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Comment by highwaylights | Hacker News Reader

I imagine it’ll nix all fixed rates for a good lot of years.

There’s a lot of people that are going to be really hurt in the UK this winter. Many will lose their homes, even those that are renting (who probably won’t see it coming).

It’s all well and good to smugly say “you should have understood what you were signing up for” but that doesn’t help people in this situation or their families.

It was already becoming impossible for many people to get by with the fuel increases, a lot of people are going to be pushed over the edge before January.

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I’m sorry but I just don’t see how “many will lose their homes”. Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments.

Evicting people is risky long winded and generally speaking their last option.

Unless you've got some data to back up what you are saying in which case I’ll shut up.

Edit: Lots of replies saying "but they're not charities etc...". Of course I respect that. I also respect that not all lenders are created equal. If you miss a payment to the mafia you're going to get a different reaction than say to Lloyds bank.

I'm referring to your typical UK high street lender. They will not hoof you out of your house if you miss or under pay on one or two payments. Of course, if you do not engage with them and setup a repayment plan - then they will of course take further action.

> Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments.

German mega-landlord corporation Vonovia announced just a few days ago that they will evict everyone too far behind on payments for heating [1], in order to pacify investors.

Never trust rabid capitalism to keep the people in mind. For the beancounters, all that matters is the current stock price.

[1] https://www.spiegel.de/wirtschaft/nebenkosten-vonovia-droht-...

> too far behind

That could mean anything.

The details are in the article. Basically, the legal framework allows eviction initiation if people are behind in either rent or heating costs ("Nebenkosten") for over two months worth of rent.

Unfortunately, given the exploding heating costs, for some cases you can rack up two worths month of staying behind in rent in just one month of heating costs - and unlike with COVID, rent protection legislation hasn't kept up in speed with exploding costs.

Isn't the alternative to say "you can stop paying us because we're not going to evict you no matter what"?

The alternative would be to say "we won't evict you as long as you can reasonably demonstrate you're doing your best, and we will use our significant political connections to fight for more government aid and/or price caps on energy". This is what common-good organization landlords ("Genossenschaften") are doing now.

But that is not the point of what is going on here with Vonovia. The "problem" that Vonovia and other landlords face is that rent raises for existing contracts are capped at 15/20% over three years, while new rent contracts are capped at 10/20% above the "average rent" aka Mietspiegel, which is determined by looking at the last years' worth of new rental contracts. The result is that many old rental contracts are sitting far below average rents... and now Vonovia can abuse the current heating cost crisis to evict people and put the units at current market prices.

When I lived in the UK my experience was that not only me, but a lot of folks in my age range back then ("young professional") moved all the time. The tenant protections were pretty appalling, particularly if you rented from a private landlord. It does not seem very unlikely that people will lose their homes and have to move.

UK tenant protections are not the greatest, but I wouldn't call them 'appalling'. However, this is talking about people who own their home but have a mortgage.

Well I let other people judge how they are. However to this point:

> However, this is talking about people who own their home but have a mortgage.

Well a friend of mine got kicked out of his house as a renter because his landlord declared bankruptcy. And apparently that person owned 6 other properties and he was not the only one who lost their place of living.

Yeah you are right, I didn't think about that.

> Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments.

Isn't that exactly the business they are in? In any country.

I mean that's sort of what a mortgage is. If you legitimately cannot ever afford to repay it, well... you will lose the house. That's sort of what the deal is, right?

Eventually, sure. I can’t speak to the UK, but in New York a foreclosure takes at least 8-15 months. You must first fall significantly behind on your payments, then a 90 day intent to foreclose notice, and then the actual foreclosure process. Maybe things are significantly faster in the UK? Seems unlikely that the UK government would allow mass evictions over this coming winter.

> Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments

No, they're in the business of lending money and making sure it's repaid. They're no charity.

> Mortgage companies are ruthless but not in the business of turfing out families that legitimately cannot afford their repayments.

Are you sure you didn’t mean “that legitimately can afford their repayments [eventually, with penalties]”? (Or perhaps “that temporarily cannot afford the payments”.)

If they cannot afford the repayments, that’s exactly when the lender should reclaim the collateral.

You made an edit, so I’m guessing you reread that part, but it still seems like the opposite of the correct version.

But.. people won't miss one or two payments.

They'll miss one payment, then never make another payment on those mortgages ever again.

If your fuel bill was £800 per year, and you're keeping your family alive on £20,000 (as many are), then it's now almost £2k. That was before any of this happened.

Your mortgage was maybe £250 a month on a variable rate because that's all you could get - and were terrified houses would go up even more if you didn't take it. Now your mortgage is almost £700 per month, and rising.

At the same time, the value of the £20k you earn is collapsing, so the food bills you were already struggling with are skyrocketing too.

Ask any of the folks on here that are based in middle America how much sympathy the system had for them in 2008.

Having forgiving policy only works if the government has enough money to protect you - the money is crashing already and after Truss & Kwarteng's nonsense last week any further support packages will make it.. Venezuelan.

Interest rates have been considerably higher in the past though. What is different now is that people have gotten used to an endless supply of cheap credit and thinking they are well off so long as the monthly payments can be maintained.

Also, the social media pressure to have the apperance of a perfect life doesn't help.

I agree with all of this, and I’d argue that it’s even worse as I very much doubt anyone gave good advice to most of those people before they took out those mortgages.

I mean, sure, some of us know better - but that’s probably because someone along the way made it clear in very stern terms that you never sign anything you don’t fully understand.

When you take out a mortgate now they do an affordability check which includes checking if you can afford the repayments if interest rates spike up, it's spart of the shpiel they have to go through.

Yes, but those interest rates have been affordable. That context of affordability matters. The UK is also basically organised around the profitability of private home ownership. Its the fundamental basis of the current ruling party's support. Anything that threatens property value and rent yield is catastrophic for the economy (as currently organised) and the current government

You're missing a major aspect of the difference now, when compared to the 80's and before, which is house affordability.

Even at peak in the 1980's you were looking at house prices being 5x income at most. (https://www.economicshelp.org/blog/5568/housing/uk-house-pri...)

Now at the UK level you're looking at 7x and in London 11x. That means that increases in interest rates have a far higher impact on affordability.

While that is true, house price inflation has massively outstripped wages. For example, my very first house in 2000 cost £105k. Today that same house would cost £220k. Therefore, what option do people have but to overextend themselves?

How do you predict those that are renting (you mean tenants right?) to be affected?

I presume they mean the landlord will not be able to pay the mortgage and hence have the house repossessed. I'm unclear on what that means for tenants in UK.

Or maybe thinking that rents might suddenly spike due to increased mortgage costs.

But I don't want to help those people or their families. They wouldn't want to help me either and frankly they need that ex-imperial superiority beaten out of them at this point.

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