r/Glasgow Tools

I mean first of all I think it's incredibly close-minded to say that lending in general is cheap just because you own an expensive asset and have access to cheap credit as a result.

Yes, I'm under 30. Yes, I'm not a homeowner. But I don't see how higher interest rates will make my situation easier. Yes valuations therefore mortgage deposit will be a bit lower - but I very much expect that the cash freed up will fly away in even more heated bidding wars. Because it's not going to be just me that will have a bit more spare cash - so will everyone else.

My mortgage payments won't fall but my valuation would. Might even go into negative equity for a wee bit. Which is I guess fine to the extent that I shouldn't feel entitled to sell in a year in profit - but I don't think remortgaging would be particularly easy if my valuation has plummeted, so I might end up stuck on a SVR after all. Even fixed rate deals themselves will get more expensive when the base rate goes up, as the bank would obviously not offer something that would put it in the red.

Maybe on the other hand there'd be less BTL investors to compete with. But a lot of them are flush with cash after selling expensive properties anyway and they can always raise rent to cover higher mortgage costs so don't expect them to disappear as competition. Less BTL also likely means growth of rental properties doesn't match demand, exerting further upward pressure on renters. Higher rates might even push more of them to switch to Airbnb if it has higher margins - so overall happy days to be a renter!

So yeah overall I think higher rates won't resolve anything and are acceptable for just a brief period to calm down consumer price inflation. They will, yes, bring down valuations, but end up hurting the exact people they're meant to help - renters, first-time buyers, and people who have just bought and haven't built up enough equity in their property. And I don't think an extra £20/year in interest on my bank account will outweigh this.