Mortgage Rate Rises

Regy53 · 2 Oct 2022 at 17:34

_Jimlad_ said:
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.

They are / were low yes but compared to what? 1980s? What is normal? I dont think its possible to go from 0/1% (pre covid) to 5% plus in say 6-9 months and hold this.. however i could be wrong. 8% for me doubles my 400k mortgage from 2% ish . I love economics and the money market i find it all fascinating and i wish i was clever with it. I mean covid loans for example are based on base rate and will be huge for so many company’s it will likely cripple them too…..it simply cant be this high for the country to function there’s to much debt

MatsyLR · 2 Oct 2022 at 17:35

Looking at around £315 on a 25 year mortage for me with no sign of getting a house anytime soon, only going to get worse and worse.

Goodie · 2 Oct 2022 at 17:38

krooton said:
45% (due to help to buy)

I think we're in almost identical positions including HTB. My plan was always to remortgage and incorporate the htb at year 5 but I wonder if it might be worth a two year fix in march 2024 and incorporate the htb at the end of that which would be year 7, I need to do the maths.

krooton · 2 Oct 2022 at 17:42

Goodie said:
I think we're in almost identical positions including HTB. My plan was always to remortgage and incorporate the htb at year 5 but I wonder if it might be worth a two year fix in march 2024 and incorporate the htb at the end of that which would be year 7, I need to do the maths.

My plan originally was to incorporate a chunk of the htb loan before the 5 year mark, so did 2x 2 year fixes, wish I had done 5 years 2 years ago

kona786 · 2 Oct 2022 at 17:54

mattyprice4004 said:
There’s already additional stamp duty on second houses, and has been for a long time

Long time but not bloody long enough. A decade too late at the least.

_Jimlad_ · 2 Oct 2022 at 17:55

Regy53 said:
They are / were low yes but compared to what? 1980s? What is normal? I dont think its possible to go from 0/1% (pre covid) to 5% plus in say 6-9 months and hold this.. however i could be wrong. 8% for me doubles my 400k mortgage from 2% ish . I love economics and the money market i find it all fascinating and i wish i was clever with it. I mean covid loans for example are based on base rate and will be huge for so many company’s it will likely cripple them too…..it simply cant be this high for the country to function there’s to much debt

Yes agree they have moved to fast, which gave a lot of people no options. The frustrating thing is it became a lucky / unlucky situation depending on when you deal was up.

Many people would have been lucky enough to have signed a new long term deal 6 months ago and will ride this out.

I am feeling for the people who have terms ending in 2023 they are likey to be the long term victims... If that is the right word

dowie · 2 Oct 2022 at 17:58

_Jimlad_ said:
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.

6-8% would be pretty disastrous, the bank still seems to be super dovish inflation has been an issue for a while but despite being neutral and with a 2% target for inflation they seem to have dragged their feet a bit in responding to it.

Yup, you're right re: it having been stupidly low for too long, there's still been a shortage of housing available so with money being so cheap prices rose. Now borrowing is going to become rather more expensive prices should take a bit of a hit.

I'm sure some people will do well out of this given the right circumstances and others are going to be totally screwed - equity wiped out, can't afford repayments etc.

But some of the people who've been hoping for a property crash so they can buy might not be quite so happy as in the real world the same shortage of housing is still there.. prices might fall but the amount you're permitted to borrow or can afford to borrow falls too. People were moaning about property prices in the 00s then the financial crisis happened and prices fell a bit... then they recovered and people carried on moaning about property prices.

ChrisD. · 2 Oct 2022 at 18:00

It's crazy to think that when we got our mortgage, we went for 5 years because we thought the jump from 1.54% to 1.84% for 10 years was a little bit too much. How I wish I could wind back time, still in an excellent position though but if we'd have gone for 10 years I think I'd be laughing inside.

Bald-Eagle22 · 2 Oct 2022 at 18:16

Goksly said:
Did you not think, when taking out a mortgage at probably the lowest rates in history, that the next renewal would be higher? When I took mine out at 2% I was given a quote for 6% asking if I could afford it. When I've taken my renewal out now for 3.2, I was quoted 9% for affordability...

It’s only £125 a month , , I spend more a week on lunch

scottomus0 said:
Mines 72k offered at 5.9

You must have phoned up 3 minutes after me !

ChrisD. · 2 Oct 2022 at 18:17

Goksly said:
Did you not think, when taking out a mortgage at probably the lowest rates in history, that the next renewal would be higher? When I took mine out at 2% I was given a quote for 6% asking if I could afford it. When I've taken my renewal out now for 3.2, I was quoted 9% for affordability...

Most people don't think, riding the sub 2% gravy train for a decade.

413x · 2 Oct 2022 at 18:59

Rates can't stay 5pc for long.

They won't need to. If they do inflation will rapidly fall as so many people will just be trying to stay afloat so. Won't be spending on anything.

I personally don't think I'd be fixing at these rates for 5 years.

If I had to get a new mortgage in next 18 months I'd be seriously thinking of a tracker.

Peak rates.. I'd guess q1/q2 2023

I think peak will be 4-6pc

scottomus0 · 2 Oct 2022 at 19:15

413x said:
Rates can't stay 5pc for long.

They won't need to. If they do inflation will rapidly fall as so many people will just be trying to stay afloat so. Won't be spending on anything.

I personally don't think I'd be fixing at these rates for 5 years.

If I had to get a new mortgage in next 18 months I'd be seriously thinking of a tracker.

Peak rates.. I'd guess q1/q2 2023

I think peak will be 4-6pc

Peak 4-6% I can live with. Still sucks paying so much more, but I think I’m sticking with my tracker now.

Regy53 · 2 Oct 2022 at 19:25

scottomus0 said:
Peak 4-6% I can live with. Still sucks paying so much more, but I think I’m sticking with my tracker now.

I too can deal with this for a bit. It’s a huge gamble for all, those fixing now and those who are not or cant.. as I previously posted i find the money market fascinating but to keep the country in check you do have to think about the longer term outlook and how this has all come about. Interest rates should naturally rise quarter / half percent at a time over a period of years. The current rises hugely false and reaction to covid and cheap money which isn’t so cheap now. If we get to 5% rates and the country is still spending like mad then im going to eat a hat

scottomus0 · 2 Oct 2022 at 19:33

Regy53 said:
I too can deal with this for a bit. It’s a huge gamble for all, those fixing now and those who are not or cant.. as I previously posted i find the money market fascinating but to keep the country in check you do have to think about the longer term outlook and how this has all come about. Interest rates should naturally rise quarter / half percent at a time over a period of years. The current rises hugely false and reaction to covid and cheap money which isn’t so cheap now. If we get to 5% rates and the country is still spending like mad then im going to eat a hat

Saying that, I was in Manchester yesterday, and with the amount of people shopping, eating outetc, you would think nothing is going on. Or everyone is balling here

MatsyLR · 2 Oct 2022 at 19:41

scottomus0 said:
Saying that, I was in Manchester yesterday, and with the amount of people shopping, eating outetc, you would think nothing is going on. Or everyone is balling here

More like keeping up appearances and people who have engrained poor money management.
To me people are more well of than they think they are once they cut out unnecessary noncense from there life. But many have become acustomed to daily greggs/starbucks coffe or eating out every other day, drinking, smoking and buying cloths every other week and giving that up means they are in poverty.

Once I factor in all bills inc a £300-400 mortage my bills would come to no more than around £1000-1100 per month leaving around £200-300 left over each month on a £20k job. This in the north east.
I am one of the lucky ones who has a "large" deposit growing by £1k every month while I'm trying to find a house so I can for the most part offset these increases (for the time being.....), but it still sucks. Currently a 25 year mortgage works out to £315 based on the house price range I am looking at with an interest rate of 5%. That same mortgage would have been £200 per month at the start of the year :mad:

neocon · 2 Oct 2022 at 19:43

scottomus0 said:
Saying that, I was in Manchester yesterday, and with the amount of people shopping, eating outetc, you would think nothing is going on. Or everyone is balling here

Maybe their fixed terms don't end for a while or they can't do the maths.

EvilRob · 2 Oct 2022 at 19:50

scottomus0 said:
Saying that, I was in Manchester yesterday, and with the amount of people shopping, eating outetc, you would think nothing is going on. Or everyone is balling here

When things aren't looking great, spending money helps cheer you up.

Chris344 · 2 Oct 2022 at 19:51

413x said:
Rates can't stay 5pc for long.

They won't need to. If they do inflation will rapidly fall as so many people will just be trying to stay afloat so. Won't be spending on anything.

I personally don't think I'd be fixing at these rates for 5 years.

If I had to get a new mortgage in next 18 months I'd be seriously thinking of a tracker.

Peak rates.. I'd guess q1/q2 2023

I think peak will be 4-6pc

This is now our plan, too. We have a £16.5 ERC between now and Feb 23 and £10k from Feb 23 to Feb 24.

If it’s still crazy when we come to renew, then we will just aim for a tracker in the hope that it then comes down and stomach the larger payments in the interim even if it is tracking at 7/8%.

jon86 · 2 Oct 2022 at 19:56

I thought that fixing my mortgage at 2.5% for 15/30 years was crazy, until recently, when I realised how much peace it brings to have fixed mortgage payments. It's a shame that it's not (more) common to have lifetime fixed mortgages in the UK.

EvilRob · 2 Oct 2022 at 20:13

jon86 said:
I thought that fixing my mortgage at 2.5% for 15/30 years was crazy, until recently, when I realised how much peace it brings to have fixed mortgage payments. It's a shame that it's not (more) common to have lifetime fixed mortgages in the UK.

Are there any early repayment charges?