Mortgage Rate Rises

[413x]

With about 18 months left on our mortgage we are paying it down as much as possible and will try and pay off a lump sum if we can when its up. It won't come close to clearing the debt but it should make any rate rise easier to accept. Fingers crossed in 18 months some of the current madness will have abated.

If there is a decent house price crash we might try and move to a bigger house.

I'd hope in 18 months the landscape will look clearer. Good or bad.

I'd expect rates to have at the least stabilised by then.

 

[IvanDobskey]

Still got 3 years of our 5 year fixed deal to go. Been paying max overpayments from day one, so hoping there will be less than 40k left to pay. Should have enough savings to half that to 20k, so a jump in interest rate shouldn't hurt too much.

 

[Sheff]

The cheapest houses are always in the ghetto/slum regions or don't suit people's needs (i.e they are poor value). When looking to buy people first eliminate houses that don't meet their essential requirements (driveway, nr bedrooms, area etc) and then choose out of what is left and then added value is evaluated alongside this. When you look at the price of houses it doesn't take much to estimate what salary would be needed to buy it and thus it is fairly easy to estimate that not many first time buyers can go above the range of the cheaper houses in an area in the first place.

I guess your view that people could buy cheaper could be applied to a home mover rather than a first time buyer. Home movers will have built up some equity so they could decide to buy cheaper but mostly they don't because they want to upgrade from the house they already have which is the whole point of moving in the first place otherwise they'd just stay put.


But we're not talking about sacrificing your essential needs to buy a place that isn't suitable, that would be a stupid decision. Yeah I could have bought a flat in a ghetto for half the money but its not suitable. Its reasonable to expect some compromise, and first time buyers normally have to compromise (most are not loaded), but its very unfair of existing homeowners, I think, to expect people to buy crapholes which is what you seem to be suggesting they do to save money.


I use myself primarily as the example in this. If you accept that I couldn't move area (reasons for this that don't need to be stated here for brevity), and you accept that a certain minimum standard of house was required (again, for reasons), then I bought the cheapest house I could, which was at the max of my budget and I earn a decent wage which is above average. The only way I could have bought cheaper was to accept sub-standard and that in my opinion is not a fair expectation on people. There is a major difference between expecting something gold plated or accepting something fundamentally sub-standard (which many many houses are). Just to add we're not talking a +/- a few percent here, most people will search within a budget range. If we're talking making a fundamental difference to financial outlay then we're talking at least +/- 10-20% difference from maximum. I bought a house at £250k - there is barely anything for sale that isn't a craphole for £200k or less. The house I bought was on for £230k and I had to overbid to get it, having previously being outbid on houses in the £220-230k range by other people bidding £10k over or more. Unless you're in the market lately you really don't know what its been like.

There are Im sure people who could have bought cheaper, who had more money available and I guess do buy at their maximum, but I would say from my own experiences that a lot of people also have little choice but to spend up to their max budget getting a suitable place.


Im focussed on FTB here because existing homeowners generally have much more of a choice. They already have security, already have equity and a lower mortgage than would be the case for an FTB. Its FTB that are forced into the buy expensive or rent expensive impossible decision and its them that are going to suffer first when rates go up.

To add to this, in the South West we have had a problem with all the larger flats, 2 beds and cheaper 3 bed properties being swept up with cash offers well over the asking price due to a combination of btl landlords and people taking advantage of the opportunities of working from home. This has caused first time buyers to pay a lot more for the same type of properties you'd assume were typical entry level homes.

 

[413x]

It’s super expensive now and worrying. I’m convinced if the rates go up to 3% there’ll be another financial meltdown as people can’t afford it.

It would be OK... If everything else wasn't ballooning.

If you're coming to an end on your mortgage fix in next 6 months your monthly bills are potentially going up 500-800 if you fixed.

That's horrible stuff.

Think for us if we weren't on fixes bills would be 500+ ppm extra vs now.

250 on mortgage + 200 on gas/elec + other inflation costs like food/fuel.

Move forward 6 months and it might be worse.
That's on a 200k mortgage. There are mortgages far far bigger.

And remember. The bank would have leant 300k!

 

[fez]

If I was coming to the end of my term within the next 6 months and wasn't planning to move I would have eaten the early repayment charge and got myself on a new deal months ago. Rising interest rates have been known about for 6 months plus now.

 

[Doobedoo]

My fix was due to end June of next year, decided to pay the erc and fix for 10 years. Last fix was 2.26, 10 year is 2.60 slightly higher but peace of mind is invaluable.

 

[Semple]

If I was coming to the end of my term within the next 6 months and wasn't planning to move I would have eaten the early repayment charge and got myself on a new deal months ago. Rising interest rates have been known about for 6 months plus now.

Same here. We're just over halfway through our 5 year fix. I think our ERC is about 10 grand currently, so wouldn't save anything by taking on a new deal now.

I'm hoping that in 2 years there will be some light at the end of the tunnel.

 

[G J]

I guess the goverment will paper over the cracks so to speak and continue to prop up the market again and the banks will just cheer them on as they wont want to give up people being lifetime slaves to them anytime soon but something has to give at some point.

 

[fez]

Same here. We're just over halfway through our 5 year fix. I think our ERC is about 10 grand currently, so wouldn't save anything by taking on a new deal now.

I'm hoping that in 2 years there will be some light at the end of the tunnel.

There should be or there will be a housing market crash as loads of people can't afford another 3-500/month on their mortgage along with another £300+ on other increased costs like heating and food.

 

[fez]

I guess the goverment will paper over the cracks so to speak and continue to prop up the market again and the banks will just cheer them on as they wont want to give up people being lifetime slaves to them anytime soon but something has to give at some point.

Correct. The government will do whatever it takes to prop up the housing bubble.

 

[413x]

My fix was due to end June of next year, decided to pay the erc and fix for 10 years. Last fix was 2.26, 10 year is 2.60 slightly higher but peace of mind is invaluable.

Especially when you factor in taking a 5 year and having to renew in 5 years costs 1000 in valuation/legal fees which you don't have to pay.

 

[Ahleckz]

I’ve got two mortgages on my property (one at 35% one at 65% of the outstanding balance), one fix runs out in March next year and the other in August next year.
I know this is a better question for the bank, but will I be able to move one of these to a different bank, or will I need to wait for both to be up to do that?

I assume I can’t move one portion and not the other but curious if anyone has been in this position.

 

[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.

 

[Chris344]

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.

 

[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

 

[Raymond Lin]

Just got a text that mine ends in October...although at that point only 2 and a half years left.

 

[Mysterae_]

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.

I can see this being true. My reasoning is that mortgages and their rates are only one "industry" and a control measure; for the wider economy to flourish and people to keep their associated jobs so the population has money to spend in the economy to keep machine running. It was actually running not too bad until someone humped a bat and Putin had his embolism.

 

[Mercenary Keyboard Warrior]

I can see this being true. My reasoning is that mortgages and their rates are only one "industry" and a control measure; for the wider economy to flourish and people to keep their associated jobs so the population has money to spend in the economy to keep machine running. It was actually running not too bad until someone humped a bat and Putin had his embolism.

Yep.

What we need more than anything is very low house price inflation (ie below wage inflation) for a number of years rather than a drop (drop will send recessionary shocks of its own).
Problem is that its very difficult to achieve, the government don't want to see house prices collapse, (most of them would probably benefit from that personally actually), due to the economic shock. So they step in to avoid the massive downward shocks, but are pretty powerless to stop the ups as well.

The only real way to stop rampant house price inflation is to attack it via supply and demand. Demand can be influenced but its very difficult, the best approach is supply, and the only way to really do that is to built state based housing, its never ever going to be in the interests of the housebuilders to create an oversupply or significantly eat into the under supply, they benefit just as much if not more than anyone else!
Not only that, creating a decent supply of state backed housing will affect many things in the nations favour, controlled housing costs will limit inflationary pressure on wages, it creates a national asset that should easy be able to be net positive (UK can borrow at seriously low rates to anyone else domestically), it removes the more predatory aspects that come with BTL, +++
Its so frustrating to me, plentiful affordable housing can give your country a competitive advantage but we seem to have successive governments who just don't see this and are either too scared to promote state housing, or too ideologically against it with an electorate who fall for that rhetoric.

 

[Voltar]

It’s incredibly worrying really. How are people going to manage? All that credit card debt out there too…

 

[413x]

Agree house prices need to be held at near zero growth in an ideal world. Which would be a gradual fall against inflation.

But its near impossible to control.