Mortgage Rate Rises

ChrisD. said:
Current Tory leadership live in ******* cloud cuckoo land, so they'll just say yes and make it happen. Money costs nothing, right?
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They can print money, we have our own currency.

What I'm thinking is that if people are having to pay 100's or even 1000's more a month to service debt, they'll have nothing to spend in economy. No cars, no meals out, no holidays, or whatever. Those businesses in turn lose loads of customers and the government loses tax revenue. It can spiral out of control pretty quickly.
 
neocon said:
They can print money, we have our own currency.

What I'm thinking is that if people are having to pay 100's or even 1000's more a month to service debt, they'll have nothing to spend in economy. No cars, no meals out, no holidays, or whatever. Those businesses in turn lose loads of customers and the government loses tax revenue. It can spiral out of control pretty quickly.
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Turning on the money printer is a good way to devalue the £ even more and increase inflation even more.

It's not a good solution long term.
 
What are people thinking worst case for a 60% LTV is going to look like over the next year? I hear talk of "6%" but is that a headline figure based around the worst case aka 90% LTV etc? Yes I should do my own research. This is part of it :p
 
Zefan said:
What are people thinking worst case for a 60% LTV is going to look like over the next year? I hear talk of "6%" but is that a headline figure based around the worst case aka 90% LTV etc? Yes I should do my own research. This is part of it :p
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Honestly everyone is just guessing. Ukraine/Tories/COVID could all have throw a spanner in the works and that's before the stuff we know nothing about.
 
neocon said:
This is really a too big to fail scenario. Can the government somehow prop up the mortgages of homeowners so they don't have to pay high interest rates?

Compared to the energy crisis it seems many times worse.
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they can allow a vote to go back into the EU, will help strengthen the pound just news about them allowing a vote, let alone it going through and we rejoin.

must be tough for liz truss. she knows leaving the EU was a bad choice, it weakened the UK should something bad happen. something bad happened, and now she has to deal with the stupid choice people made. on top of that, you've had inaction from the government this year, especially the last 3 months when something should have been done.

if interest rates go to +6%, you're talking over £600 more, per month, per house.

I can't see how the government can do anything to help with that, other then act as quickly as they can to allow BOE to bring the rates down.

One thing that is currently not getting much talk, is how will renters deal with this over the next few years. Perhaps landlords that have houses purely to rent tend to go for longer fixed terms, but when a landlord does renew, and it's another £600 per month mortgage costs, surely that goes straight to the tenants and now tenants are paying stupid prices to rent and it go towards nothing.
 
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Higher Than Average said:
they can allow a vote to go back into the EU, will help strengthen the pound just news about them allowing a vote, let alone it going through and we rejoin.

must be tough for liz truss. she knows leaving the EU was a bad choice, it weakened the UK should something bad happen. something bad happened, and now she has to deal with the stupid choice people made. on top of that, you've had inaction from the government this year, especially the last 3 months when something should have been done.

if interest rates go to +6%, you're talking over £600 more, per month, per house.

I can't see how the government can do anything to help with that, other then act as quickly as they can to allow BOE to bring the rates down.

One thing that is currently not getting much talk, is how will renters deal with this over the next few years. Perhaps landlords that have houses purely to rent tend to go for longer fixed terms, but when a landlord does renew, and it's another £600 per month mortgage costs, surely that goes straight to the tenants and now tenants are paying stupid prices to rent and it go towards nothing.
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Does anyone else think interest rates will go much higher than 6%, I mean remember when they told us inflation wouldn't hit 10%....

I wouldn't be surprised if interest rates hit 8% next summer, renters will suffer as landlords will either have to sell up which reduces the amount of rental properties on the market OR like you said they will have to add some of that cost to the monthly rent.

The problem with this country is that there is heavy reliance on housing and finance. We do not make anything else. The housing market is worth £5 trillion+ some say even higher:
https://www.theguardian.com/money/2...uld-be-worth-92tn-on-open-market-report-shows

I genuinely don't have any trust in the Government, they won't admit being in a recession, they will do anything in their power to stop house prices from falling and that includes propping up the mortgages of homeowners, they'll call it something like a house equity fund or similar.
 
Zefan said:
What are people thinking worst case for a 60% LTV is going to look like over the next year? I hear talk of "6%" but is that a headline figure based around the worst case aka 90% LTV etc? Yes I should do my own research. This is part of it :p
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It's already 6% @ 90% LTV at Nationwide.

Best case 5% @ a low LTV.
 
Wow ‘existing customer’ HSBC rates for 5 year fixed at <60% LTV went from 3.72% to 4.94% overnight!

That is alarming :eek:

We fixed at 3.09% in August - phew.

For reference, that’s about £7k a year in interest between the 3.09% and 4.94%. Which over a 5 year fix is then £35k!!!
 
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Higher Than Average said:
if interest rates go to +6%, you're talking over £600 more, per month, per house.
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Depends on the size & term of the mortgage. For us, 6% is "only" £200/month extra vs 3% (roughly £100/month extra for every 1.5%), to go up by £600/month you'd be looking at 11%!

For people with bigger mortgages (or shorter terms) then obviously yes, potentially a much bigger increase
 
Chris344 said:
Sadly not, it’s 3% between now and Feb 23 and 2% from Feb 24 until it finishes.
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Damn. I'll always check the ercs from now. Anything that doesn't end with 1 percent at the last year I'm avoiding. But you don't really think about it under normal circumstances
 
Nitefly said:
Wow ‘existing customer’ HSBC rates for 5 year fixed at <60% LTV went from 3.72% to 4.94% overnight!

That is alarming :eek:

We fixed at 3.09% in August - phew.

For reference, that’s about £7k a year in interest between the 3.09% and 4.94%. Which over a 5 year fix is then £35k!!!
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Adding to this, looking at a mortgage calculator that would have been an extra £400 a month on the repayments o_O

I’m hoping that such a savage increase would be manageable for most people that were able to able to afford a mortgage of that size, but that’s a potentially life changing increase for some depending on financial commitments.
 
Nitefly said:
Adding to this, looking at a mortgage calculator that would have been an extra £400 a month on the repayments o_O

I’m hoping that such a savage increase would be manageable for most people that were able to able to afford a mortgage of that size, but that’s a potentially life changing increase for some depending on financial commitments.
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I'm guessing it's similar for most people.
No matter what you're mortgage debt, the rise to 6pc rates will stretch anyone on a new mortgage.

Because most people borrow the max for their first home (at least it feels like that)
 
neocon said:
This is really a too big to fail scenario. Can the government somehow prop up the mortgages of homeowners so they don't have to pay high interest rates?

Compared to the energy crisis it seems many times worse.
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The trouble is, money has been so cheap over the past decade at near zero interest rates, some people have taken out as much as they can mortgage wise and outbid others on houses, pushing up prices, others have seen how reckless that is and not brought, I don't think that it is really fair for those that have over leveraged them self's to be bailed out because of they're financial decision, when many others who could have taken out a huge mortgage have not as they have done they're own research and realised that when interest rates go up they wouldn't be able to afford such a huge mortgage and brought something cheaper and been sensible.

The housing market doest not need any more prop up schemes to distort it any further, we have had enough of those through out the years. People need to be held responsible and accountable for their own financial decisions in life.
 
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