What's the monthly at the moment?
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Boe reckon the UK can handle rates of 5%, shows you where we are headed. Inflation headed for 15+% rates of 2% won't cut it.
Indeed. We are only one year into a five year fix at 1.24% and are spending all of our money on major renovations.. yet having spent 3mins on the overpayment calculator with some projected interest rates - we have swiftly opted to divert £100 extra per month to overpay even whilst we are still spending/saving to finish the renovations. Once they are done we will be overpaying a lot more asap!That's only 2 years away! What will rates be then?
I'd be looking to overpay as much as i can in those 2 years. This calculator is an eyeopener:
Mortgage Overpayment Calculator: Pay off your debt early?...
Mortgage Overpayment Calculator shows how much you can save by paying off your mortgage early - if your mortgage allows overpayments.www.moneysavingexpert.com
This same story is repeating elsewhere in the west.
Over inflated housing markets that outstrip income can't handle high interest rates, so governments are doing "saving face" rises in the interest rates when the reality is it's doing almost nothing to get inflation under control - essentially we're just going to have to ride the inflation train out until it loses steam - if they wanted inflation under control right now the interest rates would need to be close to 10% but then half of home owners would lose their house
And what I just described is not unique to the UK, it's the same story in the US, Canada, Australia and New Zealand.
So all these countries have to just ride it out - what I mean by this, the government stops printing more money and doesn't raise interest rates to where they should be and then the market handles the rest - with money hard to come by, as prices of goods continue to increase, demand from consumers drops off and inflation then falls down to earth again - but this process will take time, it may be 2 years before inflation comes down to earth through natural market forces of supply and demand
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Nice. very manageable and similar to my strategy
Soldato
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Check if there is an overpayment limit, as going beyond a limit may trigger an Early Repayment Charge.
Only issue is the rates won't make one ounce of difference as its fuel and energy driving costs
No, but the sooner you a) contact a broker and get some quotes and/or b) check your renewal options with your existing lender, the better.FFS! i nearly renewed last week, mine is due in October... not gonna get anywhere near 1.28 i am on now
My existing lender has not upped their rates yet, but it's only a matter of time.
wouldn't it have been better to build more nulear power stations than HS2?
i'm not sure how much a power station costs to build though, but iirc HS2 is up to around £92 billion
:edit: The cost of building the UK’s first new nuclear power plant in a generation has risen by up to £2.9bn and the total bill could be more than £22bn
so we could have had 4 new plants
What it would have been better to do and I've said a few times it's give every home 4k for energy efficiency.
Because that's the same cost as hs2!
You had the option to renew and didn't??FFS! i nearly renewed last week, mine is due in October... not gonna get anywhere near 1.28 i am on now
I fixed for 5yr at 1.93%
Had to pay a 2k exit fee. But will be saving 200 a month by time new rates come in
That's only 10 months payback!
How many months were you ahead of your fixed rate finishing if your ERC was only 2k? 1.93% is a very good rate now (I know you didn't only just sign now)
I applied for the 1.93 in April 2022 with my fix ending in March 2023
Held the offer until July when this mortgage started
1pc fee on a 210k mortgage (2100 fee to be exact)
Oh a nice bonus. I went direct to Lloyds and got 750 cashback! Just used money supermarket to find the lender
I spoke to a mortgage advisor in March who suggested waiting until October when could lock in with no erc. But I got spooked and got one. Glad I didn't listen
Soldato
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Its mostly true of government debt, housing debt seems better secured to me with good demand. Problem with the UK is we went broke in the 70's so we have a quarter of national debt linked to inflation. The largest amount in the world, apparently.
The USA have leveraged to short term debt as well as backing the vast majority of private housing debt via treasury debt. You can fix for 25yr terms there. Thats the biggest sea-saw, but also they are the global reserve currency so who knows what happens. The YEN is first to topple seems like for multiple reasons, they had a 18 year head start on QE etc.
Soldato
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Is the swap market a decent indicator of where banks see the rates going long term?
It was a supply side shortage leading to high fuel and energy costs in the late 70s early 80s in the US (the oil crisis) that caused the rampant inflation too. Initial attempts to control it by fiscal stimulus (like people are advocating now, eg: more money to cope with higher prices) only made the problem worse and it wasn't until they changed tack and implemented monetary policy, by raising interest rates to raise the cost of money and slow aggregate demand, that they got it under control. The Fed rate went to 21% at one point!
These things aren't designed to work immediately, they are looking 1-2yrs down the road and it's not concerned about your individual financial situation but the national macro picture.The same happened here, with Thatcher following the US monetary policy of high interest rates to suppress demand and control inflation. The problem is, the necessary sacrifice to that was unemployment, but it was an sacrifice those in charge were willing to bear and we ended up with a lost generation of people on the dole, but cured and controlled inflation.
Now, situations are never identical and there's other factors at play with what is currently going on and in economics no-one knows exactly what will work or happen, but there is historical guidance on what previously worked and what didn't, even though it might seem counterintuitive to the man on the street.
Jokingly I see it like the "what do you want in a women" Attractiveness / Intelligence / Emotionally Stable - pick two, just substitute that with Economy and Interest Rates / Inflation / Unemployment. And like with women, it doesn't matter how attractive (low unemployment) or intelligent (low interest rates) they are, if they are crazy (high inflation) you are in a world of pain
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