Mortgage Rate Rises

caff · 15 Jul 2022 at 00:07

EvilRob said:
Check a broker like London and Country.
Also, don't wait. You can apply and lock in a rate with another lender usually up to 6 months in advance. As long as you have your mortgage offer, you are good. I did this in December and then waited to complete until my fix expired last month (now locked in for 5 yrs at 1.27%).

Thanks for the tip. I called London & Country and they have been very efficient. I've gone with a 5 year fix for 3.05% from Barclays, which is only 0.05% less than going direct - but I'm happy enough with the deal, and it's fee-free.

They say the rate is secured for up to 6 months, but we shall see... from experience, i know that only the mortgage offer is the legally binding thing you can rely on, and generally those are only valid for 3 months from date of offer.

EvilRob · 15 Jul 2022 at 04:34

caff said:
Thanks for the tip. I called London & Country and they have been very efficient. I've gone with a 5 year fix for 3.05% from Barclays, which is only 0.05% less than going direct - but I'm happy enough with the deal, and it's fee-free.

They say the rate is secured for up to 6 months, but we shall see... from experience, i know that only the mortgage offer is the legally binding thing you can rely on, and generally those are only valid for 3 months from date of offer.

My remortgage was with Barclays and the offer was valid for 6 months. Some lenders do 3 months, but 6 is more common.

dl8860 · 21 Jul 2022 at 12:21

413x said:
Exactly.
At least if interest rates are high and your house is 4x your salary things can get better.. Rates can come down.

If your house is 8x your salary and rates are 0.1pc things can only get worse.

That's exactly what did happen, and exactly what will happen. Big win and big loss accordingly. I'm a bit annoyed I'm about to refix at 3.25% for 5 years (No fees, 44% LTV) compared to people saying they got high 1% deals earlier in the year, but I don't think I can not fix, and the 5 is cheaper than 2. Surprisingly staying with current provider beats anything I can see on Moneysupermarket.

JamesH85 · 21 Jul 2022 at 15:14

Rumbles of another 0.5 l% increase on the horizon in August. I imagine we will definitely see at least 0.25% again.

HungryHippos · 21 Jul 2022 at 15:15

I think we'll see 0.5% more than likely. If Fed does 0.75% or higher we'll look too slow at 0.25%.

413x · 21 Jul 2022 at 15:20

dl8860 said:
That's exactly what did happen, and exactly what will happen. Big win and big loss accordingly. I'm a bit annoyed I'm about to refix at 3.25% for 5 years (No fees, 44% LTV) compared to people saying they got high 1% deals earlier in the year, but I don't think I can not fix, and the 5 is cheaper than 2. Surprisingly staying with current provider beats anything I can see on Moneysupermarket.

Seems high for your LTV!
Edit.. Maybe not! Rates have changed a lot Since I last checked!

HungryHippos said:
I think we'll see 0.5% more than likely. If Fed does 0.75% or higher we'll look too slow at 0.25%.

I expect minimum 0.25. And fair chance of 0.5

HungryHippos · 21 Jul 2022 at 15:26

We already looked weak last time by only doing 0.25% hence that being my view.

413x · 21 Jul 2022 at 15:27

HungryHippos said:
We already looked weak last time by only doing 0.25% hence that being my view.

I was surprised 2 didn't do 0.5 last time with the break.

Can really see how it affects the forex rates slipping behind

JamesH85 · 21 Jul 2022 at 15:30

413x said:
I was surprised 2 didn't do 0.5 last time with the break.

Can really see how it affects the forex rates slipping behind

I think 3 people actually voted for 0.5% last time but majority wanted 0.25%.

I can see it leaning closer to 0.5 this time. When is the next meeting after August?

413x · 21 Jul 2022 at 15:33

JamesH85 said:
I think 3 people actually voted for 0.5% last time but majority wanted 0.25%.

I can see it leaning closer to 0.5 this time. When is the next meeting after August?

Think so. With pound subdued I think 0.5 is probably better now than later

BUDFORCE · 21 Jul 2022 at 17:56

Gotta understand to a certain extent mortgage interest rates are seperate from the BoE base rate.

Instability in the money markets is what is causing mortgage rates to skyrocket.

BoE will have a knock of effect at some point.

Chris344 · 21 Jul 2022 at 20:06

BUDFORCE said:
Gotta understand to a certain extent mortgage interest rates are seperate from the BoE base rate.

Instability in the money markets is what is causing mortgage rates to skyrocket.

BoE will have a knock of effect at some point.

In more stable money market times, what are typical mortgage rates vs the base rate?

Would be interesting to know.

Puzzled · 21 Jul 2022 at 20:25

Martin Lewis was interesting on Peston last night. He was saying how people coming out of a mortgage fix in the next few months could be in for a shock, not just because of the higher rates but that they could fail the affordability checks due to the price of everything else going up.

413x · 21 Jul 2022 at 20:28

Puzzled said:
Martin Lewis was interesting on Peston last night. He was saying how people coming out of a mortgage fix in the next few months could be in for a shock, not just because of the higher rates but that they could fail the affordability checks due to the price of everything else going up.

Was afraid of this myself.

As time goes on, for a fixed wage anyone near the limit will be over it most likely.

I wonder if that's why my friends was declined? I tried to tell her to find out why. But I think she isn't bothered and may well end up stuck on svr.

Chris344 · 21 Jul 2022 at 20:46

Puzzled said:
Martin Lewis was interesting on Peston last night. He was saying how people coming out of a mortgage fix in the next few months could be in for a shock, not just because of the higher rates but that they could fail the affordability checks due to the price of everything else going up.

BoE have relaxed affordability stress tests recently so this will help I guess.

fez · 21 Jul 2022 at 20:53

Puzzled said:
Martin Lewis was interesting on Peston last night. He was saying how people coming out of a mortgage fix in the next few months could be in for a shock, not just because of the higher rates but that they could fail the affordability checks due to the price of everything else going up.

What happens when you fail the affordability test? You just have to stick with your current mortgage but on the SVR?

200sols · 21 Jul 2022 at 21:08

0.5% is pretty well priced in. If its 0.25% sterling will tank.

fez said:
What happens when you fail the affordability test? You just have to stick with your current mortgage but on the SVR?

Its ironic as Lewis alluded. You cant pass the test for a lower interest rate so they whack you onto the usually higher SVR rate.

Richie · 21 Jul 2022 at 21:33

fez said:
What happens when you fail the affordability test? You just have to stick with your current mortgage but on the SVR?

I believe you can still go fixed if it's cheaper than SVR but you are stuck with your current lender if the new lender fails you on affordability.

This can also affect people who have now changed jobs due to redundancy and have had to take a lower paid job. Their old salary will pass the affordability test but the new one won't.

bris · 21 Jul 2022 at 21:45

These rises are pretty unfair tbh. I know the way it works, usually we go on spending sprees pushing up inflation and so we get rate rises to counter this.

However this time it isnt our fault, we are being punished because of circunstances out of our control, everything is rocketing due to world problems not our spending.

These rises are really pushing people to default through no fault of their own, there is going to be a huge problem soon.

The cost of fuel and energy as well as food prices and almost everything else is where the problem lies, thats already killing us, the rate rises are just adding fuel to the fire.

wesimmo · 21 Jul 2022 at 21:47

There's all sorts of implications, my mate is going through a divorce, but the chain for the house his soon to be ex wife is buying is not moving.

Now he's looking at not being able to afford to buy his own house off her if his current offer runs out before everything moves.