Mortgage Rate Rises

[Scam]

I'm planning to wait until I think rates have peaked. Then lock into a hopefully 5pc plus locked for 2-3 years account. Cash out after term and plough into mortgages (if the landscape still suggests that's the best thing)

You're brave. Feel free to do the maths (we're also in a position to overpay fortunately). But the way thing are going I wouldn't put it past the government to have a run on people's savings accounts It's still probably 50/50 on whether to save or overpay, so therefore I think we'll be simply overpaying and reducing the debt at source. It feels a lot safer to me. Not to mention if you accumulate a bunch of savings and get made redundant you wouldn't be eligible for any benefits either.

With savings accounts, I've never been in a position to care about interest rates since they have been so low that it has never affected any balances I had. Now I'm starting to care obviously with the whole pay off your motrgage vs put it in savings. I know with Mortgages the interest is calculated daily, so the sooner you make overpayments the better, hence I do monthly overpayments rather than annual. How does it work with Savings account interest accumulation? I know this sounds really basic but I'm not afraid to say I don't understand it but want to. I'm going to assume if you put £100 into a savings account advertised as 4% it's not as simple as you get £4 back after a year?

Savings interest is generally calculated daily and paid monthly or quarterly, isn't it? I'd consider my paragraph above though. I certainly wouldn't want to lock away any cash in today's climate.

 

[200sols]

Offering 3.6% so you only lose 6% of yoru cash to inflation - great.

Better than losing 10% though right? Show me an asset that is yielding above inflation?

 

[dowie]

To be clear, if I wanted to, I could've owned an entire plethora of property by now with a decent income stream, but I'd rather see my fellow humans on society own their own home, so I don't get involved.
[...]
As for my own personal circumstances, my landlord has paid our place off, he bought it from the council back in the 80s and we get on well.

Slightly curious about this - if you could have bought a big property portfolio why are you renting an ex-council flat? Like why not just buy a single property for yourself and not need to rent to anyone or rent from anyone?

I get the kinda general feelings/vibes re: some landlords, I find some of the BTL types to be pretty scummy and entitled, I also don't fancy becoming a landlord, I'd much rather just invest in the stock market (though that's a bit iffy right now too!) etc.

The problem is there is a demand for landlords and if you have too few of them in a given area where there is demand for them then rent becomes more and more unaffordable, not everyone is in a position to buy, some people might not wish to own property at a given point in time and some people only need short term accommodation.

I think they're an easy scapegoat - the landlord is the person you pay your money too, lots of them can be quite scummy/unpleasant characters ergo they're typically disliked. The bigger issue though is the lack of supply thanks in part to restrictive planning laws & NIMBYism.

Landlords aren't going to vanish, some might go bust but others could well step in to replace them being quite tempted at the prospect of "buying the dip". Homes aren't going to be magically affordable or solve any significant issues after a big price crash either - if prices crash but rates carry on increasing then plenty of the people who can't currently afford to buy could well be in the same position after a crash too. There's still the same number of homes available, there are still people competing for them just as there were before, and there's still demand for rental accommodation which will attract investment in homes from landlords. If we want to solve that then really we need to increase the supply of homes.

 

[Greebo]

Offering 3.6% so you only lose 6% of yoru cash to inflation - great.

But if you have a fixed mortgage at 1.99% and the question is whether you overpay each month or save it up and pay in a lump sum at the end, if you can get 4.1% on your savings then save it.

 

[HEADRAT]

August last year I was offered 5 year fixed for 1.04%, the sale fell through. I've been renting since with money in the bank to buy, definitely happy I didn’t but at the peak off a market, as rough as it’s sounds the market is going to come to me I think.

 

[a1ex2001]

You think that's realistically going to happen? The amount of extra payments (including erc) that some people are seemingly locking in to right now indicates that they are as close to certain as possible that it won't.

I can't be sure but I wouldn't be starting an application in a market where all the good products have been pulled and uncertainty is at an all time high.

 

[a1ex2001]

Offering 3.6% so you only lose 6% of yoru cash to inflation - great.

There is no way of holding cash at the minute and not loosing money inflation is off the chart and even if you invest it you are not going to be beating inflation in the short term unless you are seriously lucky as stocks and shares are tanking too!

 

[Goates]

5-year fixed due to end in November 23, was on 2%. Going to refix again now I think for another 5 years at 4%, taking into account my erc mortage rates would only need to rise another 0.5-0.75% to make this financially make sense and from what is being said, I guess this will happen easily over the next year!

 

[Hodders]

Better than losing 10% though right? Show me an asset that is yielding above inflation?

That's true. It is truly depressing.

But if you have a fixed mortgage at 1.99% and the question is whether you overpay each month or save it up and pay in a lump sum at the end, if you can get 4.1% on your savings then save it.

Yup - lend me a million at x% when I can invest it at (x+1)% and I'm happy.

 

[ChrisD.]

My main annoyance with a few posters here is the idea that those who have recently bought should've known "better" and prepared for this insanity that we're currently experiancing.

You seem to be advocating that someone buying a house and as a result they live hand to mouth, and when some things get more expensive they can't afford the house it's okay and it's not their fault. It's irresponsible and it's bad money management. I've been on the property ladder since 2014 and I've always calculated 'what if' for various cost of living increases, including mortgage interest rises up to 10% and higher (and still being able to live comfortably). Sure I earn well (actually when I got my house I didn't but it's all proportionate).

The majority of youth today live with mummy and daddy and blow hundreds of pounds every weekend on booze and drugs, brand new cars etc. Then when they can't get a mortgage they blame the government and everyone but themselves.

Then you get people living in affluent areas because it's their birthright, working in the same jobs and then also complain because they can't afford to live. Yet they do nothing about their earnings. I know someone who was on ~£35k in a public sector job, who spent two years studying their arse off and taking various exams. They're now on well over £100k with 5 figure sign on bonuses and RSUs etc.

With that said I genuinely feel sorry for those who are unable to upskill, or can't afford a house due to factors they cannot control.

I could go out and get myself a £150k supercar tomorrow on finance. Do I want one? Hell yeah. Am I going to do it? Hell no.

 

[Haggisman]

The majority of youth today live with mummy and daddy and blow hundreds of pounds every weekend on booze and drugs, brand new cars etc. Then when they can't get a mortgage they blame the government and everyone but themselves.

To say it's "the majority" is a huge (and almost certainly untrue) generalisation. I'm sure there are plenty who fall into that group, but I doubt it's anything close to a majority.

 

[purplesky]

There is no way of holding cash at the minute and not loosing money inflation is off the chart

That is generally true, however it must also be noted that everyone has their own personal rate of inflation, some much more or less than the official figures.

 

[grudas]

To say it's "the majority" is a huge (and almost certainly untrue) generalisation. I'm sure there are plenty who fall into that group, but I doubt it's anything close to a majority.

Exactly. It’s same old tosh people spit out, I don’t know what it’s based on but it’s ridiculous. “If you didn’t have Netflix subscription you’d have a house by now” same level of rubbish that boris spits out with his “buy a new kettle for £20 to save £10 a year”

I’m 31 and have friends in all age groups, literally teenagers to 50+ and I can’t think of a single teenager or mid 20s who’s like that.

only people I know with brand new cars are in their late 40s or early 50s. All others own their cars and most run cars worth a few grand if that.

Yes there are people like that but not as many as you claim @ChrisD.

 

[jaybee]

You seem to be advocating that someone buying a house and as a result they live hand to mouth, and when some things get more expensive they can't afford the house it's okay and it's not their fault. It's irresponsible and it's bad money management. I've been on the property ladder since 2014 and I've always calculated 'what if' for various cost of living increases, including mortgage interest rises up to 10% and higher (and still being able to live comfortably). Sure I earn well (actually when I got my house I didn't but it's all proportionate).

The majority of youth today live with mummy and daddy and blow hundreds of pounds every weekend on booze and drugs, brand new cars etc. Then when they can't get a mortgage they blame the government and everyone but themselves.

Then you get people living in affluent areas because it's their birthright, working in the same jobs and then also complain because they can't afford to live. Yet they do nothing about their earnings. I know someone who was on ~£35k in a public sector job, who spent two years studying their arse off and taking various exams. They're now on well over £100k with 5 figure sign on bonuses and RSUs etc.

With that said I genuinely feel sorry for those who are unable to upskill, or can't afford a house due to factors they cannot control.

I could go out and get myself a £150k supercar tomorrow on finance. Do I want one? Hell yeah. Am I going to do it? Hell no.

If we all planned for possible scenarios like the current perfect storm we literally would not have lives worth living, as every spare penny would be stashed away. It's difficult to find a balance and feel you are living out a good life for not just you but your family, as well as providing stability.

 

[adam cool dude]

Exactly. It’s same old tosh people spit out, I don’t know what it’s based on but it’s ridiculous. “If you didn’t have Netflix subscription you’d have a house by now” same level of rubbish that boris spits out with his “buy a new kettle for £20 to save £10 a year”

I’m 31 and have friends in all age groups, literally teenagers to 50+ and I can’t think of a single teenager or mid 20s who’s like that.

only people I know with brand new cars are in their late 40s or early 50s. All others own their cars and most run cars worth a few grand if that.

Yes there are people like that but not as many as you claim @ChrisD.

It does have some basis of truth though. We bought when we were both 23 with a 3 year old daughter. We worked 7 days a week on nights to save up a deposit and our daughter lived with the mother in law for 3 months whilst we finalised our savings and mortgage. Most of my school friends didn't move out till they were into their late 20's/early 30's because they blew it all on the latest mobile contracts and lease deals. Now they have massive mortgages till their 60's but all those shiny things they had are all but a distant memory.

 

[adam cool dude]

If we all planned for possible scenarios like the current perfect storm we literally would not have lives worth living, as every spare penny would be stashed away. It's difficult to find a balance and feel you are living out a good life for not just you but your family, as well as providing stability.

It is not a perfect storm though is it. You would have to be blind to think paying the country to stay at home 2 and half years ago would be met with no bad outcome. These things always happen in cycles just like 08 and the 90's.

 

[ChrisD.]

Yes there are people like that but not as many as you claim @ChrisD.

My point is people will blame everything else but themselves when they can't get on the ladder. They're unwilling to move, find new jobs, study hard etc. Then when they get on the ladder with a massive mortgage, when the interest rates go up and they can't afford the mortgage or struggle, they again blame everyone else rather than doing the responsible thing of only borrowing what they can afford plus a buffer.

'Bank said we can borrow £500k, we know we'd be living hand to mouth but we took it anyway because dream house'. Now they can't afford it, it's not their fault, it's someone else's. There are more people like that than you'd think.

 

[jonneymendoza]

My point is people will blame everything else but themselves when they can't get on the ladder. They're unwilling to move, find new jobs, study hard etc. Then when they get on the ladder with a massive mortgage, when the interest rates go up and they can't afford the mortgage or struggle, they blame again blame everyone else rather than doing the responsible thing of only borrowing what they can afford plus a buffer.

'Bank said we can borrow £500k but we know we'd be living hand to mouth but we took it anyway'. Now they can't afford it, it's not their fault, it's someone else's. There are more people like that than you'd think.

And how much buffer do you need? There is a limit.

THese interest rate rises incoming are pretty shocking and i doubt you and i or anyone here ever thought that in the space of half a year, the interest rate would have increased 6 times over(it was around 1 percent at the beginning of the year and now reportedly 6 percent. It’s all highsigt now but what person would assume that current interest rate today vs 12 months later will be 6x more? No one.

You keep harping on how its us us and us to blame…

When really, the true issue for this blame is a number of things such as leaving the eu, covid and now the Ukraine Russia war and the current Government.

You fail to understand that its not just london that has a housing crisis where people are lucky to even have a 90 percent LTV, but pretty much most cities in the uK and around the world are having this issue.

Sorry if we dont wanna live in a village with a population of about 30 people.. That’s not for everyone and of course, city life is also not for everyone.

Peoples place of living is a very personal matter and just downright blaming people for taking on higher mortgage WITHOUT actually fully understanding the whole picture and decision making as to why is absolutely dumb and stupid.

It’s as if people with high mortgage chose that because they so LOVE to pay triple what someone else pays in a village….

WOW JUST WOW

 

[a1ex2001]

It is not a perfect storm though is it. You would have to be blind to think paying the country to stay at home 2 and half years ago would be met with no bad outcome. These things always happen in cycles just like 08 and the 90's.

it is a perfect storm though we have two simultaneous major issues (COVID followed by War in the Ukraine) and countless smaller ones damaging the global economy and a third (Brexit) that is special to Britain also battering us simultaneously, when you then throw in a British government that seems hell bent on making it worse if that doesn't add up to the perfect storm for you I don't know what does!

 

[a1ex2001]

My point is people will blame everything else but themselves when they can't get on the ladder. They're unwilling to move, find new jobs, study hard etc. Then when they get on the ladder with a massive mortgage, when the interest rates go up and they can't afford the mortgage or struggle, they again blame everyone else rather than doing the responsible thing of only borrowing what they can afford plus a buffer.

'Bank said we can borrow £500k, we know we'd be living hand to mouth but we took it anyway because dream house'. Now they can't afford it, it's not their fault, it's someone else's. There are more people like that than you'd think.

Nobody was expecting interest rates to go from sub 1% to 6% in a year (which looks likely) and I've not seen any evidence of any forecasting this level of rate rise a year ago! We took on a significant mortgage in January and the banks sure as hell were not stress testing people up to 6% interest rates.