Mortgage Rate Rises

[slinxy]

At the risk of being boo'd again (lol)... I thinking of it as the total percentage of my salary over the whole fixed term period. Yes, it certainly doesn't help that the government has frozen the tax brackets and people that is near a tax bracket may be choosing to pay more into their pensions to reduce their taxes.

 

[HungryHippos]

the interest hurts you in the here and now though, in theory a house you buy should be a good long term hold due to inflation making it easier to pay back, but the ongoing interest rate is your cost to service the debt.

£100K mortgage balance at 1% is only £1k interest per year, but at 4% that is now £4k per year, and that extra £3k gives you nothing additional benefit wise.

Your position on mortgage or savings rate is likely going to be influenced by your own circumstances, for example if you have a large mortgage then low mortgage rates are king, and if you have no mortgage but lots of savings, you want higher interest rates.

 

[200sols]

At the risk of being boo'd again (lol)... I thinking of it as the total percentage of my salary over the whole fixed term period. Yes, it certainly doesn't help that the government has frozen the tax brackets and people that is near a tax bracket may be choosing to pay more into their pensions to reduce their taxes.

The whole term is irrelevant, if you cant pay your mortgage in for example year 5 then its bye bye house.

 

[BongoHunter]

I'm planning for the worst (6%) at renewal even though it's not due until August 2025.

If it's more than 6% we'll have to sell.

If by some miracle we are back to 3% rates by the time we renew then we can go back to having a nice holiday every year and think about changing one of our very old cars.

 

[Pants]

I'm weathering 5.9 just about. Over 6 and I'm in trouble!

 

[413x]

I'm planning for the worst (6%) at renewal even though it's not due until August 2025.

If it's more than 6% we'll have to sell.

If by some miracle we are back to 3% rates by the time we renew then we can go back to having a nice holiday every year and think about changing one of our very old cars.

Only way it's going back up to that is with a major shock.

But trump might be coming so all bets are off.

 

[BongoHunter]

Only way it's going back up to that is with a major shock.

But trump might be coming so all bets are off.

Yeah - there's an exceptional amount of conflict in the world right now, bringing Trump into the picture will be bad news. Though I think he will focus on domestic issues for a good chunk of his first year - he will want revenge and it'll be all consuming for a little while I think.

 

[a1ex2001]

Only way it's going back up to that is with a major shock.

But trump might be coming so all bets are off.

A lot depends on inflation as that is what is supposed to drive the BoE when setting the rates with the target being 2%. I can see them trying to hold higher rates as long as possible so unless we see a fall in inflation well below 2% for a sustained period I don’t think the BoE will drop the rate.

 

[Jack_green]

I'm planning for the worst (6%) at renewal even though it's not due until August 2025.

If it's more than 6% we'll have to sell.

If by some miracle we are back to 3% rates by the time we renew then we can go back to having a nice holiday every year and think about changing one of our very old cars.

The rates are dropping, but not that much. I think you are in for good chance of getting lower. The BOE will not drop it by that much, but they will drop.

Question if not, why dont you put away what you would pay on the max you are able to afford.

This would give you some interest, and build up a war chest. When your renewal comes you would have a bit in the bank that may cover the extra you may not be able to afford.

 

[Jack_green]

At the risk of being boo'd again (lol)... I thinking of it as the total percentage of my salary over the whole fixed term period. Yes, it certainly doesn't help that the government has frozen the tax brackets and people that is near a tax bracket may be choosing to pay more into their pensions to reduce their taxes.

Because those at the top use CGT etc...

The fiscal drag will be carried till 2028, more and more will be put into the top brackets, so expect future problems.

 

[413x]

As expected. Rates held.
What's more important is the vote split. Haven't seen any info on that.

 

[TNA]

When is the next vote. Are there set dates?

 

[200sols]

As expected. Rates held.
What's more important is the vote split. Haven't seen any info on that.

Vote Hike 0 down from 2
Vote Cut 1 same as last time
Vote unchanged 8 up from 6.

 

[200sols]

When is the next vote. Are there set dates?

• 1February
• 21March
• 9May
• 20June
• 1August
• 19September
• 7November
• 19December

 

[413x]

Vote Hike 0 down from 2
Vote Cut 1 same as last time
Vote unchanged 8 up from 6.

Slight movement. Basically exactly as predicted then.

 

[Chris344]

As expected. Rates held.
What's more important is the vote split. Haven't seen any info on that.

8 voted to remain at 5.25% with 1 vote to reduce to 5%. The attitude is shifting.

 

[Guest2]

A basic ERC query around overpayments.

If I hit my max overpay for year 1 (10k) and my ERC charge is 5%, is this 5% of every penny over 10k that goes to Santander? i.e. I overpay by £5000 and it costs me £250.
Surely best doing that still (if I have the money) as it'll reduce compound interest each month meaning it breaks even or maybe less than the ERC charge anyway.

 

[tamzzy]

A basic ERC query around overpayments.

If I hit my max overpay for year 1 (10k) and my ERC charge is 5%, is this 5% of every penny over 10k that goes to Santander? i.e. I overpay by £5000 and it costs me £250.
Surely best doing that still (if I have the money) as it'll reduce compound interest each month meaning it breaks even or maybe less than the ERC charge anyway.

what is your current mortgage interest rate?
if less than what you'd get from easy access saving then saving is the better choice

 

[Guest2]

what is your current mortgage interest rate?
if less than what you'd get from easy access saving then saving is the better choice

4.89%

 

[tamzzy]

4.89%

Borderline. If you can access rates of 5.1% then this is where I'd put the money rather than eating the 5% ERC