All depends on your mortgage balance.
Mine was so high I'm taking 2k erc fee to lock in.
And it was worth it within a month of my decision
Interest rates increased
- Thread starter Dirk Diggler
- Start date
All depends on your mortgage balance.
Mine was so high I'm taking 2k erc fee to lock in.
And it was worth it within a month of my decision
Soldato
I am waiting on news of an offer I made only this week. Had to up it today as part of a 'best and final' request after about 3 other buyers are all very close on the house. This is £10k over an asking price of £230k.
It is scary to think that I might be buying right at the top of the bubble.
But then again, prices could carry on rising for the next 10 years or more.
No way to know. Even covid, which everyone thought would crash the market, couldn't stop the train.
I'll likely fix for 5 years but if rates are several percent higher in 5 years time, I'll be pretty screwed.
But the only alternative is to carry on renting.
Impossible choice to make really.
Caporegime
Properties in Japan decline for different reasons.
Japanese homes (style) are majority made out of wood, they are recommended to be rebuilt around 20-30 years. You don‘t get many “used” homes with more than 1 prior owners because the 2nd owner usually demolish it and rebuild it. That’s why old homes loses values as it’s near its end of shelf life.
Why do they not make them more sturdy? I guess geographical reasons, you never know when they next typhoon or earth quake is going to destroy it perhaps, but that’s the way it is over there.
They are also a shrinking populations, lots of empty homes are appearing in the more rural parts of the country. There are schemes where you can get homes for really little money but for the purpose that the new owner will live there.
Perhaps our market will compress? I'm not sure how it will play out. I just think there are too many grand houses with too few buyers.
It's not only the cost of the house.
I feel there are too many big houses that no one wants.
The upkeep on my parents land was a full time job. As the millennial and next generations grow up I have a feeling we won't all want these big asset burdens. I'd like a big garden myself but I'm a rural person. But I don't want the big house that comes with it.
I mean heating my parents house, with its big council tax is not particularly desirable. It's also miles away from town. I feel market is shrinking for these types vs the up and coming availability in the next couple of decades.
Just my thoughts
It's only 60-70k. I guess enough to make that £277 less than the interest I might pay if in 6 weeks rates and or mortgages go up again.
I was watching the market for a while. And rates changed randomly. I was ready to renew with my current provider then they hiked the rates 3 days before which pushed me to a new provider.
With such a low mortgage as yours it's much less significant. Rates aren't going to rise within a few months by much.
Probably not much in it. But if the ERC is that low I'd be looking for cashback deals (Lloyds was 750 cashback for example with a 999 fee, absolute bargain that).
With a mortgage as small as yours that type of cashback is probably more significant than for myself.
How many people have actually done the maths to work out what each interest rate increase means in terms of increased payments?
My fixed term ends in September 2024 and of course I have no idea what the interest rate will be by then, but I've worked out what I would have to pay should they be 2.5% to 10% in 0.5 increments. I know the tipping point at which it becomes unaffordable. Time is also against me with age creeping up limiting the duration of the mortgage term. I think a lot of people will be in the same scenario and hopefully not walking in to it blind, hoping the government wouldn't let such a thing happen. Don't bet on it.
My fixed term ends in September 2024 and of course I have no idea what the interest rate will be by then, but I've worked out what I would have to pay should they be 2.5% to 10% in 0.5 increments. I know the tipping point at which it becomes unaffordable. Time is also against me with age creeping up limiting the duration of the mortgage term. I think a lot of people will be in the same scenario and hopefully not walking in to it blind, hoping the government wouldn't let such a thing happen. Don't bet on it.
Soldato
What benefit do you get from doing those calculations? If your mortgage is unaffordable when your fix ends and you can't extend the term then you'll need to sell up and downsize.
Knowing about it in advance isn't going to help, there isn't realistically much you can do to make it affordable?
It very much helps.
Say you're looking at a 5 Yr fix but have an ERC of 2k
If you work out your mortgage cost per year for every 0.5pc increase
You can see at what percent you should pay the erc
Obviously you have to guess what the base rate is going to be. But it's basically guaranteed to go up.
Soldato
Indeed.
I think if I do a new 5 year fix at say 3% instead of 2%, that'll cost me an extra 9k (just in interest) over the term.
So if paying 3.5k ERC means I can get a 1% lower deal, then it's well worth paying.
I don't forsee rates going up a whole 1% between now and 1st July (when I can refix with no ERC), hope I'm not wrong on that!
I think that's a pretty safe bet
Forewarned is forearmed and all that. It takes roughly 3 months or more to sell a house and if you had to sell up to downsize you can start the process early before the impact of the increased rates hit. Sitting on your bum in ignorant bliss is not wise. The increase could be substantial to the point of missing payments while you sell up and going in to debt would adversely affect your ability to get another mortgage. You'll be screwed.
This'll be the point at which the housing market will fall. Too many people with eyewatering mortgages selling up when it becomes unaffordable due to too high payments. The market gets loads of these sellers and the buyers are spoiled for choice which drives the prices down. People end up in negative equity and the problem just deteriorates. Landlords with cash have orgasms.
Having worked it out I know not to worry too much until interest rates get above 7.5% but 10% would be bad. I highly doubt interest rates would ever get that high in two years time, the country would implode.
No if they get anywhere near that high there would be much bigger problems around
Soldato
Yeah, that's a fair point. Although you would get 3 months notice from the bank when your mortgage fix is ending with details of what costs will be after that. If it's an inevitability of your situation then I think some people would prefer ignorant bliss rather than stressing about it for years - if there's nothing you could do about it anyway.
Associate
The thing is, it has happened before- several times.
Indeed.
That's their choice and I get life's too short and yolo etc. I'm at that age and the right home where I don't want to move again and planning now to keep it that way.
Soldato
Where would all these people live? On the street with their kids? There's nowhere for them to go en-masse.
If what you say does happen, it would take many years to notice the effect in terms of having a pick of houses to buy on the open market.
I don't know, where did they go the last time it happened? What happened in the US with the subprime mortgage fiasco? If it's an unprecedented event worse than any before it (like many would have you think) then I honestly don't know. Let's hope it doesn't get to that stage, personally I don't think it will.
Caporegime
Repossession -> Renting -> Move in with family -> Bankruptcy -> State accommodation -> Shelter -> Homeless -> Death
You hope to be back to ownership or reverse that order somewhere along the that line.
You hope to be back to ownership or reverse that order somewhere along the that line.
Let's be honest here, one of those isn't ever going to be open to this mainly male forum. Those are for single parent families and other vulnerable demographics. Men just aren't ever realistically in that classification.
That's not to say they aren't, just society doesn't accept them as such.