Mortgage Rate Rises
- Thread starter glenimp617
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Soldato
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I think it's bad value for the public.
It's expensive for each instance.
That money could be spent elsewhere.
Valuing houses is going to be tricky.
If those people sold up, they would still be housed somehow. If they got housing benefit for three years, that would be much less expensive than a6 £80k interest free cash lump sum.
That money could equally well be given to housing associations to build low cost housing.
Collecting that money will be ruinous expensive and... well, it just won't happen. It will be written off.
Yeah I agree. There are far better sources for public money.
Some of these people will be deserving but there will be others who have gotten themselves into a mess.
I'm not in favour of dishing out life changing money to individuals like this. Not when Wales has so many issues that this could help with.
Wonder how they are going to decide who gets what. And I wonder by how much it will be able to be manipulated.
Can you tuck away 100k and claim you need it. Get it and basically pay off a. Huge chunk of your mortgage at 0pc when everyone else Is paying 5-6?
Will there be some binary line where if you earn a pound more you get nothing vs next door getting 10s of k?
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Scotland did the HTB scheme properly IMHO. It's now stopped (back in 2019/20 IIRC.
New Builds
Max property value £200k
10% min buyer deposit
15% government loan of property value
0% interest on loan
Doesn't need to be paid back until you sell property.
Can buy back tranches of 5% at a time
Amount paid back is same percentage of current house value e.g.
200k house
20k buyer deposit
30k HTB loan
10 years later, house is valued and sold at £300k - you pay government back £45k (50% increase in house price)
As I said though, if you buy the house and live in it for 50 years and die, the loan gets paid back at that point it's sold from your estate.
New Builds
Max property value £200k
10% min buyer deposit
15% government loan of property value
0% interest on loan
Doesn't need to be paid back until you sell property.
Can buy back tranches of 5% at a time
Amount paid back is same percentage of current house value e.g.
200k house
20k buyer deposit
30k HTB loan
10 years later, house is valued and sold at £300k - you pay government back £45k (50% increase in house price)
As I said though, if you buy the house and live in it for 50 years and die, the loan gets paid back at that point it's sold from your estate.
In theory its means tested and will require jumping though plenty of hoops but as you say, who knows how it will end up being implemented.
Soldato
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We've done this twice now, although in England. Our first house made us a lot of money. The second, maybe not so much but it definitely helped us get on the ladder. Living in Surrey, affording a house as a first time buyer without HTB must be a nightmare.
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The only big issue I see with the English HTB is that its a loan that needs to start being repaid after 5 years I believe?.... "Issue" may be the wrong word but its certainly a big difference from the Scottish scheme. That and the huge upper limit compared to the Scottish system
Soldato
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Unless its changed you pay interest after 5 years so people tend to try to target paying it off, or a chunk off at that point
Ah, so its just the interest you MUST start paying back after 5 years and not any of the capital?
Again - The Scottish system is interest free. You do have to pay the percentage price increase in house value but only when you come to sell e.g. if your house price rises by 25% since initial purchase, you pay back HTB loan + 25% but, again, only when you sell the house. If you stay in it for 50 years and die, your estate pays this part. You can buy the HTB amount out in 5% tranches as you go if you want - again, the amount of each tranche is subject to house price increases/decreases
I think this is only for new purchases. Also, with the fees to take it out in the first place it's probably still cheaper to go with a ~5.4% with no fee. Fees are a killer on 2 year fixed rates.
Soldato
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Yeah, that's right for England. Works out OK to be fair. On our first house, we could remortgage and it covered the HTB loan. On this house (second one on HTB) we'll probably sell it and move on as we hate our neighbours and I'm also sure that we've reached the ceiling price, so we couldn't make any extra money by redeeming it early.
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Savings (fixes) and mortgages are near parity now. May well cause a strain on bank profits?
Not really sure if that's true or not. But it's the first time I've seen it like this
Not a chance.
After the initial boost higher interest rates are usually negative for banks, lending dries up, people start defaulting and eventually profits fall.
Obviously Banks do other stuff. But I thought that a higher rate on mortgages vs savings were a way banks creamed profits?
There's this lingering too.
Defaults on loans and mortgages.
How bad will it be? Depends on job market I think
BoE just said they won’t raise rates anymore so we are going to see them fall further.
There are no guarantees they won't raise rates more. No one has a crystal ball knowing when they'll fall. Best estimates are in about 2 years' time, but that's it, they're estimates.
Whenever it is. It is now putting downward pressure on mortgages. The base rate is not the only determining factor. Swaps which are more forward looking are falling which is what is driving the Nationwide rate down and is the start of a new trend.