Mortgage Rate Rises

TheOtherOption said:
We're also hoping for a new deal with NatWest and are within the window to see offers. Can get something around 3.79% for two years and coming off a 5.14% two year fix that'll do nicely and makes it far easier with no legal fees etc as already mentioned.

Still got £128k left and already on 40% LTV so no better rates to unlock.
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Why 2 years over 3 or 5?
 
unwashed potato! said:
Why 2 years over 3 or 5?
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Because we are all dreaming of those heady days where the banks borderline paid us to borrow huge sums of money. The glory days where you could live in a house for a few years and see 20% uptick in prices. We will be taking up a new mortgage at the end of this year going from 5.2% to somewhere like 3.7% but I have no idea what length we will fix for. Likely 3 but it depends on whether we are buying a house that needs work and we would be taking a larger mortgage out at some point.
 
fez said:
Just a heads up, if your mortgage rate is super low you would be far better sticking that overpayment in a S&S ISA or even in a high interest bank account and then just paying off a lump sum at the end. You may know this but just a nudge.
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Which is exactly what I've been doing. My 1.64% rate is up for renewal at the end of May 2026. The return on my S&S ISA is currently at around 9%.
 
fez said:
The glory days where you could live in a house for a few years and see 20% uptick in prices.
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Speaking of which, the hell is going on with prices? I've noticed in recent weeks that properties I've been looking at (mainly flats near work) are dropping a lot in listing price and some either going for barely more than what they sold for a decade ago or some listed for a decrease in price! Is it just that area or that type of property or are prices plumetting? I have heard stories that landlord owners are struggling to profit and some are selling off.
 
mahius said:
Speaking of which, the hell is going on with prices? I've noticed in recent weeks that properties I've been looking at (mainly flats near work) are dropping a lot in listing price and some either going for barely more than what they sold for a decade ago or some listed for a decrease in price! Is it just that area or that type of property or are prices plumetting? I have heard stories that landlord owners are struggling to profit and some are selling off.
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Flats and Maisonettes are the only property type on a low right now, all other property types are still appreciating even if they move slowly. But that's looking quarterly, all property types are up over their decade-old prices.

Are there any area-specific reasons that would explain it, or are lease lengths concerningly short for what you've seen?
 
mahius said:
Speaking of which, the hell is going on with prices? I've noticed in recent weeks that properties I've been looking at (mainly flats near work) are dropping a lot in listing price and some either going for barely more than what they sold for a decade ago or some listed for a decrease in price! Is it just that area or that type of property or are prices plumetting? I have heard stories that landlord owners are struggling to profit and some are selling off.
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In general the Grenfell disaster has caused people to distrust flats a little bit more but broadly speaking its the aftermath of that. The public are now very much more informed about the caveats and pitfalls of owning a leasehold flat. Little control of the costs of maintenance fees, the potential for huge one off bills, the feeling that the management company don't give a **** about value for money and are basically scamming people to do very little, the skyrocketing cost of insuring these buildings, the lack of appreciation in the flat market is at this point a self fulfilling prophecy. Cladding issues on some flats still. The insane cost of buying/moving so more people are skipping the "flat" rung on the ladder to go straight to a house.

Its all colluded to depress flat prices, especially in dedicated, large blocks of flats.
 
House prices have stalled finally.
With the state of the economy, higher taxes, confidence etc. It was bound to happen.

Good for most people moving up the ladder
 
fez said:
In general the Grenfell disaster has caused people to distrust flats a little bit more but broadly speaking its the aftermath of that. The public are now very much more informed about the caveats and pitfalls of owning a leasehold flat. Little control of the costs of maintenance fees, the potential for huge one off bills, the feeling that the management company don't give a **** about value for money and are basically scamming people to do very little, the skyrocketing cost of insuring these buildings, the lack of appreciation in the flat market is at this point a self fulfilling prophecy. Cladding issues on some flats still. The insane cost of buying/moving so more people are skipping the "flat" rung on the ladder to go straight to a house.

Its all colluded to depress flat prices, especially in dedicated, large blocks of flats.
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Another factor is that many flats tend to be in dense urban locations and aimed at those who want ‘city centre living’, however that kind of lifestyle is on the wane as city centres are becoming less appealling. The going out socialising/drinking culture is less prevalent nowadays, office based work places are migrating out of expensive city centre locations, high street shopping is less attractive. There is far less appeal to living in these kind of locations than there was in the not too distant past.

I suspect this change encourages even more of the single “young professional” market who would once have bought a flat as their first step onto the market to simply skip this stage and either not buy at all or wait until they can go straight into a more suburban house once they are in a stable relationship and can leverage the dual incomes that are realistically needed to purchase property these days.
 
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kaiowas said:
Another factor is that many flats tend to be in dense urban locations and aimed at those who want ‘city centre living’, however that kind of lifestyle is on the wane as city centres are becoming less appealling. The going out socialising/drinking culture is less prevalent nowadays, office based work places are migrating out of expensive city centre locations, high street shopping is less attractive. There is far less appeal to living in these kind of locations than there was in the not too distant past.

I suspect this change encourages even more of the single “young professional” market who would once have bought a flat as their first step onto the market to simply skip this stage and either not buy at all or wait until they can go straight into a more suburban house once they are in a stable relationship and can leverage the dual incomes that are realistically needed to purchase property these days.
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Not sure I agree. There was a big push during COVID to move out of London due to WFH and the idea that the future would be hybrid but mainly WFH. A lot of companies are now requiring either full time office again or at least a large amount of time in the office so thats reversed.

I think there is still a lot of demand for flats, they just don't make financial sense. Theres a lot of flats where the service charge is multiple thousands a year. When I lived in a flat about 10 years ago I think our maintenance costs were just over £2k/year. Imagine if your costs were £5k/year. Thats £400/month that isn't paying down your mortgage. Thats a lot of dead money to be paying on a non-appreciating asset
 
fez said:
Not sure I agree. There was a big push during COVID to move out of London due to WFH and the idea that the future would be hybrid but mainly WFH. A lot of companies are now requiring either full time office again or at least a large amount of time in the office so thats reversed.
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London is always going to be a special case, Norwich city centre seems to have an abundance of empty office space.
 
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FBi7 said:
Our 5 year fixed ends at the end of the month. We've decided to stick with the same lender (NatWest) for ease; no applications, credit checks, valuation fees, legal fees, etc. Arranged a new deal via their easy-to-use website. Actually done it 4 times now, each time they reduced their rates - which they don't tell you they've done, you just have to spot it. Gone from 4.18% > 4.13% > 4.08% to now 4.03% for a fee-free 5 year fixed, 44% LTV. Still a killer coming off 1.69% though.

Still overpaying and hope to be mortgage-free in 8 years.
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TheOtherOption said:
We're also hoping for a new deal with NatWest and are within the window to see offers. Can get something around 3.79% for two years and coming off a 5.14% two year fix that'll do nicely and makes it far easier with no legal fees etc as already mentioned.

Still got £128k left and already on 40% LTV so no better rates to unlock.
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NatWest have dropped their rates again. Same criteria now 3.98% for me.
 
For us now we can see 3.71% from NatWest for two years which is nice! Might sign up for that and then keep calling them to check if it drops further.

5 year fix is 3.83% which isn't too bad either hmmm
 
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TheOtherOption said:
For us now we can see 3.71% from NatWest for two years which is nice! Might sign up for that and then keep calling them to check if it drops further.

5 year fix is 3.83% which isn't too bad either hmmm
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It's odd that 5 years is higher no? Don't the banks think that rates will be lower by then? It's almost like they are predicting higher rates within 5 years so want to cover themselves for this. And also they'd prefer you go with the shorter term so that they can charge a nice £1k in fees each renewal
 
Bluebozzy said:
Are there any area-specific reasons that would explain it, or are lease lengths concerningly short for what you've seen?
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Leases aren't especially short, worst I've seen is ~80 years, while most have well over 100 years.

kaiowas said:
Another factor is that many flats tend to be in dense urban locations and aimed at those who want ‘city centre living’, however that kind of lifestyle is on the wane as city centres are becoming less appealling. The going out socialising/drinking culture is less prevalent nowadays, office based work places are migrating out of expensive city centre locations, high street shopping is less attractive. There is far less appeal to living in these kind of locations than there was in the not too distant past.

I suspect this change encourages even more of the single “young professional” market who would once have bought a flat as their first step onto the market to simply skip this stage and either not buy at all or wait until they can go straight into a more suburban house once they are in a stable relationship and can leverage the dual incomes that are realistically needed to purchase property these days.
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Note that these flats aren't even in particularly big towns or cities or even situated in town centre sorts of areas, though this is the south, within commuting distance to the capital. What I've also noticed (not sure if its just coincidence), many of the cheapest flats also have the worst communications infrastructure, with internet speeds max below 100mb (might just be the area). Though even the ones supporting gigabit plus internet are being discounted/dropping in price. WFH is less viable on slower connections.
 
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unwashed potato! said:
It's odd that 5 years is higher no? Don't the banks think that rates will be lower by then? It's almost like they are predicting higher rates within 5 years so want to cover themselves for this. And also they'd prefer you go with the shorter term so that they can charge a nice £1k in fees each renewal
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Labour have still got nearly four more years. Fixing on a five year seems sensible.
 
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Hagar said:
Labour have still got nearly four more years. Fixing on a five year seems sensible.
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Surely fixing on a 3, and then a 5 would be better to get yourself further into the next governments term, assuming the polls remain the same and we have a reform newbie government.

But I still don't understand why banks have higher rates over the next 5 years when everything shows rates dropping slowly.
 
unwashed potato! said:
Surely fixing on a 3, and then a 5 would be better to get yourself further into the next governments term, assuming the polls remain the same and we have a reform newbie government.

But I still don't understand why banks have higher rates over the next 5 years when everything shows rates dropping slowly.
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Mortgage rates are based on swaps not the base rate. Of course there is heavy correlation for the short duration mortgages. Generally on the yield curve 5 years is slightly higher than 2 years, this is market pricing.
 
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