If it does drop, it'll be those FTBs that did join recently that get most burnt.
Mortgage Rate Rises
- Thread starter glenimp617
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I know my sister won't get another chance for maybe years if this falls through. That's the hard part.
Not an easy call. Get it wrong and a huge crash happens? Not great.
This was the same decision I went through in late 2019...do I bail on this because covid is going to destroy house prices?
Obviously the government propped everything up that time. But this time no such help.
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Especially on 90-95pc ltv.
Guaranteed negative equity.
Fine in short term. But if its a big drop and slow recovery a lot of pain ahead.
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Only when they come to renew their mortgage product. If they are in negative equity, or very high LTV they'll be hit with the higher rates.....although, there doesn't seem to be much difference in the rates between bands at the minute.
Caporegime
Bracing for another kick up the ******** today
If they've bought a flat say and their plan was to sell and move up the ladder to house after 5 years or so, not uncommon, they may not be able to sell for what they paid.
There's an oversupply of flats and not enough family homes. Obviously better situation than paying rent though.
From what I read the central banks need to raise interest rates until companies go out of business and people start losing their jobs, they need to cause pain to stop people spending their money. They need to people to stop asking for payrises and just be thankful that they have jobs.
Isn't that what the Philips curve describes
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The Phillips Curve Economic Theory Explained
The Phillips curve is an economic theory that inflation and unemployment have a stable and inverse relationship.
Soldato
Lube at the ready? Or a hard dry one?
Soldato
1% is possible!
Soldato
Would not be surprised. We seem to be following what the US is doing to fight this. Sharper increases earlier on are to be expected.
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Soldato
If the house isn't too expensive then it probably won't matter as much.
Just got to to make sure it's still affordable if mortgage rates keep going up a bit higher than current.
Alternative is to pull out and rent, but then the landlords are likely to up prices as well to pass on costs.
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No they won't, but whatever they are buying will be cheaper. The biggest issue is that they will have probably lost their deposit and any equity, so will need to roll that 'loss' into the new property. Could mean they won't be offered a mortgage at all. It just depends how well they planned prior to the purchase, although more often than not, it's down to pure luck. I say luck, as 15yrs ago we bought a house right on the limit of what we could afford. Luckily prices went up, and we built up a lot of equity but could have gone the other way.
Some people will be trapped and won't be able to move. They'll just need to stay put for a bit longer. We have to, I'd love to move house but just can't. The biggest losers will be those who are forced to sell, like a divorce.
One thing needs to happen for sure. Wages need to go up, or houses need to come down.
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So is 0.5%
Is a tricky one.
She's a FTB. But he (the bf) has to sell the damp flat they are in.
But the equity is low. So it's almost like a FTB with the hinderence of a flat.
I'm actually not sure if they need to remortgage the flat as I know they aren't porting!
So a bit messy. As obviously value of the flat will drop anyway.
They want kids though and the damp mouldy flat isn't great for that. So I think if they can they will move. Least its a 5 year fix.
Soldato
0.75% as a minimum I would expect. But with headlines talking about highest rise in 30 years it leads me to think it could be much higher.
Soldato
Houses should drop 50% really, to make them any way affordable for most people. That'll never happen though, the country would implode.
Soldato
I'm expecting .75% now that Truss has gone, but it probably should be 1% or higher.
Soldato
Exactly this, because the interest rates are the flux you can tweak that on a new deal with same terms. When you change your terms you have to be means tested again because of course it changes the affordability and generally gives a greater rise in monthly payment that you need to consider on top of the inflation rise calc too.