Mortgage Rate Rises

[Derek W]

argh, there is another thing to consider when chosing between a 2yr tracker or 5yr fixed. That's the £999 product fee.

Once the 2yr tracker is up I'll need to find a new deal and spend another £999. That £20 a month saving might not be worth it.

I'm starting to think I need a new username. I mean, can anyone see rates falling by a decent amount between now and the next 5yrs, or will they settle around the high 3s? This year is out of the question, I can't see them dropping until very late '23 or early '24.

Now thinking 5yr fixed. If I do a 5yr fixed, gonna be great for all you lot as I guarantee rates are gonna drop through the floor the day after I sign!

I take it you're not being offered any deals without the product fee? I've only been with nationwide but they normally have similar deals with or without a product fee.

Edit

Or are you able to get a 3yr deal and split the difference?

 

[glenimp617]

I take it you're not being offered any deals without the product fee? I've only been with nationwide but they normally have similar deals with or without a product fee.

Edit

Or are you able to get a 3yr deal and split the difference?

Unfortunately not, but I was 5 years ago when I renewed last time. This time, nope. The rates are a little bit lower than the website though, but still with £999 fee. I think there was one without a fee but it was a silly rate of over 5%. IIRC, they did a 3yr fixed but that was a high rate as well. I've still got a bit of time to mull it over.

 

[413x]

What if I end up tracking and it goes up to 6pc again. ?

That's the game. No one knows. What I do know, if they went up to 6pc you'd be looking at monumental damage to people's lives and jobs and the economy. There would be repossessions all over the place and a huge shift of wealth from the squeezed middle to the elite.


All those homes repossessed would likely end up bought on cheap by the super rich.


It would be carnage.


If I personally got caught up in something like that I'd just leave the UK and go live in stone cheap country teaching English. Too late to start again.

 

[ci_newman]

That's the game. No one knows. What I do know, if they went up to 6pc you'd be looking at monumental damage to people's lives and jobs and the economy. There would be repossessions all over the place and a huge shift of wealth from the squeezed middle to the elite.


All those homes repossessed would likely end up bought on cheap by the super rich.


It would be carnage.


If I personally got caught up in something like that I'd just leave the UK and go live in stone cheap country teaching English. Too late to start again.

I agree, 6% would be a disaster. I consider myself "well off" and 6% would cripple us as a household. We'd have to cut ALL spending except mortgage and bills. I think the economy would actually crumble.

 

[413x]

I agree, 6% would be a disaster. I consider myself "well off" and 6% would cripple us as a household. We'd have to cut ALL spending except mortgage and bills. I think the economy would actually crumble.

It would cripple people who were probably less than half way through their mortgage.
It would add 400ppm to our bill. And our house isn't extravagant

If we were fully exposed to all these cost of living changes.

Energy =200 ppm extra
Mortgage =400ppm extra
Food = 50-100ppm extra

Justin those 3 alone you'd be looking at 700 a month extra for absolutely no benefit. Yet the stock market is at record highs?


So yeah 6pc would cripple things. Which is why I don't think it would happen without everything else going even more to ****.
Really, for things to get that bad there would also be big problems with jobs etc etc

 

[EvilRob]

I agree, 6% would be a disaster. I consider myself "well off" and 6% would cripple us as a household. We'd have to cut ALL spending except mortgage and bills. I think the economy would actually crumble.

Meant in the nicest way, you aren't well off.

 

[ci_newman]

Meant in the nicest way, you aren't well off.

I love how you assume you know all about my personal finances

 

[Kill_Phil]

I love how you assume you know all about my personal finances

Yup people tend to forget that a salary of 45k tends to put you in the top 25% of earners in the UK. So even being well off comparable to most in the country, a £400-700 increase in living costs is going to decimate peoples income let alone those at the bottom end

 

[Goodie]

Meant in the nicest way, you aren't well off.

what on earth goes through someones mind to think that this is acceptable to post, unless you're just going out of your way to be a ****.

 

[EvilRob]

what on earth goes through someones mind to think that this is acceptable to post, unless you're just going out of your way to be a ****.

Fair, I probably shouldn't have said that however it's a sad state of affairs for the country and our economy when people who would be ruined by a few percent rise in interest think they are well off.

 

[ci_newman]

Fair, I probably shouldn't have said that however it's a sad state of affairs for the country and our economy when people who would be ruined by a few percent rise in interest think they are well off.

A few percent? 6% would be a nearly 5% increase in less than 2 years.

Even the banks only stress-tested for a 3% rise on mortgage rates over a 25 year period.

I don't care to discuss my personal circumstances but it would essentially make me economically inactive, and without intending to humble brag our household is in the top 10% of earners in the UK.

If 6% mortgage interest rates would make my household economically inactive, the rest of the country would be epically screwed.

The only households that would escape that are those who own their home and are mortgage free, typically the retired / older generations that spend less money anyway.

 

[Em3bbs]

If I personally got caught up in something like that I'd just leave the UK and go live in stone cheap country teaching English. Too late to start again.

Don't you already live in Wales?

 

[EvilRob]

A few percent? 6% would be a nearly 5% increase in less than 2 years.

Even the banks only stress-tested for a 3% rise on mortgage rates over a 25 year period.

I don't care to discuss my personal circumstances but it would essentially make me economically inactive, and without intending to humble brag our household is in the top 10% of earners in the UK.

If 6% mortgage interest rates would make my household economically inactive, the rest of the country would be epically screwed.

The only households that would escape that are those who own their home and are mortgage free, typically the retired / older generations that spend less money anyway.

Maybe its a difference in definition. Well off to me isn't about how much you earn but how much you have and how financially secure you are.
You can be in the top 1% of earners and not be well off if you make poor financial decisions or over stretch yourself.
True I don't know your precise circumstances however a rise to 6% on a 500k mortgage is 1.2k or so a month. If that was the difference between me being OK and being crippled I would be worried interest changes aside, not think I was well off.

 

[413x]

Don't you already live in Wales?

Ha yes.
Also. I have recently read that Wales might increase CT by more than 5pc.
The articles seem to say "funding" so not sure if that means CT or total funding.

 

[SpeedFreak]

In fairness, well off and high income aren't the same to me. High income can lead to being well off, but you can still be exposed to risk.

 

[malachi]

I guess if you are well off then mortgage rates wouldn't bother you You take whatever hit and you continue with life as normal as it wouldnt make any or very little impact.

 

[platinum87]

A few percent? 6% would be a nearly 5% increase in less than 2 years.

Even the banks only stress-tested for a 3% rise on mortgage rates over a 25 year period.

I don't care to discuss my personal circumstances but it would essentially make me economically inactive, and without intending to humble brag our household is in the top 10% of earners in the UK.

If 6% mortgage interest rates would make my household economically inactive, the rest of the country would be epically screwed.

The only households that would escape that are those who own their home and are mortgage free, typically the retired / older generations that spend less money anyway.

I don't understand why rising interest rates would make you economically inactive?

 

[ci_newman]

I don't understand why rising interest rates would make you economically inactive?

Because all of my earnings will go towards servicing mortgage debt and bills - aside from buying fuel and groceries, there would be no further spending in the economy.

The more people caught with high mortgage rates, the less being spent in the economy (which is exactly the point of BoE raising interest rates in order to reduce spending and reduce inflation).

[Edit] if my mortgage payments increase by £1000/month, that is £1000/month NOT spent into the economy.

 

[adam cool dude]

House prices dropped for the 4th month in a row. Should be the beginning of a housing crash. Sucks if you just bought a house. A friend didn't get into positive equity untill nearly 10 years after the 08 crash. Some people are predicting up to 20pc which even still would only take you back to 2021 levels.

 

[platinum87]

Because all of my earnings will go towards servicing mortgage debt and bills - aside from buying fuel and groceries, there would be no further spending in the economy.

The more people caught with high mortgage rates, the less being spent in the economy (which is exactly the point of BoE raising interest rates in order to reduce spending and reduce inflation).

[Edit] if my mortgage payments increase by £1000/month, that is £1000/month NOT spent into the economy.

Ok i understand, however economically inactive means you are out of work and not seeking work