

Australia is in the same situation. Although a news report last month had an interesting bit of snippet: 1/4 of purchases in the past year had zero debt! Apparently the haves are doing much better than the rest of us have-nots.

@joshmarks3954 Год назад

Probably a lot of boomers selling their big/well located properties and downsizing. Plus record migration, some of those people have a lot of cash.

@cborecky Год назад

Both the UK and Canadian governments pressuring banks to extend the amortization of existing variable loans to keep borrowers' payments stable. In the context of sovereign or corporate bonds, this is referred to as a default. I wonder if it will lead to permanently higher spreads between bank borrowing costs and mortgage rates.

@dwhxyz Год назад

UK property is ridiculously overpriced. All driven by low interest rates, banks lending money on overvalued properties and buy-to-let/second homes which caused a shortage. Interest rates should have been kept at sensible levels and buy-to-let/second homes should have been forced out years ago. The whole situation is crazy and I for one home the housing market crashes and resets prices to more sensible levels.

@hieronymuslarsson1388 Год назад

Open capital accounts is also drivning asset price inflation in the west, broadly. Mercantilist nations have been allowed to buy assets in the west with the money we have paid them for consumer goods. That way their currency is kept low so we keep buying stuff from them and their consumers can’t afford buying from us.

@wolfen210959 Год назад

Don't forget the government repressing new house building, in order to drive house prices even higher, after all they can't let an opportunity to rake in more tax from house purchasers pass them by.

@meikala2114 Год назад

also more Russian oligarchs are coming with oodles of cash

@sandileminke403 Год назад

Great video. Many people underestimate how big this problem is. I live in the Netherlands and we are following the uk trend. The real problem of this crisis isn't the interest itself but the fact space, assets and minerals are limited. We can print unlimited Money, we change interest rates and we can tweak tax rates. But there's a limited amount of space to build new houses. People above the 40 with a house are struggling with their mortgage and are Demand a better loan and low food prices. People between 20-30 are starting their career with debt, low level jobs and limited houses to choose from. Since there is no room to build, the situation gets worse

@sbfcapnj Год назад

Did....*any* Western society actually plan for where their children were supposed to live? Anyone?

@wolfen210959 Год назад

Nope, they are only ever concerned about the next 4 -5 years, when they will be due for re-election. Planning for the future would mean that the next government, if it wasn't their party that won, would benefit from those longer term plans, and they can't allow that.

@AM_SDG Год назад

Thanks Patrick. Excellent presentation as always. Very concise and factual. We have the similar situation in Canada, the difference that the average mortgage to family income is materially higher compared to the UK and the US, specially in Toronto and Vancouver. Some are now in dire negative equity situation or very extended amortization , specially the ones who bought during 2020 through early 2022 before the rates

@davidadamkess8129 Год назад

Nice tailor. Amazing sound. Good solid editing

@Brotherbear75 Год назад

And how bout that cushion?

@Olav3D Год назад

I live in Norway where almost everyone has variable rate mortgages, with the 50 basis point hike this week the market is finally starting to panic. My girlfriend and I already have the downpayment ready at 26 yo, so we are hyped that our segment of the market is already down 5-10% in prices. Glad I did not give in to the pressure of buying right away when inflation was already out of control. Much higher inflation means much higher interest rates and lower house prices, basic economics.

@Mtmonaghan Год назад

Good luck my prudent friend

@samsungnewlife8739 Год назад

Which region are you in btw? West Coast?

@Olav3D Год назад

@@samsungnewlife8739 Oslo

@Olav3D Год назад

@@arrell1xyz Inflation is still on the rise in Norway due to a very weak currency. Wages have also risen a lot. The interest rate here still has a long way to go as inflation is almost 7% and rising.

@81Earthangel Год назад

Let’s not forget that the high inflation also lowers the real value of mortgages and savings both at the same time. So I guess savers need a lot more help than mortgage holders right now.

@mdkvalitet2623 Год назад

Pure quality and a touch of humor, only Patrick can produce!! 🙌😎

@JamesMullarneyIsAFraud Год назад

When my tracker was 54bps above the BoE rate I smashed my mortgage out. Paid it off on 2020. This was never going to last forever.

@Greg-ii6nq Год назад

Same, was told repeatedly I was a mug for not leveraging up to my eyeballs...

@DamonMurphy1 Год назад

7:58 "I'm not trying to beat up on Edwina, mathematics isn't for everyone" Brutal. Absolutely brutal! 🤣

@swingarmer Год назад

Did the bank lend money? Or did the homeowner create the money with their signature?

@futuretab Год назад

Here in AUS we have a similar system with mostly short term fixed rates that revert to a variable rate. The longer the fixed rate period, the higher that fixed rate will be. The cost to refinance is quite minimal, with banks often waiving fees just to sign you up. Pretty much everyone refinances at the end of their fixed term, often playing one bank off against another. Many, myself included, locked into for 3 years fixed at 1.8% in mid 2021 as this appeared to the ideal time for hedging your mortgage bets - a very low probability of lower rates, and a high probability of higher rates. This was at the same time our RBA chairman said "interest rates will not go up until 2024" haha

@whatisanamelol Год назад

""The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest." Bit different to your quote. However, above that, you're spot on. Phillip's language was poor and he should've learnt from Greenspan's errors. Language choice in monetary policy updates is likely as important as the policy updates themselves.

@creepersonspeed5490 Год назад

Honestly I am pissed at myself for not understanding this and locking in my first mortgage with fixed rates. I'll have to wait I guess until the dip comes. Until then, less (imaginary) wagyu for me!

@futuretab Год назад

@@whatisanamelol I can see why the media often simplified his words to the more average Joe friendly, but incorrect, sound byte.

@liam3284 Год назад

@whatisanamelol The irony is wages hardly grew at all, yet inflation spiked well over 3%. The RBA still lives in the fantasy land where wages drive inflation.

@whatisanamelol Год назад

@@liam3284 You're right. It's a shame but it's the way things are (atm at least). I would assume they'll do 2-3 more 25bps increases this year, boot Phillip out, new governor in, and they'll magically start reducing around April. Try to get the public back on their side. We can discuss then and see how right (or wrong) I am

@NoMoreCrumbs Год назад

Wild how every place on earth seems to be having a housing crisis all at once

@Greg-ii6nq Год назад

After all having a pandemic all at once, and lockdowns, and stimulus...

@jimpaddy79 Год назад

@@Greg-ii6nqUK had a housing crisis long before covid

@cypherlock01 Год назад

We all have central banks and thus monetary policy controlled by private actors.

@AnthonyHancock-s7v Год назад

You should try making something about Irelands housing crisis

@brunoheggli2888 Год назад

Why?

@danieldeburgh8437 Год назад

@@brunoheggli2888because he’s Irish

@brunoheggli2888 Год назад

@@danieldeburgh8437 Hoe about the Beer crisis?

@harryireland1935 Год назад

Ireland's banks are fraudsters, plain and simple. The last country in Europe to NOT reward savers. Meanwhile, they charge 22% on creditcards, 11% on personal loans and act like they're the victim. I'm sorry for anyone who's underwater mortgagewise, but overbidding and buying at the peak of greed and hysteria is kind of your own fault. I'm one of those people that's been looking for a property here for a decade and things went from difficult to outright sheer impossible. The whole thing is controlled by realtors that are still in pandemic greed hysteria mode and bankers that are only now starting to raise mortgagerates. The trouble is the non-existing supply and ultrahigh demand AND having 100.000 plus refugees, all at the same time. Never before in history were properties THIS UNAFFORDABLE. And the worst is still to come, interestrates from the ECB will continue to rise, so I'm expecting mortgage rates to climb to around 6% or even higher. There's really only one solution, but it's extremely painful. A total collapse of the bankingsystem. A decade of excessive moneyprinting and persistent inflation, coupled with war, corruption, unimaginable levels of immigration and politicians that are in bed with bankers and hedgefunds AND hold vast portfolios of properties themselves. It's a gigantic mess and it's depressing as hell. But mark my words, within 6 months reality will sink in. The economies of Europe are already in recession and deflationary forces will inevitably correct this insane housingmarket regardless of low supply. These prices are so utterly ridiculous, nobody is going to be able to afford them.

@danieldeburgh8437 Год назад

@@brunoheggli2888 learn to spell mate.

@AJ-kv1po Год назад

Australia is getting smashed, most fixed terms were only 2 years and the big ones are expiring throughout this and next year

@CalCalCal6996 Год назад

You should do a deep dive on this subject in Canada. We have some of the most out of control prices and also have a hybrid model between the UK and the US in terms of mortgages.

@tkismik8146 Год назад

😂😂😂 "mathematics isn't for everyone" 😂😂😂 also loved the short pause after the avocado toast

@oioidarling9404 Год назад

That short swallow just after the phrase "trigger millennials". Gold

@KingCutlet Год назад

If banks are supposed to protect borrowers from rising interest rates, who are the rising interest-rate supposed to affect then?

@FilipAus Год назад

Exactly the same issue in Australia. Sharpest increase in interest rates on record.

@dimplesd8931 Год назад

I asked for a OZ analysis because my Aussie hubby and I don’t know how people can afford homes near any major city. Our older relatives a selling up in Blacktown, Rouse Hill even out to the Hawkesbury Dist and getting $600k-1.2million for older 1000-1300 sq ft homes that aren’t renovated. We wanted to come visit in August, but flight and hotel prices are astronomical. I don’t know how people are making ends meet? PS… I love Australia, except for the flies in the summer, and would love to have a small flat that we rent to tourist until we retire, but we don’t have $600K-1 million.

@richardv9648 Год назад

Move to Russia. No housing crisis or Rainbow propaganda thrust on your throats.

@leonhenry4861 Год назад

@@dimplesd8931it’s really simple, work harder and smarter and you’ll get what you want.

@privacylock855 Год назад

Every Crisis is the end of an illusion ~ G.M. Weinberg

@myaowl55 Год назад

0:00: 💰 The UK mortgage industry has a different structure compared to the US, with fixed-rate mortgages being adjustable-rate mortgages for the first few years. 4:13: 🔒 VPN provides secure and encrypted internet traffic, protecting users' data and allowing access to streaming services from different countries. 7:29: 💰 The video discusses the impact of interest rates on homeowners and the demands made by politicians to protect borrowers. 10:42: 💰 Renters in the UK are facing increasing financial strain as rental prices rise. 14:21: 💰 Brexit and interest rate hikes have led to higher inflation and increased grocery shopping bills in the UK. 18:24: 🏦 Hundreds of thousands of households are facing higher interest rates as their fixed rate mortgages expire. 21:16: 💰 Britain's public sector net debt surpasses 100% of GDP as borrowing comes in higher than expected. Recap by Tammy AI

@ambition112 Год назад

Thanks for saving my time! Amazing summary with love time stamps! where you download this Tammy AI tool?

@KeithWhittingham 11 месяцев назад

"Brexit [has] led to higher inflation and increased grocery shopping bills in the UK" - well that's arguable but even if we grant it for the sake of argument, food bills are still cheaper in the UK than they are in the EU (as Patrick states).

@sooibot Год назад

Love the Miro print cushion. My man's got taste.

@sheldonpetrie3706 Год назад

Canada is going through a similar situation. Personally two years ago renewed my mortgage. At the time I had 1.79% fixed, or Prime-1.2 (2.45-1.2 = 1.25). I opted for fixed, and I am glad I did. Prime right now is 6.9%

@jimbojimbo6873 Год назад

Worth factoring that renters will suffer too as rates go up

@markporter7774 Год назад

That’s it , I’m going to get a mortgage and work until I’m 85 😂

@winstonw2020 Год назад

Hello Mr. Boyle, really enjoy your work. I live in Canada (Toronto). We have a similar mortgage structure but our banks have resolved the higher rate problem by expanding the amortization periods on existing mortgages who are having a hard time paying to 30,40 up to 90 years in some cases.... problem solved... Insanity...

@kanucks9 Год назад

It's not that crazy. In 5 years interest rates will be lower (a bit) again, and the banks will put them back on 30 year schedules.

@winstonw2020 Год назад

@@kanucks9 Or people will lose their jobs, it won't matter what the rate is and we have a housing and credit crisis....

@themsmloveswar3985 Год назад

That did not work out well in Japan.

@philippebouchard-bourdeau5100 Год назад

Lol... the Lizz Truss picture looked like the picture of a lost one 😂😂😂😂

@KingUnKaged Год назад

I wish there were a Canadian Patrick Boyle to explain how we're even more screwed. Though, without the accent and the dry, British humor I probably wouldn't watch.

@bobchannell3553 Год назад

I'd bet the higher interest rates will hurt mortgage holders a lot more than it will benefit savers. That's because banks charge way more interests for loans than they are willing to pay out for savings accounts. At least that's been what I've observed so far.

@hanshans387 Год назад

Always astonished how quickly you can gather your thoughts into a coherent analysis so promptly, your videos are a must watch for me!

@k-c Год назад

He is reading like a newsreader.

@greebj Год назад

Here in Australia we have part time fixed mortgages like the UK. The government helped to worsen the issue by throwing free credit at our banking cartel during the pandemic, and the Reserve Bank governor (a political appointee to a supposedly independent statutory body) made a silly promise suspiciously proximate to an election campaign that interest rates would definitely stay low into 2024 (because our 'Tories' campaign heavily on interest rates because Labor, their duopoly opponent, being in power in 88-89, is of course highly relevant to today's policies and conditions). And with these centre-right "fiscal conservatives" having overseen the largest most wasteful corporate and social welfare handout in the history of the nation, Labor is again in power when the effect of it all hits interest rates and inflation. Sigh.

@harnicgreieras Год назад

I would be very curious to hear your take on czech republic where inflation is still >11% even though it is one of the first countries to start with interest rate hikes almost 2 years ago

@andy_ppp Год назад

Amazing explanation - I had assumed mortgages were variable because the UK loved ripping people off for mortgage fees.

@MongooseTacticool Год назад

It's funny how the lower rates always have that £1k fee, which they let you borrow on top of the existing loan.

@leonhenry4861 Год назад

@@MongooseTacticoolyeah I just got to pay that when I remortgaged 3 months ago. Essentially you get penalised for owning more then 60% of the asset. I’ll remortgage 1 more time then I’m paying the thing off.

@mike2561 Год назад

Do people not realise that their house will be used to pay for their care home fees in the future?!? Their kids will not be receiving it in the will .

@MichaelCampbell01 Год назад

Until watching Patrick, I had no idea UK mortgage are normally ARMs. And I've worked for UK managers for some years.

@rhuephus Год назад

they just don't call them ARMs

@BenHeckHacks Год назад

Australia too. Lots of counties. All the people in US locked in at sub 3% think they're set but this is going to affect all of us.

@plweis7203 Год назад

The Bank of England have clearly demonstrated how totally inept they are. Why is Andrew Bailey still in his job?

@debl9957 Год назад

Those of us who lived through double-digit interest rates of the '80s know that low interest rates can't last forever.

@rhuephus Год назад

and neither do double-digit interest rates (which were a result of the Republicans)

@frostmelody Год назад

Those of u who lived through the 80s are the reason why housing affordability are the issue today.

@debl9957 Год назад

High housing prices (as well as the rise of other prices) cannot be blamed on certain generations. One can easily say (as was alluded to in this video) that living within one's means would assist a home-buyer in meeting mortgage payments.

@chrissmith3587 Год назад

@@debl9957living within means would help but a single room in a shared house can cost £700 per month here A third of a good salary going on rent for a single room is insane

@johnstirling6597 Год назад

Yes, but unlike Edwina Currie, we all weren't bonking the Prime Minister.😂😂

@rathelmmc3194 Год назад

I think the real problem is that 30 year mortgages are the norm. You practically take a decade to even start to work down principal. I'm a firm believer that 15 year mortgages should be the standard.

@tomspoors768 Год назад

Perhaps, but cost each month in the current housing market would not be easily affordable. As an example only a 250000 mortgage over 15 years @6% would see a payment increase of 41% each month. However, you would pay far less interest overall if you could support the payments - 125882 as opposed to 280433!

@tkelly6121 Год назад

It's just simply not practical to buy a house on a 15 year for the average person. House prices would have to dramatically reduce to make this possible. And I say this as someone who did get a 15 year mortgage if you did too you have to recognise that we are the exception not the norm.

@rathelmmc3194 Год назад

@@tkelly6121 No doubt it's trying to put the milk back into the bottle. They should have never allowed 30 or 40 year mortgages. That would have helped restrict house prices in the beginning. The longer terms allowed people to bid up prices.

@solidusnek Год назад

Patrick do Canada next we are in a heap of trouble with mortgages and housing.

@midimusicforever Год назад

Mathematics are not for everyone, but it slaps us all on the ass when we make mistakes, or when someone in our vicinity does.

@KevinJDildonik Год назад

"Math isn't for everyone" is caused by horrible education systems. Imagine a school that beats kids with a whip anytime they try to go outside and play. Those kids would probably learn to say they don't like going outside, and they're not outside people. The same goes for math. I've tutored a lot of people, and honestly, 90% of the work I do is therapy. It can take months of people breaking down crying about how their math teachers treated them, and made them feel stupid, and how being bad at math ruined so many opportunities in life. And you start to show them some simple things in a supportive environment, and people weep tears of joy. "But I never use math" says the American as they stare at a restaurant bill and struggle to figure out a tip.

@midimusicforever Год назад

@samwize28 economics = applied mathemstics.

@SuperKendoman Год назад

@samwize28Both are very intimately related to each other since economics is the management of scarce resources. Without mathematics how would we expect to be able to manage said resources?

@rhuephus Год назад

well .. "mathematics" covers a lot of territory ...

@krisg4863 Год назад

The problem with UK mortgages are 1 people max their mtg 2 people hoping mtg rate will be low forever 3 people expect house prices will continue to raise forever

@UsaqMadiq Год назад

Another great episode. Suggestion for another episode: the structure of the UK economy by GDP and exports vs imports pre and post Brexit.

@lephtovermeet Год назад

Patrick should have yo register his channel with the ATF because his burns are lethal.

@Miata822 Год назад

Shades of 2008 in the US. I have been hoping to see interest rates here suppress our inflated home prices. That hasn't really happened yet, not in properties that interest me anyway.

@nomobobby Год назад

I think the main resistance is everyone in a house is clinging to it, given the circumstances, is understandable.

@davidgray8321 Год назад

A rare decent recommendation in the RU-vid algorithm. Thank you Moby.

@DS8G10 Год назад

I know it's a very serious topic, but that was one of the best boomer takedowns I've ever seen! Thank you for an informative, educational video which also made me smile!

@eddenoy321 Год назад

Excellent presentation. But I hope your diet does not consist of what you showed in the photos @15:50

@tomcads1604 Год назад

The "Mettigel" representing food in Germany is just absolutely brilliant and spot on

@MTerrance Год назад

I was well aware of your droll wit, but you went above and beyond in this post! I had to listen to it twice just to catch all the digs, or to hear what you were saying after one of them while I was laughing. As a Boomer I have concluded my experience from 50 years ago is almost irrelevant. My first job after graduating from the University of Illinois paid $8400 - per year. Without inducing a coma by recounting how much less things cost then, the differences between now and 1970 are too large to draw valid parallels. Yes, I still flinch when the burger, fries, and milkshake I ordered at Five Guys cost a bit over $21, but I will get over it. The problem is we boomers tend to jump to memories from the 1970s and skip the 80s, 90s etc. That and it is easy to gloss over the serious pain and damage caused by the stagflation of the late 70s. Incidentally, our parents and grandparents had the same attitude toward us that we have toward the younger among us - since we were all forced to go to elementary school by walking 12 miles uphill both ways in a snowstorm every single day etcetera. Some things never change.

@thisguy317 Год назад

Same is happening in Canada

@bingebinge3722 Год назад

Honestly, what's the point of working if I am screwed anyway. If I stop working there will still be a benefit system to keep me alive and unemployment benefits. Pretty sure a lot of people will just give up.

@davesy6969 Год назад

In the 70s and 80s houses were a fraction of what they were now. You could by a terraced house in east London for £50-£60,000

@rhuephus Год назад

ha ha ... so was income ... #DUH

@jabberwockytdi8901 Год назад

On the one hand those who voted for Brexit on immigration grounds got part of what they wanted - a tighter labour market and rising wages even before the inflationary fall-out from C19, on the other hand only a relatively small part of the UK work force actually contribute to a productive supply chain so the effect of wage rises on an inflationary spiral is no where near as high as the government would have you believe.

@wolfen210959 Год назад

Yeah, the government are trying to convince people that if they ask for even just a 3% wage increase, that 3% will be directly added to inflation. The problem is that a lot of people believe it, and have settled for a below 3% rise instead of demanding a rise that matches inflation. Of course the government have said nothing at all concerning the 200% increase in energy prices, which is, and continues to be, one of the main causes of inflation.

@SzTz100 Год назад

My variable rate tracker mortgage has tripled thus far, and I expect it to increase by another third by the end of summer.

@bobchannell3553 Год назад

Back in the day of double digit interest rates, you could get a good interest rate on your savings account. Of course I didn't have a savings account back then.

@WestOfEarth Год назад

Housing security is a worldwide problem. Something needs to be done. I wish I knew the answer.

@myBeam10 9 месяцев назад

I am a millennial and I would/will die broke for my avocado toasts.

@stephenp4802 Год назад

Omg your the funniest person on the planet...the videos are not only informative they are hilarious which makes them so much more entertaining!!! Keep up the great work..I love the sarcasm!

@garethwilliams4467 Год назад

If you buy a house at todays prices you deserve to be told you can't eat avocado on toast.

@lindsaycole8409 Год назад

Fixed UK 5 year mortgage in Jan 2021..... Not sure I can beat that financial decision any other way.

@gemmagreene362 Год назад

Yep - me too! 1.1% & I’m hoping to ride that out until I can pay it all off at the end of the 5 year term.

@chrisgoblin4857 Год назад

I'm rather unlucky as my 5 year fixed at 1.7% runs out in January of next year.

@lindsaycole8409 Год назад

@@gemmagreene362 2.3% I think and I'll still have 50% of the original mortgage amount to go after it. So probably a small shock in 3.5 years for me. But that is also 3.5 years for the inflation to flatten and my wage to catch up. And even with 25% correction in the property market I should still have 50% equity.

@Mr.Thursday Год назад

In Poland most if not all mortgages are in floating rate, the inflation rate seems higher, the central bank incompetent, and the rates are way higher than in UK, seamlessly PLN is not Sterling either. I don't think there is really a reason to call situation in UK a Crisis, at any of the dimensions UK households don't seem to max out their capabilities or resiliency yet.

@paulshanesmith Год назад

If you were prepared to pay an inflated price for a property because rates were at a rediculous and clearly unsustainably low level then I've no sympathy and it's disgusting that some people think the government should bail them out from their stupidity.

@evocatiranch7624 Год назад

Man 3.5x my income on a mortgage sounds like a dream. Here is California the average home price is $737,900, a little over 20 times my annual income. At least my mortgage is a 27 year fixed.

@MrSandshadow Год назад

Thats the same in Poland, I find it surprising that you say it's usual since in my experience it's really rare to find a fixed rate on EU market...

@ZeromuS_ Год назад

I would love a video like this looking at the Canadian condition given in many major cities house prices are 10x incomes, and we have similar mortgage renewal concerns, though we have banks NOT raising the payments at the moment, they have interest adding to principal until renewal so far...

@leonhenry4861 Год назад

Well find a Canadian economist to do it then 😂😂😂. ?????????

@SgtAndrewM Год назад

I got a 5 year fixed term 3.5 years ago when intrest rates were 0.5 percent. Its hard to believe people got a variable rate when intrest rates were that low

@richardhands904 Год назад

Yeah I was like even if they go negative, they aren't going to reduce thevmortgage rate to below 0

@barracuda008l4 Год назад

Just an economic lesson: lockdown+ furlongs +deficit +help with utilities bills + idiotic sanctions +artificial low interest rate = QE + creating money = inflation = interest rates... un5il deficit go to zero and interest rate to 8% pa inflation will only spiral