Mortgage Rate Rises

[jonneymendoza]

Do some DIY

I could but i dont think it will be up to spec that my partner would like!!!

I could do some stuff DIY like any flooring stuff but i wish i could take cielings down and replace them with new cieling and also be able to be a pro at plastering!!!

 

[Mercenary Keyboard Warrior]

It kind of is that simple though.

If you overpay £1000 per month on a mortgage at 1.24% for 3 years (until 2026) you would better off putting that £1000 per month into a savings account at 5% (rough fixed term rates currently) for 3 years.

Yep if your after tax rate on savings is higher than your mortgage interest rate you save and then pay off the mortgage when that situation reverses.
(Or hold out if you think savings will overtake mortgages again quickly).

As said with the proviso of its probably better to not have more than one years overpayment allowance saved, unless there is a massive rate discrepancy.

How is it taking advantage, you ask for a quote you get a quote, if you don't like it just do it yourself?



Fixing is not a gamble, not fixing is. If you are looking at the numbers and you can afford to, you should fix for a long time, were interest rates to fall, you can remortgage, from what i see, there is no penalty after only a few years.

Seems to me the majority of people here are basically traders on the interest rate.

Typically the ERC is linked to the length of the fix, in both rate and when it applies. Usually (but not always) declining as the fix plays out.
Generally there is an ERC payment up until the end of the fix, but short and the end of long term fixes tend to be pretty low.

My 10 year fix was 5% ERC Years 0-6, 4% year 7, 3% year 8, 2% year 9, and 1% during final year of fix.

 

[Guest2]

As above, I took my 5 year fixed rate mortgage out in 2018

Product - FAW332, Basis of charge
5.00% of the amount repaid on or before 31/12/2019
4.00% of the amount repaid on or before 31/12/2020
3.00% of the amount repaid on or before 31/12/2021
2.75% of the amount repaid on or before 31/12/2022
1.30% of the amount repaid on or before 31/12/2023

 

[jonneymendoza]

I think if i was living on my own i would attempted more DIY myself and if i **** it up, its on me and dont have a nagging partner on my back lol.

i would obviously never touch doing rewiring and doing extensions etc!

 

[marinersfan]

I'm currently on a 5 year deal with Nationwide, 1.7% I think. Ends in Dec 25. I'm currently overpaying as much as I can (I think it's 4k a year)
Hopefully by the time the deal ends it'll either have calmed down or I'll have such a small amount left I can just pay it off.

 

[Scam]

It kind of is that simple though.

If you overpay £1000 per month on a mortgage at 1.24% for 3 years (until 2026) you would better off putting that £1000 per month into a savings account at 5% (rough fixed term rates currently) for 3 years.

But it’s not. We compared the capital left on the loan after 3 years and it was pretty much the same. Presumably because you’re hitting the compound interest on a much bigger amount (the mortgage). Or to mention we couldn’t save that for 3 years and pay in one lump because we’d hit the overpayment limit. We’d have to break it up into say yearly payments. By which point you may as well save the admin and just pay off every month.

 

[JamesH85]

But it’s not. We compared the capital left on the loan after 3 years and it was pretty much the same. Presumably because you’re hitting the compound interest on a much bigger amount (the mortgage). Or to mention we couldn’t save that for 3 years and pay in one lump because we’d hit the overpayment limit. We’d have to break it up into say yearly payments. By which point you may as well save the admin and just pay off every month.

Money saving expert has a overpayment vs savings calculator, will tell you right there,

 

[413x]

I have until 2027 for them to drop down... Anything over 3.4% would still be an increase though.

Same Boat.

I certainly don't think they will be down to what we have.
Under 3pc would be nice. As that would only be 1pc more than now

 

[413x]

BBC News - Mortgage payments set to jump by £500 for one million households https://www.bbc.co.uk/news/business-66172954

Doesn't look like BoE expects rates to come down soon!

 

[mrochester]

BBC News - Mortgage payments set to jump by £500 for one million households https://www.bbc.co.uk/news/business-66172954

Doesn't look like BoE expects rates to come down soon!

Despite the increase in interest rates, we don’t seem to have found the point yet where people will stop spending.

 

[Richie]

Same Boat.

I certainly don't think they will be down to what we have.
Under 3pc would be nice. As that would only be 1pc more than now

Anything under 3.4% (my current rate) would be a decrease in payment for me... If it went under 3%, that would be awesome

 

[413x]

Anything under 3.4% (my current rate) would be a decrease in payment for me... If it went under 3%, that would be awesome

I accept I will be paying more of stay in this country!

 

[Richie]

Despite the increase in interest rates, we don’t seem to have found the point yet where people will stop spending.

That'll be mainly caused by the fact lots of people are on fixed rates so an increase in base rate won't directly affect them much until they come off it.

If they are fixed until 2025/26/27, then they are protected.

 

[413x]

Despite the increase in interest rates, we don’t seem to have found the point yet where people will stop spending.

If you need something better to buy now than later!
I mean just talking about the ensuite we have. If had spend money 2 years ago could have justified it. Now can't.

So better to get anything (especially big ticket) bought sooner than later!

 

[FishThrower]

im not a economist, but if the inflation is being driven by oil and energy prices , wouldn't increasing the VAT by 10%-20% be a better option rather than increasing the interest rates? this would discourage people from buying luxury goods (which the BOE keeps saying that spending needs to come down). VAT is also only 5% on energy and fuel, and not added on food costs.

Whole thing just absolutely stinks in my opinion, sadly the government paying everyones salaries during COVID to sit at home hasn't help either which is now biting us in the backside.

 

[mrochester]

im not a economist, but if the inflation is being driven by oil and energy prices , wouldn't increasing the VAT by 10%-20% be a better option rather than increasing the interest rates? this would discourage people from buying luxury goods (which the BOE keeps saying that spending needs to come down). VAT is also only 5% on energy and fuel, and not added on food costs.

Whole thing just absolutely stinks in my opinion, sadly the government paying everyones salaries during COVID to sit at home hasn't help either which is now biting us in the backside.

That would be government policy change to alter the tools available to the BOE to control inflation.

 

[jaybee]

But it’s not. We compared the capital left on the loan after 3 years and it was pretty much the same. Presumably because you’re hitting the compound interest on a much bigger amount (the mortgage). Or to mention we couldn’t save that for 3 years and pay in one lump because we’d hit the overpayment limit. We’d have to break it up into say yearly payments. By which point you may as well save the admin and just pay off every month.

Yeah I have a spreadsheet where last time I checked, the difference between chucking mine all into a savings account vs over paying, was minimal at best. We have a massive mortgage though and only got on the ladder in 2020 on a 1.89% rate. I will work it out again to be sure today I think.

 

[FishThrower]

That would be government policy change to alter the tools available to the BOE to control inflation.

I read about that.... but cant they suggest to the government to increase the VAT? surely increasing interest rates is having a zero impact on inflation. Everybody i know are still having 2-3 holidays a year.

 

[GordyR]

I read about that.... but cant they suggest to the government to increase the VAT? surely increasing interest rates is having a zero impact on inflation. Everybody i know are still having 2-3 holidays a year.

What makes you think that?

It can take months for the impact of rate changes to filter through into changes in spending habits, let alone into inflation figures.

This lag effect is further compounded by the fact that we have a large percentage of mortgaged homeowners still on fixed deals.

 

[neocon]

That'll be mainly caused by the fact lots of people are on fixed rates so an increase in base rate won't directly affect them much until they come off it.

If they are fixed until 2025/26/27, then they are protected.

32% of people own their house outright , they can spend spend spend