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tjvc | 3 years ago
I don't think you're stupid. You couldn't have foreseen the sequence of events that has produced this situation. For what it's worth I did a very similar stress test, with similar assumptions, when I bought my home. I feel like this volatility is something of a rude awakening for our generation.
What does the 500,000 figure represent? There will be many people whose fixed-term mortgage rates expire in a now much higher-rate environment, including those on longer-term fixes negotiated before the pandemic.
kypro|3 years ago
Thanks man. At the end of the day a mortgage is always a risk and you can only be so conservative with your expectations. People have been predicting rates will move up for years, but I'm not sure anyone predicted rates would move up 6% in a year and a half even if in theory it was possible.
> What does the 500,000 figure represent? There will be many people whose fixed-term mortgage rates expire in a now much higher-rate environment, including those on longer-term fixes negotiated before the pandemic.
There's a lot of people who will need to fix at a higher rate in the coming years, but most I suspect are at little risk. If you owned your home for 10 years you've already paid down a lot of the mortgage and you were probably used to modestly higher rates anyway.
Here's a chart: https://pbs.twimg.com/media/FdlyDZhWAAI95pl?format=jpg&name=...
Where the risk would be is new buyers with a high percentage of debt / equity who brought over the last couple of years who now need to move to a much higher rate. I believe that number is around 500,000, but I've not seen an exact figure for that. It's somewhere around that though from the numbers I've seen.
Higher mortgage rates generally obviously aren't great for anyone though. Even if you can afford it your mortgage payments going up it will still mean you have less to spend elsewhere.