Mortgage Rate Rises

HungryHippos · 15 Nov 2023 at 12:43

Situation is what it is, it's like asking for utility prices to be lower again when the current price is the new normal, and probably will be for some time to come.

3-4% mortgages in 2025 may be best case scenario.

I'm not really expecting a huge house price crash here, but perhaps a stabilisation around current levels.

fez · 15 Nov 2023 at 12:45

413x said:
No idea on how many are by choice vs necessity

I think this is probably the crux of the issue. What people consider choice and necessity. And what should be choice but your long term choices have led to the point of necessity. Most people I know who complain about having little money are very frivolous with it. I don't have buckets of sympathy for people who have made poor choices for years and then circumstance happens to come and bite them.

413x · 15 Nov 2023 at 12:56

platinum87 said:
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.

Its a new normal though. 5pc + is enough to cripple companies laden with debt and individuals and even national debt becomes an issue.

Normal can change over time.

413x · 15 Nov 2023 at 12:57

fez said:
I think this is probably the crux of the issue. What people consider choice and necessity. And what should be choice but your long term choices have led to the point of necessity. Most people I know who complain about having little money are very frivolous with it. I don't have buckets of sympathy for people who have made poor choices for years and then circumstance happens to come and bite them.

Everyone needs a smart phone now.
No one needs a Samsung fold and the smart watch.

delta0 · 15 Nov 2023 at 13:10

200sols said:
People getting carried away, its still at 4.6% and will fall more slowly from here. Possible small rate cuts next year if data allows it, nothing spectacular.

For mortgage rates those will fall before we get a base rate cut. Gilt rates are back down to early July levels and on a downward trend. That’s already bringing mortgage swaps down and it’s going to accelerate.

platinum87 · 15 Nov 2023 at 13:17

413x said:
Its a new normal though. 5pc + is enough to cripple companies laden with debt and individuals and even national debt becomes an issue.

Normal can change over time.

I don't quite understand what you are saying here.

We want those companies laden with debt to go bankrupt, this is a good thing. Those companies laden with debt are in such a position due to having a return on capital, lower than the cost of capital.

You should look into that because you own a few of them.

jaybee · 15 Nov 2023 at 13:44

platinum87 said:
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.

But we can't just push a switch and make all house prices half. What we can do is adjust rates. Both need to come down really.

kevman · 15 Nov 2023 at 14:43

jaybee said:
But we can't just push a switch and make all house prices half. What we can do is adjust rates. Both need to come down really.

Basically need 10 years of lowish rates to curb excessive house price inflation and allow people and business to financially recover

HungryHippos · 15 Nov 2023 at 14:53

kevman said:
Basically need 10 years of lowish rates to curb excessive house price inflation and allow people and business to financially recover

Lowish rates keeps house prices high, because it's cheaper to finance £500K mortgage at 2%, it's part of the reason the prices went up so much in the last decade and a half.

Higher rates like we have today should curb price increases.

413x · 15 Nov 2023 at 14:59

platinum87 said:
I don't quite understand what you are saying here.

We want those companies laden with debt to go bankrupt, this is a good thing. Those companies laden with debt are in such a position due to having a return on capital, lower than the cost of capital.

You should look into that because you own a few of them.

Many will. But it won't need super sky high rates of old.
I mean it's already coming though. 5pc base rate is starting to take hold.

Companies weak and riding on debt will fold.

If you put it up to 10pc or "normal" you'll cause unnecessary pain.

MatteH Oxford · 15 Nov 2023 at 15:01

Freakbro said:
As oft mentioned, a 'crash' wouldn't help anyone (apart from cash buyers)

My current property is worth around £300k, if it fell to £100k then a £600k house should be then be worth around £200k.

I'd only need £100k to move up instead of the £300k before the fall, I'd be massively better off if I moved to the bigger house!

413x · 15 Nov 2023 at 15:02

MatteH Oxford said:
My current property is worth around £300k, if it fell to £100k then a £600k house should be then be worth around £200k.

I'd only need £100k to move up instead of the £300k before the fall, I'd be massively better off if I moved to the bigger house!

Think about others. Those new to the market. They'd be royally screwed.

MatteH Oxford · 15 Nov 2023 at 15:03

413x said:
Think about others. Those new to the market. They'd be royally screwed.

I'm sure they wouldn't be thinking of me

HungryHippos · 15 Nov 2023 at 15:13

£600K houses aren't going to £200K, that is basically dreaming territory at this point, even the materials to build the houses have likely gone up in price a lot.

People just won't sell at a loss, or they'll wait where they are unless they're forced to move.

413x · 15 Nov 2023 at 15:16

HungryHippos said:
£600K houses aren't going to £200K, that is basically dreaming territory at this point, even the materials to build the houses have likely gone up in price a lot.

People just won't sell at a loss, or they'll wait where they are unless they're forced to move.

That's what my neighbours said.

They are selling for 350 and they won't budge. They are happy to leave it on market until it sells. If it doesn't. They won't move.

brightside229 · 15 Nov 2023 at 15:33

what annoys me is the "oldies" who bought a house for 20k and it is now "worth" 250k but they will not take any drop in price despite making a huge return and not having had a mortage for 30 years.

MatteH Oxford · 15 Nov 2023 at 15:37

HungryHippos said:
£600K houses aren't going to £200K, that is basically dreaming territory at this point,

I didn't say they would, just using it as an example to those who think house price increases across the board are universally beneficial. - they aren't

There's always the 3 D's, death divorce and destitution. People selling set the price, not those ''hanging on for what they think it's worth''.

kevman · 15 Nov 2023 at 15:47

HungryHippos said:
Lowish rates keeps house prices high, because it's cheaper to finance £500K mortgage at 2%, it's part of the reason the prices went up so much in the last decade and a half.

Higher rates like we have today should curb price increases.

Yup - when i say "lowish" i mean around 4%. Will curb house prices to some extent but not drive the economy into recession

fez · 15 Nov 2023 at 15:48

Its quite funny watching the youtubers all talk about how the market will drop 20-30% and now they are explaining why its not dropping much in a lot of areas. Desperately trying to explain how they were right in both situations or just straight up ignoring it.

Like thousands of others. We are probably stuck in our current home for another 5+ years due to the interest rates. We would have been moving within a year or two but thats now off the table. So we won't sell and we won't buy. I imagine a large number of people are in that boat now.

We are also looking into making some house improvements as a result. Hey, at least builders are going to do very nicely over the coming years eh.

Blackjack Davy · 15 Nov 2023 at 15:49

413x said:
Everyone needs a smart phone now..

Somehow I seem to manage without one. Crazy I know.