In hindsight we were really lucky, lovely house, lovely location, lovely neighbours in a cul-de-sac with similar age children. Moved in March 19, the way things have gone since then I’d imagine that this house would have been forever out of our reach. We paid 325, an identical house sells for 500+ now. Hope things work out for you.
Mortgage Rate Rises
- Thread starter glenimp617
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I mean with the lockdown and deaths
Jesus Christ don’t open that can of worms, more of the enlightened will be here within minutes.
Not in too much of a rush. Not wanting kids and working from home opens options. Interesting ones.
Our is is by no means horrible, it's nice. Just would like more land and less neighbours. (less suburby, more village)
But we have a home that many could finish up in so so in all I can't complain.
But I don't really want a bigger mortgage to earnings ratio. And locked in a decent mortgage for 5 years. Hopefully the carnage will have settled by then and life can be reviewed.
I'm sure agents played a large part in the rises in prices in recent years.
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I imagine that's how he feels about it.
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Except as of about a month ago, banks were still offering long term deals at around the 3% mark which means they were not predicting the rises you seem to think everyone else should have expected.
Policies of this new cabinet have created this need for particularly fast rate rises
Except the banks won't necessarily be making more money, infact possibly less as to get people through the door with new mortgages they will need to cut their margins.
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Pretty sure the bank provided all money required to purchase the house at point of sale. They would have then borrowed that amount from BOE(?) to pay and added their margin. Now instead of making £150,000 profit, it’s £550,000 unless the bank doesn’t borrow at a fixed rate to finance - in which case - why not!? Do banks even borrow to finance mortgages? As if not - again - they have made more money.
Yeah, 30 is possible and not good at all for a lot of people, especially recent buyers, imagine saving up say a 20% deposit, putting down say 60K on a 300k property and then it drops 90k or so... Like fine if you're in your forever home but otherwise you're stuck of a bit then in negative equity and could take another while to even get back to break even/no equity.... and once you're back to break even you've basically got to save for a deposit all over again (albeit via capital repayment) if you want to move house to a similar property or upgrade.
I mean at least you're not renting and if you have a steady job then meh, no one is going to evict you but still, could be a lot of very angry people if it goes that far.
I guess people forced to sell + foreclosures at auction are going to have to take what they can, others are probably going to be a bit sticky with the prices they're willing to accept initially and will perhaps leave homes lingering on the market with no offers.
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Banks borrow almost all of their money. It will come from a variety of sources, including savings deposited by other customers who they pay interest to from the money they make lending it to others.
The inter bank lending rate was up near 4‰ last week and heard some people talking up 5+% on the 5 year outlook. Lenders need to take this into account.
I'm not sure how you have calculated your figures but you will be making a huge amount of assumptions to come to them which may or may not be correct over the fixed period of the mortgage.
The inter bank lending rate was up near 4‰ last week and heard some people talking up 5+% on the 5 year outlook. Lenders need to take this into account.
I'm not sure how you have calculated your figures but you will be making a huge amount of assumptions to come to them which may or may not be correct over the fixed period of the mortgage.
For many it's taken years and years to save that up. To have potentially 10 years wiped out just like that? Brutal. But the world is not fair.
30 percent will hurt a lot of people. I don't think it will get that far. Certainly not from inflation/base rate on its own. However with Ukraine/Russia who knows. But not normal running.
Rates will peak at 4-5pc. That will do plenty enough damage to bring inflation down. House prices will dip. People will stop spending to pay rent/mortgage/save and hopefully within 3 years it will be back down to a sensible 2pc.
To be fair it's not really their job to take massive punts on interest rates, so long as they're in line with the market and lending for more than they're borrowing/paying for deposits then... meh.
They can't just turn around to all their commercial and retail clients and go "actually some market wizard here thinks rates should be at like 6% in the future so no loans for you unless you pay that even though all our competitors are still giving loans at 3%".
Yup, not good at all, would be quicker to save again when owning a property though to be fair, like typically mortgage (inc interest + capital repayment) can be less than rent for a similar property.
Someone without a property is saving on top of rent whereas someone with a mortgage is "saving" via the capital repayment portion + any overpayments they make.
Main issue is getting stuck in SVR.
If you get really unlucky. House prices drop, you come to remortgage. You house is negative and rates are 5pc SVR could well be 7-8-9pc? On SVR?
You jump from 80pc LTV with a sub 2pc mortgage straight to 8pc and negative equity.
Brutal
Oh yeah, good point, that is going to seriously screw people as they can't realistically remortgage.
If there's one thing government could do to help it would be offering banks collateral so people in negative could at least access market rate fixes rather than SVR. I think that's reasonable
Demands building for independent inquiry into pensions turmoil which left several funds just hours from collapse
This is what I was on about on the other thread that was closed.
LDI Strategies are indirectly linked to mortgages, as I said "linked to policies 22 years ago". Same as the MBS that the city was mixing and most of those that were mixing did not have a clue.
This book gives you an idea, think it was chapter 3 intertemporal portfolio optimization.
Myopic Portfolio Choice
Abstract. Reviews the theory of portfolio choice for short‐term investors, and explains the special cases in which long‐term investors should make the same
academic.oup.com
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It looks likely it will be a period of significant house price falls and serious financial strain for the majority of home owners. I can't see how mortgage rates will not hit 10% in the next 6 months and that would likely lead to a ~20% drop in house prices. Unfortunately those most affected likely being those that bought in the last two years (so many of those who struggled to get on the housing market and very likely overstretched themselves) - these folks will literally see all their hard work obliterated and on top of that might be forced out of their homes when their monthly mortgage payments become un manageable.
There's not really much that can be done to stop this now, for years we've all suspected that house prices where too high and yet due to high demand and government intervention (E.g. stamp duty holidays) prices have continued to climb until now, but I never thought the wheels would come off quite like it looks like it will. By January we should have a clearer picture, but if mortgage rates do hit 10% that equates to some extra £1,300 a month in mortgage payments for most, given how most people reacted to several hundred £ a month energy increases it's clear that the majority cannot afford this. It sounds like it's going to be carnage.
There's not really much that can be done to stop this now, for years we've all suspected that house prices where too high and yet due to high demand and government intervention (E.g. stamp duty holidays) prices have continued to climb until now, but I never thought the wheels would come off quite like it looks like it will. By January we should have a clearer picture, but if mortgage rates do hit 10% that equates to some extra £1,300 a month in mortgage payments for most, given how most people reacted to several hundred £ a month energy increases it's clear that the majority cannot afford this. It sounds like it's going to be carnage.
Soldato
My fix of 3.4% for 5 years seems like a decent deal now (locked in a couple of months back). At the time, it seemed not to be considering 6 months earlier it was much lower.
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Soldato
I can see prices dropping, people getting forced out and downsizing, then the rich folk clearing up the cheap housing stock to rent it back out for profit in a few years.
Love a good wealth transfer.
Love a good wealth transfer.