They do. My fixed ends next month and I am moving onto a 2 year Tracker with Nationwide. No ERC (the 2 years refers to the length of time the uplift on BoE base rate is fixed), no overpayment limits. Just a £65 admin fee if you want to pay it off during the term. +0.74% over base rate with an LTV of 20%.
Mortgage Rate Rises
- Thread starter glenimp617
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They are quite high for people with mortgages.
If your income hasn't gone up since 1pc rates then 5pc is going to feel a big squeeze.
What seems clear is 0-1pc rates were never a good thing. Especially for so long.
Soldato
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Anecdotally I'm not seeing any properties around here selling. Used to be the case most for sale boards were sold (seller's market) but it's the opposite now. Feels like a collapse is on the cards
Absolutely... The smugness and self-righteousness of some people, especially those who have never came up against actual difficulties that life can throw your way, is simply astounding TBH.
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Soldato
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Not being smug about anything here but I think there is a problem in general society where people don't really plan for contingencies or issues outside of their control properly, taking out finance they can't afford etc (especially when circumstances change against them).
I have a friend who has a mortgage, who thinks that living in debt is better, and always has loans on the go, buys expensive watches etc. Should they lose their job I really struggle to think how they'd manage. They don't have a really expensive house luckily, but their real time balance will be negative when you take into account assets vs debt (excl the property).
I have another friend who is renting a room in a house share, says they are planning to save to buy somewhere, but dips into their overdraft every month and takes out finance on new gadgets all the time.
People like to buy stuff and they don't usually want to wait or save for it, I am generally the opposite, I'll usually save up capital and then spend it, I hate paying interest unless it's unavoidable (larger purchases like house, car etc).
In my case, I am the sole person responsible for paying my mortgage, and I'm not happy unless I can pay my living costs for a minimum of 6 months should I lose my job unexpectedly, that is the smallest sum I am comfortable with.
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Yep, house prises around me have stayed the same or gone up even
the difference this time, is nothing is sellingThere's self inflicted pain (people over spending and NEEDING credit to buy stuff.
Then there are people who've been stuffed by bad timing.
Let's face it for all the "you knew this rate rise was coming.. Why did you max out?" blurb this has been the best thing to do for the prior decade before the price rises.
So you can really blame people for maxing out. Even with the rises it still Works out. If moving house wasn't such a money burner maybe people wouldn't feel the need to max out.
But you can blame those who have jumped on credit/pcp cars for non essentials as this is very different.
Round here they are selling, except for the obviously overpriced like my neighboursYep, house prises around me have stayed the same or gone up even
Soldato
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Prices round here haven't dropped by much, but very few houses are actually selling.
Yeah, it's similar round here.
We viewed 4 houses before putting an offer on one - and 2 of them hadn't changed their prices in almost 6 months. One of the estate agents said that it's tricky as some of the sellers are quite stubborn on the price and they can only advise to some degree - but seeing a house sit on the market for 6+ months with 1 viewing every 2 months doesn't indicate that it's well priced. It seems like some sellers are still living in 2020/2021 with their prices and because a similar house sold for X amount 2 years ago, it should mean the same for them.
Interest rates don't need to come down in any significant form any time yet, it's the only way we're going to even try and stabalise the housing market.
As oft mentioned, a 'crash' wouldn't help anyone (apart from cash buyers) and what we need is a long period of 'stagnation' in prices so incomes can catch up to make prices more affordable again. A drop in interest rates in the region of 2's would only fuel price rises again due to facilitating affordable credit.
As oft mentioned, a 'crash' wouldn't help anyone (apart from cash buyers) and what we need is a long period of 'stagnation' in prices so incomes can catch up to make prices more affordable again. A drop in interest rates in the region of 2's would only fuel price rises again due to facilitating affordable credit.
As a general feel. 3pc seems sensible. It. Stops people and companies treating debt as free but also isn't ruinous or crippling.
Does seem to be more people are starting to see house price flatlining as a good thing.
I guess this is due to few people having less and less in assets in old age? Or thinking more of now than inheritance?
Early in life the cheaper houses are the better.
Soldato
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I took out the largest mortgage I possibly could a few years back, in fact I was a little short and had to borrow more than I was comfortable with from the bank of m & d on top. This was around 2017 or so.
I knew it was risky, I knew what the cost would be (many thousands of £ having to be paid back in 24-36 months), and in the end the house I bought I didn't even like and sold it at a loss 2-3 years later, and the stamp duty I paid went with it.
Point being, I was borrowing extraordinary amounts, but I knew I had to make sacrifices and make extraordinary payments to get the figure down within that 24-36 months timeframe.
I think a lot of people have done the former, but have no plan to pay it down quickly, or make sacrifices to do it.
In general, I think most of us who have had a mortgage for the last decade or so were/are also aware that the 0.5% rate wasn't going to last forever, so I disagree that it was the only option, people needed to ensure they had enough fat to pay extra should the rates have gone up.
I've got very lucky with my move I'm in the middle of considering there certainly are differences in the market by location.
Moving from Kent. House advertised at probably 10-15% less than it would have done 18 months ago. Only one person showed interest in six weeks but they liked it so much they put in an acceptable offer.
Moving to The Vale of Glamorgan. House we're buying had been bought by the current owners 18 months ago but circumstances mean they have to move. They had an agreed sale at 5% over what they paid in June this year (when prices had fallen everywhere). That fell through and I've managed to have an offer accepted at less than that but pretty much what the current owners paid 18 months ago so it's not decreased in value (aside from real terms inflation I guess). There were lots of viewings from potential buyers, no need for them putting a price reduction on the listing, three offers on the table (presumably a few cheeky ones) and comparable stock over the couple of months we were looking in the area was going online and selling quickly.
I had no leverage as a seller in Kent and no leverage as a buyer in South Wales and so I feel quite fortunate to make something work.
Moving from Kent. House advertised at probably 10-15% less than it would have done 18 months ago. Only one person showed interest in six weeks but they liked it so much they put in an acceptable offer.
Moving to The Vale of Glamorgan. House we're buying had been bought by the current owners 18 months ago but circumstances mean they have to move. They had an agreed sale at 5% over what they paid in June this year (when prices had fallen everywhere). That fell through and I've managed to have an offer accepted at less than that but pretty much what the current owners paid 18 months ago so it's not decreased in value (aside from real terms inflation I guess). There were lots of viewings from potential buyers, no need for them putting a price reduction on the listing, three offers on the table (presumably a few cheeky ones) and comparable stock over the couple of months we were looking in the area was going online and selling quickly.
I had no leverage as a seller in Kent and no leverage as a buyer in South Wales and so I feel quite fortunate to make something work.
Long term retail mortgage rate would be 3.5-4% if the BoE of 2.5% inflation is to be met consistently.
anything more or less those will mean there are some level of macro economic issues in the underlying fundamentals.
If BoE increase inflation targets, there will be wider market repercussions and it’s not something they can change today and then again another month or year down the line.
anything more or less those will mean there are some level of macro economic issues in the underlying fundamentals.
If BoE increase inflation targets, there will be wider market repercussions and it’s not something they can change today and then again another month or year down the line.
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My issue with this is that ultimately you are always gambling and when you lose I don't think you can really complain. It wasn't a massive gamble but the writing has been on the wall for quite a few years before it eventually came to pass.
Part of the argument for abolishing stamp duty as well. Have a more fluid housing market.
I think there are far far more of these people that some of us like to admit. Our cleaner was complaining about her electricity meter running out all the time last winter. Shes in a council house, has 4 kids and she spends ridiculous money all the time. I would be astonished if she is paying into any sort of pension or savings for her future from her job.
Shes just bought 2 dogs for £2k, they are eating about £50 of food between them a week currently and they are still puppies. She always has the latest or last gen iPhone, expensive trainers etc. She was telling me what she has bought for Christmas for her kids and it totalled at least £2.5k just for the "big ticket" items.
Agreed. Its a nice middle ground.
I think that the gap between the haves and the have nots is just massively widening. The older generation (in general) doesn't or didn't spend money they didn't need to so with some vaguely prudent investments they are very well off now. The younger generation is going to find themselves at retirement with very little in a lot of cases.
For new buyers if you're not maxing out you lose so much.
We maxed out. Absolute maxed out. I didn't have enough to buy the house when I put in an offer.
If we hadn't have maxed out I'd have missed out on something major.
Garden, detached, a room.
If I did it again? I'd do the same. Because moving up 3 years later (need a room for a kid, WFH need an office room, etc) would be 10k extra on costs at least and the stress with it
Soldato
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Right, but presumably you didn't max out and then max out on other things, you must have considered paying into it and reducing exposure to risk after you bought the house.
I think many haven't done that, and don't even know what the word overpayment means.
Yeah I wouldn't expect a hand out, I wouldn't expect to be told "I told you so" if it didn't work out.
Really, the only thing that would scew me would be insane rate rises or job loss. And I doubt either of those would be different if I went for a 200k vs 260k house.
Anything less and be in a right hole.
Our cleaner (employed not her business) is always dressed up fancy, has a nice new merc. It might not be on finance. But I'd guess it is. Don't like to judge and I know the benefits of lease cars. But I do agree people do over extend. No idea on how many are by choice vs necessity
Soldato
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Sorry but 3% is a joke rate. The current rates now are "normal", they are not high, the issue is house prices are too high, they were tuned for artificially low interest rates.