Mortgage Rate Rises

BongoHunter said:
We will have 500K and 29 years left to go at renewal in 2025 (with 200K of equity in the property), combined salaries of 165K.

It's surprisingly close to being unaffordable at anything over 5% mortgage rate. Though I guess our salaries will go up a bit over the next 2 years.

We could probably manage 6% - but it wouod be tight.
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The £ devalues by 5.47% a year so anything below that is technically fine.
 
The IMF expects inflation to be higher in the UK than in any other G7 country both this year and next year.

It believes Bank of England rates will peak at 6% and stay around 5% until 2028. Rates are currently 5.25%.
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https://www.bbc.co.uk/news/business-67056069

Looks like the people that went for 5 year deals in mid-late 2022 may get hit with a large increase in mortgage payments :(

I was hoping rates would be coming down by 2027 :(
 
Richie said:
https://www.bbc.co.uk/news/business-67056069

Looks like the people that went for 5 year deals in mid-late 2022 may get hit with a large increase in mortgage payments :(

I was hoping rates would be coming down by 2027 :(
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Crazy. Yeah that will be us in 2027. 1.9 to lol%

That's why I want to push the stay in the UK vs emigrate decision now. Need to plan whether it's worth paying down the mortgage or not.
 
I wouldn't say it's a "no brainer"; whilst I've repeatedly said in this thread that I didn't expect interest rates to fall in the short term, 5 years is a fair way off. This is just the IMF outlook which is a useful input but don't take it as gospel. A no brainer, if there is such a thing would have been more like grabbing a long term fix last year when rates were low but inflation looming.
NZXT30 said:
The £ devalues by 5.47% a year so anything below that is technically fine.
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Can you elaborate a bit on the inference of this please?
 
delta0 said:
They are usually wrong with these forecasts. Also fixed mortgages are set by swap rates so can and often are lower than base rates.
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Well, yes, its a forecast. WHo can ultimately predict what will happen in 5 years... I mean, any forecast made in 2019 for the next 5 years couldnt imagine a Global Pandemic, Russian War, Israel War or CoL crisis happening nor taking those into account.

Given what has happened in the last 18 months, forecasting for that period itself would likely be inaccurate
 
Richie said:
https://www.bbc.co.uk/news/business-67056069

Looks like the people that went for 5 year deals in mid-late 2022 may get hit with a large increase in mortgage payments :(

I was hoping rates would be coming down by 2027 :(
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Maybe, maybe not. This is just a forecast.

Bear in mind the thing that got us to nearly 0% was on 2008. In 2003 nobody would have guessed that. Similarly in 2008 nobody would have forecast it staying this low for this long.
 
Just locked in 5.12% on part 1 of my mortgage (£354k). The Nationwide process isn't bad, but annoying that things like not being able to extend the mortgage term at the same time aren't possible until <3mos out.

Locking in cost nothing though... so there's that...

Also, my house has apparently increased by 10k...
 
HangTime said:
I wouldn't say it's a "no brainer"; whilst I've repeatedly said in this thread that I didn't expect interest rates to fall in the short term, 5 years is a fair way off. This is just the IMF outlook which is a useful input but don't take it as gospel. A no brainer, if there is such a thing would have been more like grabbing a long term fix last year when rates were low but inflation looming.

Can you elaborate a bit on the inference of this please?
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The half life of the £ is 9.14 years so if you have 100k today in 9.14 years your purchasing power will be 50k.

It makes sense to invest it instead of losing 5.47% of it each year and the property market has traditionally been exceptionally strong in the UK.

The 5.47% is extremely conservative as the property will certainly be worth more in 9.14 years, if you're renting it's a no brainer to go into a mortgage even up to 10% interest rate.
 
Richie said:
https://www.bbc.co.uk/news/business-67056069

Looks like the people that went for 5 year deals in mid-late 2022 may get hit with a large increase in mortgage payments :(

I was hoping rates would be coming down by 2027 :(
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Not great but at least another 4 years puts you in a good position to have a backup plan. Also the capital owed will go down quite a bit in that timeframe, reducing the proportion of mortgage payment that is interest.
I'm in a similar situation. 18 years left on mortgage, locked in at 1.27% until mid 2027. Figuring out what I need to do to make a huge dent, if not pay off, the mortgage in that timeframe.
 
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Anyone with HSBC mortgage know how many months befor end of current fixed term, they send renewal offer? Is it 6 months or later? Think my fixed term ends sometime between Feb-April 2024.
 
EvilRob said:
Not great but at least another 4 years puts you in a good position to have a backup plan. Also the capital owed will go down quite a bit in that timeframe, reducing the proportion of mortgage payment that is interest.
I'm in a similar situation. 18 years left on mortgage, locked in at 1.27% until mid 2027. Figuring out what I need to do to make a huge dent, if not pay off, the mortgage in that timeframe.
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If you are on only 1.27%, wouldn't you be far better off not paying it off, and earning a load of interest on the money you would have used instead?
 
EvilRob said:
Not great but at least another 4 years puts you in a good position to have a backup plan. Also the capital owed will go down quite a bit in that timeframe, reducing the proportion of mortgage payment that is interest.
I'm in a similar situation. 18 years left on mortgage, locked in at 1.27% until mid 2027. Figuring out what I need to do to make a huge dent, if not pay off, the mortgage in that timeframe.
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My strategy also. I’ll take a hit next April when I renew but will attempt to clear the mortgage in 2-3 years.
 
NZXT30 said:
The half life of the £ is 9.14 years so if you have 100k today in 9.14 years your purchasing power will be 50k.

It makes sense to invest it instead of losing 5.47% of it each year and the property market has traditionally been exceptionally strong in the UK.

The 5.47% is extremely conservative as the property will certainly be worth more in 9.14 years, if you're renting it's a no brainer to go into a mortgage even up to 10% interest rate.
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£10 today was £5 in 1994 going by the inflation calculator https://www.bankofengland.co.uk/monetary-policy/inflation/inflation-calculator
 
My 10-year fixed (~3%) runs out next year. Considering I've actually been paying more than base for most of it, I'm not happy that my stability is about to abruptly end. Luckily I only have a few years left, but then we would be thinking about moving, and there goes that dream as well.
 
Richie said:
https://www.bbc.co.uk/news/business-67056069

Looks like the people that went for 5 year deals in mid-late 2022 may get hit with a large increase in mortgage payments :(

I was hoping rates would be coming down by 2027 :(
Click to expand...

ouch!

My mortgage will be down to £65k by then, but without our current car loan. Still, absolutely crazy.

House prices aren't coming down either....at least not where I live.

I want to move house as well :(
 
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TheOracle said:
ouch!

My mortgage will be down to £65k by then, but without our current car loan. Still, absolutely crazy.

House prices aren't coming down either....at least not where I live.
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Mines 200k (200014 right now!, about to cross under 200k..yay? No!) paying off about 600 a month until 2027.

So it's barely going to be any lower. If we stay in the UK and rates are still bad, it possible I'll dump 10s of k from my isa into it.

All depends on rates of savings vs mortgage vs S&S
 
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