Mortgage Rate Rises

rG-tom · 5 Oct 2022 at 17:26

Hagar said:
That looks sensible to me. Does it allow paying down the loan a bit as well?

10% overpayments are allowed, yes. However, it increases my mortgage payments by £900pcm from my current ~2.2% deal, so will have to evaluate how much appetite/bandwidth i have for overpaying right now

I'm locking this in for a March execution, so if anything changes between now and then we just walk away and take the better deal. Feels worth doing!

robfosters · 5 Oct 2022 at 17:36

If property prices drop 10% next year, I’d love to know how long till they recover. Unfortunately my crystal balls broken.

fez · 5 Oct 2022 at 17:52

robfosters said:
If property prices drop 10% next year, I’d love to know how long till they recover. Unfortunately my crystal balls broken.

A few years after things get back to some semblence of normality.

413x · 5 Oct 2022 at 17:56

I wonder how much they'll Drop by?

I expect recovery to be slow.

rG-tom · 5 Oct 2022 at 18:10

413x said:
I wonder how much they'll Drop by?

I expect recovery to be slow.

another reason I'm fairly happy taking a 10 year fix, in 5 years property prices could be in a strange place!

_Jimlad_ · 5 Oct 2022 at 18:14

413x said:
I wonder how much they'll Drop by?

I expect recovery to be slow.

i doubt there will be a drop, why would there be when so much demand

robfosters · 5 Oct 2022 at 18:16

_Jimlad_ said:
i doubt there will be a drop, why would there be when so much demand

I thought it was just natural thing to happen when mortgages get more expensive

200sols · 5 Oct 2022 at 18:19

_Jimlad_ said:
i doubt there will be a drop, why would there be when so much demand

Because mortgages becomes unaffordable, economy contracts and lenders tighten criteria. People thought the same.before 2008 and prices dropped 20+%.

_Jimlad_ · 5 Oct 2022 at 18:28

while the skilled job market is still pumping I just don't see a drop in any desirable area's - certainly where i am people are still bidding over asking price

dowie · 5 Oct 2022 at 18:30

_Jimlad_ said:
i doubt there will be a drop, why would there be when so much demand

That's constrained still by what people can afford... I mean lots of people might love to live in a huge mansion, it's irrelevant if they can't afford it.

The amount banks might be prepared to lend or deem affordable for someone at higher interest rates could drop significantly - if the amount you can borrow drops significantly then the amount you can afford to bid for a house drops too ergo less demand that there'd perhaps otherwise have been at various price levels.

You'll also see perhaps repossessions increasing a bit and people desperate to sell quickly etc. which can have a downwards effect on price too.

_Jimlad_ · 5 Oct 2022 at 18:32

dowie said:
That's constrained still by what people can afford... I mean lots of people might love to live in a huge mansion, it's irrelevant if they can't afford it.

I appreciate that, and i suspect a small minor drop, some people talk like it will be a fire sale ... just dont see it

dowie · 5 Oct 2022 at 18:37

_Jimlad_ said:
I appreciate that, and i suspect a small minor drop, some people talk like it will be a fire sale ... just dont see it

I guess prices can be a bit sticky at times but given that it doesn't take much in the way of rate rises for things to become quite unaffordable quite quickly then there could be a double-digit % drop in prices over the next couple of years.

The risk is there of something similar to the 80s property crash repeating itself.

_Jimlad_ · 5 Oct 2022 at 18:53

dowie said:
I guess prices can be a bit sticky at times but given that it doesn't take much in the way of rate rises for things to become quite unaffordable quite quickly then there could be a double-digit % drop in prices over the next couple of years.

The risk is there of something similar to the 80s property crash repeating itself.

we need the job recession as well for that, which is what makes todays situation very different, there is a bulk ton of jobs going

200sols · 5 Oct 2022 at 18:54

_Jimlad_ said:
we need the job recession as well for that, which is what makes todays situation very different, there is a bulk ton of jobs going

You don't need a recession, 6%+ interest rates will make many houses unaffordable.

smokedog · 5 Oct 2022 at 19:59

robfosters said:
If property prices drop 10% next year, I’d love to know how long till they recover. Unfortunately my crystal balls broken.

Prices on some properties in London have already dropped around 10%. So instead of being extremely over priced, they are now just very expensive.

R.O.S.S.I · 5 Oct 2022 at 20:15

Currently in a sticky situation of looking for houses now and wanting to try and get something locked in sooner rather than later before rates go up and up. But then part of me wonders if we should wait a little bit now and see if anything happens with house prices in the next 3-6 months but I feel like I could just be waiting for something that never happens.

Ahleckz · 5 Oct 2022 at 20:18

rG-tom said:
2 year fixes are currently the most expensive in my very recent experience - I've just locked a 4.24% 10 year fix in (I couldn't see any 2 year fixes under 5% and 5 year fixes were .3-.4% more)

it feels far more likely for mortgage rates to go up from 4.24% in the next 10 years than down, so feels like the better option!

Yea I think you’re right. I’ve just done a 5 year at 4.84% (72% LTV) for one of my products. Kicks in in March.

Raumarik · 5 Oct 2022 at 20:20

R.O.S.S.I said:
Currently in a sticky situation of looking for houses now and wanting to try and get something locked in sooner rather than later before rates go up and up. But then part of me wonders if we should wait a little bit now and see if anything happens with house prices in the next 3-6 months but I feel like I could just be waiting for something that never happens.

Personally I wouldn't wait, it could be several years before things settle and you can at least bite a bit into your mortgage by then and then change your deal or sell up and move. At worse I suspect you'd break even if the market doesn't collapse which it never ever seems to do despite warnings it's coming.

413x · 5 Oct 2022 at 20:43

R.O.S.S.I said:
Currently in a sticky situation of looking for houses now and wanting to try and get something locked in sooner rather than later before rates go up and up. But then part of me wonders if we should wait a little bit now and see if anything happens with house prices in the next 3-6 months but I feel like I could just be waiting for something that never happens.

Really hard decision.

If you had a good rate (like 2pc) I'd say go for it. But if you're gonna be in 5-6pc and potentially buying at top of the market (let's say a modest 10pc fall. Is likely) I'd really take some time to think about it

R.O.S.S.I · 5 Oct 2022 at 20:55

413x said:
Really hard decision.

If you had a good rate (like 2pc) I'd say go for it. But if you're gonna be in 5-6pc and potentially buying at top of the market (let's say a modest 10pc fall. Is likely) I'd really take some time to think about it

Best rates im seeing on MSE's mortgage finder are 3.74% on a 3 year fix but a super high fee, then next best are 4.09% and 4.15% on 10 year fixes.

Its the issue of whether house prices are going to go down or not which is really troubling me.