Mortgage Rate Rises

dLockers said:
If I were you, I'd fix for 2 years. In the short term, rates are going to go up again for sure.
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Do you think so, how much further if guessing?
I'm not sure. I mean I think 4.5 will be the peak.
But if I was gambling with a mortgage fix of x years? Hard to say. I think I'd go tracker.

I'd certainly be very apprehensive at fixing for 5 years. But who knows

But yeah a 2 year fix is probably going to neither here nor there for best choice for next couple of years. Certainly don't see significant changes to make you regret the decision
 
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If rates are going up again, and 5 year is about 1% less than 2 year (from my own quotes) I don't see the logic? If rates were just going down, then sure, go short so as not to be locked higher than you could be, but if they're going to increase still, taking the lower for long term becomes a better option?

Already, I'm glad I snagged under 4% last month as I don't think they're so available now.
 
413x said:
Do you think so, how much further if guessing?
I'm not sure. I mean I think 4.5 will be the peak.
But if I was gambling with a mortgage fix of x years? Hard to say. I think I'd go tracker.

I'd certainly be very apprehensive at fixing for 5 years. But who knows

But yeah a 2 year fix is probably going to neither here nor there for best choice for next couple of years. Certainly don't see significant changes to make you regret the decision
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The Fed announced rates are likely going up higher than expected in USA yesterday. Would not be surprised if we follow suit. Maybe another 1-2%on mortgage rates ? Complete guess.
 
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AndyCr15 said:
If rates are going up again, and 5 year is about 1% less than 2 year (from my own quotes) I don't see the logic? If rates were just going down, then sure, go short so as not to be locked higher than you could be, but if they're going to increase still, taking the lower for long term becomes a better option?

Already, I'm glad I snagged under 4% last month as I don't think they're so available now.
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Most are thinking rates are about to peak. Ie next rise is last. How quick they come down? Probably slowly, And not as far.

But obviously it's all unknown. Who would have predicted this 2 years ago?
 
413x said:
Most are thinking rates are about to peak. Ie next rise is last. How quick they come down? Probably slowly, And not as far.

But obviously it's all unknown. Who would have predicted this 2 years ago?
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that's the thing.. no one knows.

it's all click-baity articles and youtube videos.

my view is : worry about it now if you have remorgage coming up etc or just don't worry until it's your turn..
 
EvilRob said:
The Fed announced rates are likely going up higher than expected in USA yesterday. Would not be surprised if we follow suit. Maybe another 1-2%on mortgage rates ? Complete guess.
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Personally I don't see it.
The effects of 4pc haven't rippled through yet. And if we go above 5pc (let's say) I think pain will really start to show. More and more mortgage defaults for one.

Been hearing inflation is on the come down. And we haven't been at 4pc that long.

But we do like to follow the fed. So who knows.
 
BBG said:

Powell Sees Higher Peak for Interest Rates, Says Fed Prepared to Speed Up If Needed​

  • Traders switch bets to half-point hike at March meeting
  • Fed chief says path to lower inflation ‘likely to be bumpy’
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edit: non paywall and evilrob beat me to it. Man, username checks out :D

www.theguardian.com

Markets rocked as Jerome Powell warns Fed could switch back to bigger interest rate rises –as it happened

Federal Reserve chair says US central bank would be prepared to increase the pace of rate hikes if data justified it
www.theguardian.com www.theguardian.com
 
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EvilRob said:
The Fed announced rates are likely going up higher than expected in USA yesterday. Would not be surprised if we follow suit. Maybe another 1-2%on mortgage rates ? Complete guess.
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Don't bother giving facts and talking common sense on this forum.

Fed will increase to circa 6%. BOE will have to follow. For those saying this won't happen as it will cause defaults, well this is exactly what we've seen before many decades ago. But in any case, as always, only a certain minority will suffer. Those are the types who over extend themselves, are unable to control themselves, particularly money, and blame anybody but themselves when things go down.
 
RedWarrier said:
, and blame anybody but themselves when things go down.
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Yes, and then complain that it is too hard to get a mortgage or finance.

People often see mortgage lenders as the big bad guys, but to some extent you can't win, make too easy? People get greedy and borrow more than they can afford, blame the bank's when it goes wrong, make it hard they also complain.

Mortgage regulation in this country at present is actually really good, and has been for a number of years so hopefully the effect of interest rate rises will be to some extent buffered by stress testing.

Don't get me wrong, there will be those who are unfortunate, loose jobs, have family emergencies etc, but also plenty that were just too greedy.
 
BUDFORCE said:
Yes, and then complain that it is too hard to get a mortgage or finance.

People often see mortgage lenders as the big bad guys, but to some extent you can't win, make too easy? People get greedy and borrow more than they can afford, blame the bank's when it goes wrong, make it hard they also complain.

Mortgage regulation in this country at present is actually really good, and has been for a number of years so hopefully the effect of interest rate rises will be to some extent buffered by stress testing.

Don't get me wrong, there will be those who are unfortunate, loose jobs, have family emergencies etc, but also plenty that were just too greedy.
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I think if anything its too generous. I maxed out on my first (a gamble but I knew it was) but should I have been allowed to? Probably not.

More keep loosening the criteria the more it fuels house prices and passes an ever harder buck to the next rung.
 
I agree about that mortgage companies shouldn't be letting people stretch themselves too much. Especially with the possible drop of house prices on the horizon.
Mortgage companies lending criteria isn't the root problem though, it's the house prices in the UK unrelenting rise past 5/10 years
 
413x said:
The effects of 4pc haven't rippled through yet. And if we go above 5pc (let's say) I think pain will really start to show. More and more mortgage defaults for one.
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Arguably the Fed haven't waited to see if the effects of rises over there rippled through before yesterday's warning. There's a danger they will end up going too far the other way but I think central banks have shown before that they are wiling to accept any consequences to bring inflation under control.

I think the most likely scenario is as @RedWarrier outlined.
 
200sols said:
Not just that, financial conditions are not as tight as these interest rates would have you believe, people are still spending so there is room for manoeuvre.

Surprise House Price Rise Proof that UK Financial Conditions are Easing, Defying the Bank of England

www.poundsterlinglive.com www.poundsterlinglive.com
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I don't believe the effects of the rate rises will have filtered through to reported figures yet.

Because of how sharp and how steep the rises are we still have some way to go.

Tracker mortgages will really only be increasing last couple of months.
More and more people are coming off cheap mortgage fixes and entering higher new ones.
We've been subsidised for energy for 6 months with "free" money.
Rents have been rising a while but there is an increasing number of landlords selling. Pushing up other rents and reducing rent ability.

Figures are slow to report too and lag reality.

I think it would be dangerous to jump to, say 5pc, without at least waiting to see what 4-4.5pc yields in next 3-6 months.


But, if the fed does go crazy, I'm sure BoE will follow to prop up the pound.

We are also in the process weird period where we've had a lot of. 3.99pc. Deals appear which will be very appealing.

Those are now disappearing. I do not. Except much change in house prices this year. Probably a slow decline.



All my uneducated guess work there! :D
 
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MikeTheNative said:
Mortgage companies lending criteria isn't the root problem though, it's the house prices in the UK unrelenting rise past 5/10 years
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Why are house prices continuing to rise? Surely, its because people are able to afford to pay higher prices which is either due to significant wage inflation or the lending criteria. AFAIK wage inflation over the last decade is averaging 3.1%. House price growth per quarter has averaged 5.1% with the last two years being closer to 10% per quarter. therefore I can't see why anyone would think that the combination of government policy and lending criteria is not the root cause of the inflation.
The government gave an unnecessary waiver in SDLT to stimulate demand as we exited the pandemic, exacerbated the rate rises to curb inflation with its fiscal policy while Ms Truss was in power. All this against a backdrop of unsustainable low interest rates (in the context of most peoples mortgage terms) and a slow paced renewal of housing stock.

Mortgage companies. banks, whoever have most definitely played a part in this by applying lending criteria that has fuelled the boom. 27 years ago when I took out the mortgage on this house guidance was 2.5/3 times combined base salary. Now thats 6/7x, when wages have barely kept pace with inflation. It's only because we have low unemployment that this isn't biting down harder but give it time.
 
Calpol said:
House price growth per quarter has averaged 5.1% with the last two years being closer to 10% per quarter. therefore I can't see why anyone would think that the combination of government policy and lending criteria is not the root cause of the inflation.
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House prices have not risen 10% per quarter over the last 2 years. That would be a 114% rise in the last 2 years.
 
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EvilRob said:
House prices have not risen 10% per quarter over the last 2 years. That would be a 114% rise in the last 2 years.
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I think he means the rolling quarter rise?



But I do think banks lending so much has fueled the problem. I guess what I don't know is if the lending had been restricted would prices be lower? Or would it not really make a difference?

I only got on the property ladder where I did by maxing out the loan. But let's say it was 3x earnings for the last 10 years... Would prices be materially different?
 
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