Mortgage Rate Rises

[413x]

Afford, technically yes. But 'affording' is different to living. Yes if I had to I could pay the mortgage at a higher rate, but there would be no discretionary income left. That isn't good for the economy as at my age I'm quite economically active. So the general point is that it's not good to tie up economically active people's income in mortgage repayments at the expense of the economy.

Very much same for me.
Could afford 7-8pc but I would have no life.

You get a long fix if you're sensitive to rate changes. Shame couldn't fix for longer if you so choose.

15 year would be enough to be able to be well into paying off a mortgage and thus be much less sensitive to anything unexpected at point of renewal.

 

[danlightbulb]

Very much same for me.
Could afford 7-8pc but I would have no life.

You get a long fix if you're sensitive to rate changes. Shame couldn't fix for longer if you so choose.

15 year would be enough to be able to be well into paying off a mortgage and thus be much less sensitive to anything unexpected at point of renewal.

I got 5 years which is the highest most of the mainstream banks will do I think. Going 10 years or even 15, I agree it should be more widely available and with no penalty (eg able to move mortgage with you if you need to move house). Poor regulation again in this country.

 

[413x]

I got 5 years which is the highest most of the mainstream banks will do I think. Going 10 years or even 15, I agree it should be more widely available and with no penalty (eg able to move mortgage with you if you need to move house). Poor regulation again in this country.

It just feels so unfair that some people (by sheer luck) exit thier fixed deal in a nice window (ie early 2022) and someone exiting 6 months later (yeah, late 2022!) can end up with totally different and potentially life changing effects

 

[Curlyriff]

I got 5 years which is the highest most of the mainstream banks will do I think. Going 10 years or even 15, I agree it should be more widely available and with no penalty (eg able to move mortgage with you if you need to move house). Poor regulation again in this country.

Barclays do 7yr and 10yr accordingly.

 

[Curlyriff]

It just feels so unfair that some people (by sheer luck) exit thier fixed deal in a nice window (ie early 2022) and someone exiting 6 months later (yeah, late 2022!) can end up with totally different and potentially life changing effects

Same for electric and gas.

 

[danlightbulb]

Barclays do 7yr and 10yr accordingly.

Ok. Barclays didn't come up as a competitive rate when I was getting my mortgage. If I recall, even Barclays 2, 3 year deals were quite a bit higher than the most competitive deals.

 

[Curlyriff]

Ok. Barclays didn't come up as a competitive rate when I was getting my mortgage. If I recall, even Barclays 2, 3 year deals were quite a bit higher than the most competitive deals.

No idea what deals like now,
their 2yr trackers are 3.99%
7yr fixed 5.1%
10yr fix is 5.5%

At 70% LTV

 

[Phill4321]

This is the point of a long term fix, the certainty. 100%

Your almost certainly over the term going to pay more, unless you get lucky, but certainty with many is vastly undervalued.
Until something goes against them and they re-evaluate that choice they made.

So true. There is definitely a cost to certainty and also a peace of mind.

 

[danlightbulb]

No idea what deals like now,
their 2yr trackers are 3.99%
7yr fixed 5.1%
10yr fix is 5.5%

At 70% LTV

Well exactly, that is a huge premium for the longer fixes. It's unnecessary to have that sort of uplift on a house asset which is low risk and which isn't going anywhere.

 

[LabR@t]

Very much same for me.
Could afford 7-8pc but I would have no life.

You get a long fix if you're sensitive to rate changes. Shame couldn't fix for longer if you so choose.

15 year would be enough to be able to be well into paying off a mortgage and thus be much less sensitive to anything unexpected at point of renewal.

When I took original mortgage out back in 2000 it took up most of my income and left me when hardly anything, but it was worth it to get on the property ladder.

Sacrifices are required to buy a house, it's just depends how much you want it.

 

[LabR@t]

It just feels so unfair that some people (by sheer luck) exit thier fixed deal in a nice window (ie early 2022) and someone exiting 6 months later (yeah, late 2022!) can end up with totally different and potentially life changing effects

Life isn't fair shocker...

Maybe the education system shouldn't have mollycoddled you?

 

[danlightbulb]

When I took original mortgage out back in 2000 it took up most of my income and left me when hardly anything, but it was worth it to get on the property ladder.

Sacrifices are required to buy a house, it's just depends how much you want it.

Sacrifices are fine, but getting shafted by factors outside anyone's control after you've just bought the place (and evaluated those sacrifices) isn't fine. Surely you can see the difference?

 

[MatsyLR]

My mortages works out to £307 for 5 years on a 14 year mortage at 4.59%. After all bills (on todays prices at least) roughly £400+ left over with basic wage (no counting bonuses). Plan to make 10% overpayents each year and having the mortgage below 10 years in the end.

 

[Goodie]

When I took original mortgage out back in 2000 it took up most of my income and left me when hardly anything, but it was worth it to get on the property ladder.

Sacrifices are required to buy a house, it's just depends how much you want it.

And this at a time when income to property value wasn’t a patch on what it is now. Just because you could do this 32 years ago doesn’t mean it’s reflective of this day and age.

 

[Mercenary Keyboard Warrior]

Sacrifices are fine, but getting shafted by factors outside anyone's control after you've just bought the place (and evaluated those sacrifices) isn't fine. Surely you can see the difference?

But thats literally life.
There are no certainties all you can do is try to place yourself if the best position to weather them.

You have always been able to long term fix, many wont as they see it as paying more for nothing. Thats their call.

 

[Curlyriff]

Well exactly, that is a huge premium for the longer fixes. It's unnecessary to have that sort of uplift on a house asset which is low risk and which isn't going anywhere.

They have always had that uplift no matter whom provides because there is inherent risk for banks. For instance in March they were

1.49 2yr fixed
1.63 5yr fixed
1.89 7yr fixed
2.69 10yr fixed

It isn't that much of a premium tbh in my opinion for what offered. On my mortgage it would have been £40 different. On a 240k mortgage it's a £160 from £1040 to £1200. So is that premium worth security is point.

Longer term mortgages have always had such an uplift.

 

[Richie]

It just feels so unfair that some people (by sheer luck) exit thier fixed deal in a nice window (ie early 2022) and someone exiting 6 months later (yeah, late 2022!) can end up with totally different and potentially life changing effects

Rates are unlikely to go back down to what they were and will probably stay around the 4-5% mark depending on LTV.

So the people who are getting the big rises now should weather the next renewal better than the ones who renewed at sub 2% a year ago who may now need to renew at double that rate the next time. For those on fixed deals anyway....

Yes, their income should increase over those 2-5 years but, as is human, most people start to "live" in their new salaries resulting in cutbacks having to be made if their mortgage shoots up as I mention above.

Not sure if I explained what I am trying to say very well...

I got 5 years which is the highest most of the mainstream banks will do I think.

Sacrifices are fine, but getting shafted by factors outside anyone's control after you've just bought the place (and evaluated those sacrifices) isn't fine. Surely you can see the difference?

If you've "just bought the place before the factors outside your control shafts people" then, surely, you will have fixed and completed at the low rate... Like your 5 year deal you mention?

 

[danlightbulb]

you've "just bought the place before the factors outside your control shafts people" then, surely, you will have fixed and completed at the low rate... Like your 5 year deal you mention

Yes, but now 5 years isn't looking long enough unfortunately.

1.49 2yr fixed
1.63 5yr fixed
1.89 7yr fixed
2.69 10yr fixed

7 yrs is the value option there:
1.49 / 2 = 0.75
1.63 / 5 = 0.33
1.89 / 7 = 0.27
2.69 / 10 = 0.27

Because whilst 7 and 10 have the same ratio the trend coming up the fixes has bottomed out at 7.

But yeah people would kill for those rates now.

But thats literally life.
There are no certainties all you can do is try to place yourself if the best position to weather them.

You have always been able to long term fix, many wont as they see it as paying more for nothing. Thats their call.

I agree to a point, but when things like this are happening now, literally the whole country has gone to pot in the space of a couple of years, then it's not people's fault. Why should people be protected against COVID but not against massive financial instability? Both could be equally as damaging.

 

[Richie]

Yes, but now 5 years isn't looking long enough unfortunately.

Well it is.

You now have 5 years of wage growth (promotions etc) to counter a potential increase of your payment i.e. 5 years to adjust your finances/lifestyle so that you can adsorb that extra cost.

What you need to do is take that extra income and stick it in savings (after accounting for inflationary increases in living costs like energy, food, fuel etc). Then, come renewal time, not only will you have a small lump sum to put into the mortgage to bring the balance down, you'll also have this "extra" monthly income to help cover the mortgage increase - it goes into mortgage rather than savings

Alternatively, take that extra monthly income and put it straight into the mortgage each month to lower interest paid

Of course, this relies on you looking and gaining better paid jobs rather than just standard wage rises you may or may not get in your current role.

But you have to have a forward planning and disciplined mindset for this. A lot of people just live for the day and all that jazz

 

[delta0]

Yes, but now 5 years isn't looking long enough unfortunately.



7 yrs is the value option there:
1.49 / 2 = 0.75
1.63 / 5 = 0.33
1.89 / 7 = 0.27
2.69 / 10 = 0.27

Because whilst 7 and 10 have the same ratio the trend coming up the fixes has bottomed out at 7.

But yeah people would kill for those rates now.



I agree to a point, but when things like this are happening now, literally the whole country has gone to pot in the space of a couple of years, then it's not people's fault. Why should people be protected against COVID but not against massive financial instability? Both could be equally as damaging.

Technically they were protected. We shutdown the entire economy and then propped it up with loads of money. Not that I agree with this approach but it is what was done and now there’s rampant inflation. Artificially holding down interest rates would go directly against the Bank of England trying to tackling inflation with increased interest rates. Inflation would completely run away and interest rates will be like the late 70s and 80s again where it was changing daily in some cases.