Mortgage Rate Rises

Regy53 said:
Our fixed deal ends in July next year and we are around 60% Ltv

Inflation is going to dump very quickly imo when it does eventually hit people and spending stops . I do think they will have to lower interest rates again . This reaction is insaine it’s happening very fast and you need to leave time to allow things to settle. We wanted to move and have been waiting for our fix to end for this. World wide economy is going to stop us from doing this I assume for a few years but fixing for another 5-10 years locks us in to far .

When you hear the news of 8% plus I genuinely think we will be absolutely doomed by this point as nobody will be able to buy or afford there mortgages let alone anything at all ( rent etc) I just can’t see that being a BOE policy for any significant length of time. We know rates have been high before but as posted before here 15% back then was 3-4% Today etc
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This is exactly my logic for delaying.

I've just run the numbers on ours:

Our 1.54 % fix ends in July 23.

Fixing for 2 years at 4.56% now (and paying £1240 ERC) would bring us to a total that would require a mortgage rate of 7.4% for 15 months after the end of our fix to "break even" against fixing today. I haven't done the 5 year maths because that would almost certainly be even more mental (and require serious crystal balling). If a £999 product fee is added, then the break even rate (over those 15 months, so I'm going OTT) would be 6.6%, still kind of crazy for an extended period of time.

For those that are looking at this thread and considering banging out of your deal early, I implore you to do the numbers yourself and get projections down in a spreadsheet.
 
Zefan said:
This is exactly my logic for delaying.

I've just run the numbers on ours:

Our 1.54 % fix ends in July 23.

Fixing for 2 years at 4.56% now (and paying £1240 ERC) would bring us to a total that would require a mortgage rate of 7.4% for 15 months after the end of our fix to "break even" against fixing today. I haven't done the 5 year maths because that would almost certainly be even more mental (and require serious crystal balling). If a £999 product fee is added, then the break even rate (over those 15 months, so I'm going OTT) would be 6.6%, still kind of crazy for an extended period of time.

For those that are looking at this thread and considering banging out of your deal early, I implore you to do the numbers yourself and get projections down in a spreadsheet.
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Sadly, my ERC is currently £16,500.
 
Zefan said:
This is exactly my logic for delaying.

I've just run the numbers on ours:

Our 1.54 % fix ends in July 23.

Fixing for 2 years at 4.56% now (and paying £1240 ERC) would bring us to a total that would require a mortgage rate of 7.4% for 15 months after the end of our fix to "break even" against fixing today. I haven't done the 5 year maths because that would almost certainly be even more mental (and require serious crystal balling). If a £999 product fee is added, then the break even rate (over those 15 months, so I'm going OTT) would be 6.6%, still kind of crazy for an extended period of time.

For those that are looking at this thread and considering banging out of your deal early, I implore you to do the numbers yourself and get projections down in a spreadsheet.
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sorry cant see the rates coming down in the next 18 months, history alone shows that does not happen, be a fair few more rises in 2023 / 2024 before we even out i reckon.

you need to remember they should never have been sub 3% anyway, we all just got used to what is not the normal
 
_Jimlad_ said:
sorry cant see the rates coming down in the next 18 months, history alone shows that does not happen, be a fair few more rises in 2023 / 2024 before we even out i reckon.

you need to remember they should never have been sub 3% anyway, we all just got used to what is not the normal
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I'm assuming that has some bearing on my post, in that you would choose to fix at 4.65 today because you believe product rates will be higher than 7% from mid 2023 until 2025?
 
200sols said:
It's not crazy though. That puts the base rate at 4-5%. All perfectly reasonable. House prices simply need to fall or our economy will never recover.
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while so much demand still, not sure a big drop will happen.

with the government removing stamp duty i am sure plenty of investors will be lapping up the houses if a small drop happens.

i wished they had added a tax rule for second houses.....

kevman said:
People have been waiting for housing market to crash for decades. Its proven suprisingly resilient
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supply and demand, gods not making any more land!

i live an hour away from london, and best mate owns an estate agent, in sought after town and around Winchester houses, still get bids without viewing and 40 - 50k bids over asking
 
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neocon said:
Location, location, location

There are towns where demand just totally outstrips supply and that will never change, because they don't build anything in these places.
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also since lock down, people have been flooding out of london, working from home means the commutator circle is much much bigger if you only need to do the journey a handful of times per month.
 
_Jimlad_ said:
while so much demand still, not sure a big drop will happen.

with the government removing stamp duty i am sure plenty of investors will be lapping up the houses if a small drop happens.

i wished they had added a tax rule for second houses.....



supply and demand, gods not making any more land!

i live an hour away from london, and best mate owns an estate agent, in sought after town and around Winchester houses, still get bids without viewing and 40 - 50k bids over asking
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Housing market has stalled in Northamptoshire for sure for anything over 500k

I know people keep saying high Intrest is here to stay and perhaps it is I do also however feel the world economy is going to be in the dumps in 2023 . Keeping interest rates high will not generate spending at all and if there is the sort of unemployment I’m expecting ( there is such high employment it’s going to really dump sadly ) then they will have to stimulate .

Ultimately as posted today , if they don’t then the repossessions will be mental, however I would fear for us massively as a world but more specifically country . No jobs, high interest , loads of negative equity , covid loans based on interest and government borrowing with this high interest will kill them off as well. It’s not that high interest rates is a bad thing we’re just not ready as a worldwide economy to go from 0 to 5 etc in a few months and then holding. The world has been built on low interest for the last 15 years .
 
Zefan said:
This is exactly my logic for delaying.

I've just run the numbers on ours:

Our 1.54 % fix ends in July 23.

Fixing for 2 years at 4.56% now (and paying £1240 ERC) would bring us to a total that would require a mortgage rate of 7.4% for 15 months after the end of our fix to "break even" against fixing today. I haven't done the 5 year maths because that would almost certainly be even more mental (and require serious crystal balling). If a £999 product fee is added, then the break even rate (over those 15 months, so I'm going OTT) would be 6.6%, still kind of crazy for an extended period of time.

For those that are looking at this thread and considering banging out of your deal early, I implore you to do the numbers yourself and get projections down in a spreadsheet.
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If you are remortgaging early, do make sure you take into account the ‘loss’ of your low interest rate as well as the ERC.

For example; if you shifted from 1.5% to 3% with 6 months remaining you have to pay:

- the ERC; AND
- indirectly, you’ll lose 6 months at the lower rate (which in this case as the difference between the two is 1.5% per annum, six months of that equates to 0.75% of the whole sum being mortgaged…. if the mortgage sum was £100k then that’s £750).

It might be a small sum in the grand scheme of things but worth keeping in mind.
 
Nitefly said:
If you are remortgaging early, do make sure you take into account the ‘loss’ of your low interest rate as well as the ERC.

For example; if you shifted from 1.5% to 3% with 6 months remaining you have to pay:

- the ERC; AND
- indirectly, you’ll lose 6 months at the lower rate (which in this case as the difference between the two is 1.5% per annum, six months of that equates to 0.75% of the whole sum being mortgaged…. if the mortgage sum was £100k then that’s £750).

It might be a small sum in the grand scheme of things but worth keeping in mind.
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Yep, already taken in to account by plotting payment for each and every month. It makes a big difference actually as it's £200pm extra.
 
_Jimlad_ said:
while so much demand still, not sure a big drop will happen.

with the government removing stamp duty i am sure plenty of investors will be lapping up the houses if a small drop happens.

i wished they had added a tax rule for second houses.....



supply and demand, gods not making any more land!

i live an hour away from london, and best mate owns an estate agent, in sought after town and around Winchester houses, still get bids without viewing and 40 - 50k bids over asking
Click to expand...
There’s already additional stamp duty on second houses, and has been for a long time
 
I doubt investors will be around to buy houses unless a huge drop given they could keep money in bank to earn. Rents will be huge if we get anywhere near the rates quoted in here. Imagine a BTL on interest only……..(A LOT ARE) there going to be in bits so have to put rent up into a market where jobs will be reduced and people have less money than ever. Same with the car market, interest rates will be so high they wont be able to sell anything. We’re either all doomed or this will resolve itself in 12-18 months. Renters sadly are usually the ones who struggle financially to get on the market etc, imagine doubling the rent (potential at 8% rates) its worrying for sure but reality has to kick in, if that actually happens we are in a very very bad place

I also edit to add, i know the history shows etc but history is history, today we are in a hugely different world. You cant keep looking back when it was so long ago back in 2006 the minimum wage was £5.35 a hour today its £9.50, my house was worth £300k in 2006 and today over double. This is all reletive to the longevity in this.
 
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Regy53 said:
Housing market has stalled in Northamptoshire for sure for anything over 500k

I know people keep saying high Intrest is here to stay and perhaps it is I do also however feel the world economy is going to be in the dumps in 2023 . Keeping interest rates high will not generate spending at all and if there is the sort of unemployment I’m expecting ( there is such high employment it’s going to really dump sadly ) then they will have to stimulate .

Ultimately as posted today , if they don’t then the repossessions will be mental, however I would fear for us massively as a world but more specifically country . No jobs, high interest , loads of negative equity , covid loans based on interest and government borrowing with this high interest will kill them off as well. It’s not that high interest rates is a bad thing we’re just not ready as a worldwide economy to go from 0 to 5 etc in a few months and then holding. The world has been built on low interest for the last 15 years .
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that is half the issue, they are not high interest rates... we just had it stupidly low for to long.

people coming off a 1% to a 6% - 8% come Q2 next year are gonna really feel it.

while the Bank is at odds with the gov i can only see more and more rises ahead.
 
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