Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Soldato
Hard to tell really, depends on the relative price she's paying, the rate she booked and the period. For example, a 200k loan on a 5 year fix at 2% is worth about 30k over current rates, which is the equivalent of a 10-12% reduction in a 250k home.
I am personally now waiting to move. We have about £120k left on a house currently valued at £500k ish and have a 5 year fix at sub 2%. Initially we were going to do a refurb, but a 25% drop would bring more expensive houses into range. Absolutely a first world problem, but if things slide for 2 to 3 years I can save the money to move.
I am personally now waiting to move. We have about £120k left on a house currently valued at £500k ish and have a 5 year fix at sub 2%. Initially we were going to do a refurb, but a 25% drop would bring more expensive houses into range. Absolutely a first world problem, but if things slide for 2 to 3 years I can save the money to move.
She should buy imo. If she loses that mortgage offer the next one will be a higher interest rate and even on a lower house price she may not save anything at all. Historically waiting for a housing crash before purchasing has backfired, the only people who can really do that are those with cash ready to buy extra homes.
Soldato
I did this the last time I remortgaged. I had a 5yr fixed deal which I overpaid religiously in the last 3yrs of the term meaning that I managed to reduce my mortgage by 8 yrs and my monthly payments only increased by about 30quid. The only thing I had to do was redo an affordablility test because I was reducing the term by more than 3yrs. You may have to do the same. I'm now coming to the end of my subsequent 2yr fix next April
Yes, I agree, it's a fairly cheap property to begin with coupled with a reasonably good interest rate. Even a 10-20% drop in prices over the next year isn't the end of the world at that price range, and I doubt very much at the end of her fixed rate she'll be in negative equity unless something massive happens.
Soldato
Apparently there are reports that the mortgage rates will decrease to early 2022 levels for next year?
Is this a load of FUD?
Is this a load of FUD?
Soldato
“apparently” and “reports” gives you at least 2 degrees of separation, you’ll have to be more specific.
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Soldato
Can't see how that is possible. Base rate won't turn for quite some time.
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Soldato
If she’s going to live in the property for a while, the value dropping doesn’t matter (it’ll pick up again) and as long as she can afford a few more % there’s no issue with affordability.
She should continue IMO
Whoever told you that is talking absolute rubbish.
Soldato
Saw the headline article from zoopla
Soldato
I don't see a 20% drop myself.
Soldato
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Soldato
Crazy how house prices have soared over the last 20 years. Wouldn't surprise me at all if they dropped back to where they were in 2020.
Soldato
What are you classing as a "normal house" and "the Midlands", because to get to your quoted £1.8-£2k/month, that's a £450k house @ 6% with 10% deposit on a 30 year term
Round here, that would get you a 5-6 bed semi, or a very nice 3-4 bed detached with a huge garden. Assuming you're talking about FTB (since otherwise they should have some equity in their current property), then that's not exactly a "normal house" for most people.
A "normal house" for most FTB would be a 2-3 bed terrace, of which plenty are available around the £150k mark, which is "only" £640/month @ 6% with 10% deposit over 30 years. Yes it's still pretty expensive compared to recent years, but still under the 30% for someone on the average UK salary (various sources seem to put this between £26-32k)
I couldn't see it, they have an article about rates falling in 2023 but if you read it.
'Mortgage rates are expected to fall to 4-5% next year and this is likely to be the new norm. The days of ultra cheap money are now behind us'
Mortgage rates expected to fall in 2023 - Zoopla
In good news for buyers and homeowners wishing to remortgage, mortgage rates look set to fall towards the end of this year and into 2023.
www.zoopla.co.uk