Mortgage Rate Rises

[413x]

Tbf though the writing has been on the wall for 6+ months now. Not trying to be smug because I’m far from a financial guru but the signs were there enough to want to get some security and lock down a long term fix.

This us certainly true if you cab afford to pay your erc. But some people are on very high percentage ercs.

And I doubt many expected rates to go so high so quickly

But yes, if you are on a 1pc, 2pc erc fee. It was sensible to get out



Some horrendous companies have ercs that don't reduce over the term of the fix! Santander for example!

 

[krooton]

Tbf though the writing has been on the wall for 6+ months now. Not trying to be smug because I’m far from a financial guru but the signs were there enough to want to get some security and lock down a long term fix.

And I am 1.5 years in to a 2 year fix, with a £5k ERC

 

[Doobedoo]

And I am 1.5 years in to a 2 year fix, with a £5k ERC

Yeah it’s a lot of money but long term you keep your house. I get it some people are going to be on the wrong side of it.

 

[413x]

And I am 1.5 years in to a 2 year fix, with a £5k ERC

Under normal conditions shouldn't you be able to pay your last year's erc?

For example if you have a 500k mortgage you'd be earning enough to pay that to exit if you wanted to?

I'd assume for most people they erc is a similar impact no matter the sum as you tend to buy the best you can afford. Be that 2k erc on a 200k mortgage or a 5k erc on a 500k one

(this assumes 1pc etc in last year of term)

 

[krooton]

Yeah it’s a lot of money but long term you keep your house. I get it some people are going to be on the wrong side of it.

Indeed, however the ERC from my provider can not be rolled up in to the new mortgage, and we don't have £5k sitting around to pay it, plus it would negate the savings from locking in the reduced rate now, so all we can do is gamble that will be able to do something come May next year.

I can't lock a rate in until 90 days from the end of the fix, so if by Feb next year things are still looking grim, all we can do is get a lodger in.

 

[Kill_Phil]

Had our mortgage approved last week and have already seen lower rates haha. Not sure it is worth the rigmarole of trying to go with a different lender now (or even trying to get our current product changed with existing lender) when we are so close to completing. However 4.89% vs 5.39% is an extra £70 per month in our back pocket. Argh, annoying.

I think Nationwide have only reduced the fee on our product to £0 now instead of £999 but they do have a slightly lower 5.24% product available for the same fee. What to do, what to do.

Maybe speak to a broker to get their thoughts? £1600 over a 2yr fix isn't exactly chump change (we'll for most!)

 

[Richie]

Yeah it’s a lot of money but long term you keep your house. I get it some people are going to be on the wrong side of it.

The issue being, a lot of people don't have that kind of cash available to pay the ERC.

Rolling it into another mortgage may not be possible as well and, even if it is, you pay interest on it which may negate any or some of the savings.

As is normal in today's society, the wealthy are in a position to mitigate losses whereas the poorer are not and so continues the increasing wealth gap

 

[R.O.S.S.I]

Maybe speak to a broker to get their thoughts? £1600 over a 2yr fix isn't exactly chump change (we'll for most!)

It's a 5 year fix.

My only concern is were potentially 2.5 weeks from completion so this will throw a bit of a spanner in the works going with a new lender at this stage.

My broker is going to contact Nationwide for me today and see if he can at least get us on the newly lowered Nationwide rate.

 

[413x]

The issue being, a lot of people don't have that kind of cash available to pay the ERC.

Rolling it into another mortgage may not be possible as well and, even if it is, you pay interest on it which may negate any or some of the savings.

As is normal in today's society, the wealthy are in a position to mitigate losses whereas the poorer are not and so continues the increasing wealth gap

You'd hope that whatever your mortgage is you would have 1pc in savings to be able to cover that?


If not you are really living on the edge of your means.

 

[Richie]

You'd hope that whatever your mortgage is you would have 1pc in savings to be able to cover that?


If not you are really living on the edge of your means.

Of course but other circumstances come into play e.g. a job loss which has decimated your savings and you have to build it back up or an ERC that doesn't lower from the initial i.e. 5% throughout the term as a couple of examples.

 

[Doobedoo]

The issue being, a lot of people don't have that kind of cash available to pay the ERC.

Rolling it into another mortgage may not be possible as well and, even if it is, you pay interest on it which may negate any or some of the savings.

As is normal in today's society, the wealthy are in a position to mitigate losses whereas the poorer are not and so continues the increasing wealth gap

It seems like nothing can be done then. But again interest rates have been historically low for a long time, unfortunately this always had the potential to happen. 2008 really wasn’t that long ago.

 

[neocon]

It is exactly that bad, I'm looking at a 700-800 increase in May next year (1.28% to 5.5%)

Are there two of you? Talk to lenders, because selling will likely be at a loss.

 

[krooton]

Are there two of you? Talk to lenders, because selling will likely be at a loss.

We are unlikely to get approved by any other lenders, we have to stick with our current provider, limiting options. Not everyone has savings, some of us just have debt.

Either crypto saves me, or we get a lodger, will have to see how the next 3 months pan out.

 

[R.O.S.S.I]

We are unlikely to get approved by any other lenders, we have to stick with our current provider, limiting options. Not everyone has savings, some of us just have debt.

Either crypto saves me, or we get a lodger, will have to see how the next 3 months pan out.

Crypto isnt going to be saving you in the next 3 months

 

[Richie]

It seems like nothing can be done then. But again interest rates have been historically low for a long time, unfortunately this always had the potential to happen. 2008 really wasn’t that long ago.

That depends on the age demographic. Low interest rates on everything from credit cards to loans to mortgages have all that someone in their late teens to late 20s have ever known.

Now to expect every young person to have a great fiscal mind or pay attention to it is disingenuous at best - young people have a live for that day attitude (in general) and thats not unreasonable (the gift of being young)... Knowledge generally comes from experience and experience comes with age which young people don't have yet.

Of course there are outliers i.e. young people who have an actual interest in finances and economies but I'd wager that most 16-25yo don't until it affects them.

The problem is house prices Vs wages, none of which are younger people's fault.

I use younger people as it's likely that they are more disproportionately affected by the current CoL crisis and housing costs.

I suppose my point is - do not punch down towards younger people just because you have the experience or interest of the past (and by "you" I mean in the general sense not you in particular)

 

[krooton]

Crypto isnt going to be saving you in the next 3 months

I'm a core project member, I know my 'investments' aren't doing squat in the coming months, haha

 

[ci_newman]

That depends on the age demographic. Low interest rates on everything from credit cards to loans to mortgages have all that someone in their late teens to late 20s have ever known.

Now to expect every young person to have a great fiscal mind or pay attention to it is disingenuous at best - young people have a live for that day attitude (in general) and thats not unreasonable (the gift of being young)... Knowledge generally comes from experience and experience comes with age which young people don't have yet.

Of course there are outliers i.e. young people who have an actual interest in finances and economies but I'd wager that most 16-25yo don't until it affects them.

The problem is house prices Vs wages, none of which are younger people's fault.

I use younger people as it's likely that they are more disproportionately affected by the current CoL crisis and housing costs.

I suppose my point is - do not punch down towards younger people just because you have the experience or interest of the past (and by "you" I mean in the general sense not you in particular)

It's not just younger people. I'm in my late 30s and a Millenial and it's all I've ever known for my working life too.

 

[krooton]

It's not just younger people. I'm in my late 30s and a Millenial and it's all I've ever known for my working life too.

40 here, when I first moved to the UK at 19, my bank wouldn't even give me a debit card, but were more than happy to give me a credit card.

 

[Doobedoo]

It's not just younger people. I'm in my late 30s and a Millenial and it's all I've ever known for my working life too.

I’m the same (mid 30’s in my case)but I know about the housing crisis, my boss has told me the story of when they brought their first house and ended up with negative equity in the 90’s.

I’m certainly not trying to gloat at all but some personal responsibility has to come into it.

 

[413x]

Of course but other circumstances come into play e.g. a job loss which has decimated your savings and you have to build it back up or an ERC that doesn't lower from the initial i.e. 5% throughout the term as a couple of examples.

Of course. But under normal circumstances?

I did use the example of 1pc in final year. Those 5pc fees throughout should be illegal! Most people (me included) didn't even know what an erc was before already getting my first mortgage!