Mortgage Rate Rises

[glenimp617]

of course they have

I always seem to be a year behind the crazy cheap deals. Mines up this time next year. If it was this year I could have locked in a few months ago at around 2% but heaven knows what the rates will be like in another 12 months.

Santander are closing in on 4%

anyone else needing to renew at a higher rate?

 

[glenimp617]

And chances are it will be pushing 5% when you try and fix next year.

Guaranteed

 

[glenimp617]

Well house prices are still rising, a sellers market with houses flying off the shelves, rates are rising, wages aren't

Where's the money coming from

 

[glenimp617]

Santander ask for a full 5% ERC no matter how close to the end of the term you are. Most other banks drop 1% each year but not them.
Fortunately our mortgage is quite low (I say low, it's £90k, that's still a lot in my book). It would have cost me more to pay the ERC and rates would need to rise well over an additional 1% to level out.

Lifes for living, but you need to be sensible. I'm going to knock the term down at renewal. We have enough money to knock it right down and get it paid off quite quickly but we'd be cutting it very fine.

It's a balancing act

 

[glenimp617]

I'm coming up for renewal next month, i.e. 3 months before my fixed rate ends.

I've been looking at my account but can't get a new deal until next month without heavy ERCs.

I'm wondering whether to stick my existing lender and go for a 5-year (3.25%) or 10-year (4.04%) - but both have a heavy product fee, and at 57% LTV I'm sure I can do better than these rates. They might change over the next month thhough....

Would anyone advise using a mortgage broker for a remortgage, or just shopping around yourself?

Barclays beat those deals so check them out

 

[glenimp617]

I'm thinking a 7yr fixed next year which should be the last. Just hope they don't reach 5%

 

[glenimp617]

Check a broker like London and Country.
Also, don't wait. You can apply and lock in a rate with another lender usually up to 6 months in advance. As long as you have your mortgage offer, you are good. I did this in December and then waited to complete until my fix expired last month (now locked in for 5 yrs at 1.27%).

who was that with if you don't mind me asking? The reason I ask is that I was looking last year and couldn't find anything close to 1.27%

I'm missing a trick here

 

[glenimp617]

Since 2010 our house value has gone up 60-70%. Bloody madness and we do not even live in a London commuter zone but I think a lot of WFH have moved this way for cleaner living. We were looking to sell during covid and houses were barely up for a couple of weeks before selling. Now there is very little for sale.

It wouldn't surprise me in the decades to come if WFH really does take off that a lot of previously hot property will be worth a lot less than it was and people stuck in rubbish houses with negative equity.

Damn, mines 70% as well (in the east mids). Crazy!

Just wish my wages had gone up by the same amount. In fact, my place hasn't given a payrise for the last 10yrs.

 

[glenimp617]

Nobody likes paying more for stuff, but it's not just mortgage rates. £100 extra for mortgage, £100 for gas, £100 for petrol, £50 for food......

before you know it, another £500 has gone out. There are those who can take the hit, a lot which can't

I'm afraid wages are going to have to increase because nothings coming down.

 

[glenimp617]

High interest rates are temporary, says Andrew Bailey​

Bank of England Governor hints at eventual return to 'low global' rates

Ultra-low interest rates will return once the effects of Covid and the war in Ukraine fade, Andrew Bailey has suggested.
The Governor of the Bank of England said there would be “no ifs or buts” in the quest to bring down inflation, once again hinting that aggressive rate rises could be on the way in the coming months.

But he said there is no reason to think the enormous global forces which drove interest rates to record lows have gone away, or that the fallout from the pandemic will force worldwide interest rates back up again on a permanent basis.

“Cyclical adjustments in short-term nominal interest rates – like those we are currently witnessing in the United Kingdom and abroad – will for the foreseeable future continue to be played out against the backdrop of low global equilibrium real interest rates,” Mr Bailey said.

A combination of surging demand post-Covid and supply chain disruption caused by the war in Ukraine has led price rises to hit 9.1pc in May, well above his 2pc target. The Bank has rapidly raised interest rates in response, taking them from 0.1pc in December to 1.25pc last month.

Well you can put money on them going up, and hitting their peak July '23 before crashing hard.

Source: My fixed rate ends

 

[glenimp617]

What's everyones thoughts on discounted variable rate mortgages?

I'm tempted to switch to one next year. I've seen one at 1.7% compared to around 3.4% for a fixed (£84 a month for me). Rates would have to jump a decent amount before I'd be worst off, plus they tend to have better ERC.

Obviously if rates go through the roof.....but I don't think they will go crazy. We'd be back to 2008 levels of crisis.

 

[glenimp617]

But by increasing the value of the pound, our buying power increases, lowering interest rates or qe do the opposite, how else do you propose we get more value into peoples hands? Ultimately the BoE are unable to affect the cost of gas and oil. It's far from a silver bullet but it is a tried and tested way to get a handle on things.

This is probably (I'm not an economist) due to the stark warning in writing of a recession.

For what its worth I'm just as worried as everyone else, my mortgage product ends Dec 23, it's a worrying time as I'll either be okay if what I think will happen, happens, or it'll be awful.

July '23 for me

£90k left at 2.2%, so not too bad. It's around £40 extra a month right now with the rate rises, which isn't the end of the world, but still....£40 is £40

Gas/Elec is the killer as my fix rate ends Nov '22 lol

 

[glenimp617]

I'm so so glad I paid my erc fee to refix.
Advisor suggested waiting. That would have been a fail

Both with mortgage and energy advising professionals said 'do not fix' both times wrong. These are life changing sums in the near term too.

Nobody knows what the future holds. It certainly doesn't look good that's for sure.

 

[glenimp617]

wouldn't it have been better to build more nulear power stations than HS2?

i'm not sure how much a power station costs to build though, but iirc HS2 is up to around £92 billion

:edit: The cost of building the UK’s first new nuclear power plant in a generation has risen by up to £2.9bn and the total bill could be more than £22bn

so we could have had 4 new plants

 

[glenimp617]

Is 3.09% over 5 yr fix a good deal in the current climate?
LTV of 53%

Yeah that's not bad. Who's that with?

 

[glenimp617]

I can't honstly see rates coming down. Hope I'm wrong, but the economy is ruined.

When my fixed rate comes to an end next year, I'm locking in anything lower than 4% but don't think I'll be that lucky. I think it will be between 5% and 6%.

 

[glenimp617]

Rates go up significantly to support the GBP. Over-stretched debt donkeys lose their house

Or

Rates don't increase, the GBP collapses, and everyone eventually loses everything.

Which is it?

Rates go up significantly, the GBP collapses, and everyone eventually loses everything.

 

[glenimp617]

Our current model shows BOE not keeping pace with the Fed and a GBP collapse Q2 '23.

not a bad prediction

 

[glenimp617]

That doesn't make sense, although even better off people would take a haircut.
Everyone I know who wants to protect their wealth though sold GBP and Euro months ago.

depends on your definition of significantly. The only way out of this mess was years ago, too late now.

 

[glenimp617]

My 2.29% fixed rate ends June '23 lol as the starter of this thread I was already looking yonks ago, but that silly 5% ERC from santander stuffed me over. Unlike many others, they don't drop the percentage either, so even a month before your term ends it's still 5%.

I'm preparing to see 5% - 6%

Santander have just increased their rates today

90% 5yr fixed 4.59%
80% 5yr fixed 4.29%
70% 5yr fixed 4.09%
60% 5yr fixed 3.99%