Mortgage Rate Rises

Hagar said:
I understand that but surely knowing that the year after next you are doing this again and the rates may have gone down, stayed roughly the same or gone up. Roll the dice. Against that a longer fix also reduces with cost of living salary increases. Inflation actually helps as the mortgage is fixed against inflation for a longer period. As I said before over twenty five years it makes five eights of **** all difference. Your house is still worth more on resale if you want to move on.
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I agree, I have always long term fixed. Despite being told many times by people I am mad it would be cheaper for a short term etc.
Its just a choice, and most people from my experience take the cheapest possible mortgage and dont for example look at the rest of the data, early termination fees etc they just ignore

I try to educate those who come to me (I'm an accountant) to look wider than simply the monthly payment, and consider risk of rate changes, the fees, etc.
Some listed, some don't.
 
n111ck said:
Who was saying that as logically it doesn't make sense - why would you only fix for 2 years when rates are very low? Particularly if you thought rates could go up to 3%??
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On a long term loan like a mortgage, short fixes when the rates are high, long fixes when the rates are low. There would need to be a very good reason to go for short fixes over the last 15 years.
 
Mercenary Keyboard Warrior said:
Its not because of the Eu.
Its because generally they have better quality food.
The UK has a more aggressive retail food sector as well, lower margins, but with the impact that it supports less jobs.
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I went to the Spanish equivalent of co-op in a small regional town in Central Spain last year.

I was amazed that they had a sizeable fresh fish counter. And it was busy!
 
esmozz said:
Something about this does'nt make sense to me. The effect of increasing interest rates to curb household spending (and thus inflation) would seem to be a less effective strategy in say, the US or France, where 10-30 fixed mortgages are far more common and many more home owners would be uneffected by central bank interest rises.

Yet the opposite seems to be true. Inflation in these countries seems to be under more control than in the U.K. and responding to interest rate rises.

These countries also spend vast sums of money on covid.

The simple fact of the matter is we're in this boat due to the 'B' word.
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Ok for the 10 year ones they will have a low rate but the ones before then could have some horrendous rates locked in. Also do these people not move house for 30 years?
 
413x said:
I don't think anyone else is going to leave the EU after seeing what's happening to the UK.
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Appetite for leaving the EU has fallen significantly since Brexit by all surveys completed.
Work friends in the NL for example who were pro Brexit now say they are glad the likes of Wilders didn't manage to impact them in the same way.
I believe even Le Penn has dropped leaving the EU as a target. Now quoting pushing for reform.

I work for a global, I have work friends in many places on the globe and not one of them doesn't at times ask me what were you thinking as a nation.
But then they are all smart finance professionals, they see the numbers etc, they don't fixate on things like sovereign tea.
 
Mercenary Keyboard Warrior said:
I agree, I have always long term fixed. Despite being told many times by people I am mad it would be cheaper for a short term etc.
Its just a choice, and most people from my experience take the cheapest possible mortgage and dont for example look at the rest of the data, early termination fees etc they just ignore

I try to educate those who come to me (I'm an accountant) to look wider than simply the monthly payment, and consider risk of rate changes, the fees, etc.
Some listed, some don't.
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For us it made a huge difference because we had a joint mortgage + ercs.

If you break up on a 10 year fix you probably have 5pc erc to pay for 5 of those 10 years.
On a 200k mortgage which is 10k.

This is quite a lot.

Most 2 year fixed are 2,1. 5 year, 5,4,3,2,1.
This is a lot more palatable.

But on a solo mortgage. I agree longer is better at historical good rates.
Unfortunately, mortgage advisors are useless at advising this. And you don't have any real world experience on your first mortgage
 
Exactly why I went for 10 years as I wasn’t sure or convinced that this would be a short term thing.

One of the best things I’ve done as my 5 year fix would have ended this month.
 
413x said:
For us it made a huge difference because we had a joint mortgage + ercs.

If you break up on a 10 year fix you probably have 5pc erc to pay for 5 of those 10 years.
On a 200k mortgage which is 10k.

This is quite a lot.

Most 2 year fixed are 2,1. 5 year, 5,4,3,2,1.
This is a lot more palatable.

But on a solo mortgage. I agree longer is better at historical good rates.
Unfortunately, mortgage advisors are useless at advising this. And you don't have any real world experience on your first mortgage
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Longer term fixes tend to have longer ERCs. My point was they are not all equal, they often follow a reducing penalty, but not always.
Its that sort of detail that can make paying an extra £1 a month for lender B who has significantly better flexibility, rather than A who works out £1 a month cheaper, but has far worse terms in the mortgage offer!
 
413x said:
What you probably need to (but won't be able to, because it's guess work) is think of how much equity you'd be paying back owning.

Even though rent is 900 and mortgage is 1050, some of that, maybe 500? Is paying down the mortgage. (ours equity pay off is 570 per month on a 900 payment)


Problem is, so you think host prices are going to fall by more than this over that initial term? And yes. It's quite possible. I don't envy your decision!
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Absolutely right. It's a horrible situation at the moment. Even if we don't buy right now, we'll be squirreling more money away ready for when the time is right anyway so we're not losing out by carrying on renting right now. I think it doesn't make sense to buy myself. I know what'll happen if we do buy though - it'll be at the top end of the rates and they'll suddenly come crashing down, because that's the sort of thing that happens to me :)
 
potatolord said:
I went to the Spanish equivalent of co-op in a small regional town in Central Spain last year.

I was amazed that they had a sizeable fresh fish counter. And it was busy!
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The UK food market is unique, the supermarkets have destroyed the industry in the UK over the last 30 years, or at least, dominated it.

This is not the case in Southern Europe, where supermarkets are very much second choice for many people, and they actually still have that choice.

I do not hold a lot of hope for the UK generally unfortunately. returned for the summer recently from Greece, and it is in a terrible longterm economic decline I think. Not something I take pleasure in, but fact when I see it after a couple of years away, and can compare it with a previous 'economic pig' of Europe (which is now growing at 6% per annum).
 
el_dazza said:
Absolutely right. It's a horrible situation at the moment. Even if we don't buy right now, we'll be squirreling more money away ready for when the time is right anyway so we're not losing out by carrying on renting right now. I think it doesn't make sense to buy myself. I know what'll happen if we do buy though - it'll be at the top end of the rates and they'll suddenly come crashing down, because that's the sort of thing that happens to me :)
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If its any help (probably isn't) I was sure prices were going to drop during covid when we bought our first house. It was a hefty mortgage for us (220k) on (at the time) 55-60k combined earnings.
Thought we were going to go negative, that covid was going to ruin the economy.

To be fair, if the government hadn't paid furlough this may have played out. Never did I think government (a tory government) would hand out so much cash.

We all know what happened and that had we not of bought.. I'd be fuming with myself.



But now is different. It seems we aren't getting any help as a country. And house prices are already inflated. If it was me.. What would I do? Genuinely I don't know. What I do think is it all depends on jobs.
If job market holds up relatively well I don't think drops will be too bad. Certainly not enough to make FTBers regret buying.

But if the bank goes too far, all bets are off and jobs could start crumbling.


Knowing that not buying was the wrong decision and that buying when you can seems to mostly be the right call is some kind of comfort. But I'd certainly be looking at heavy discounts to asking prices and not be in a rush to buy, like what happened in covid.


Really, only thing we know is government won't prop it up this time.
 
413x said:
But now is different. It seems we aren't getting any help as a country. And house prices are already inflated. If it was me.. What would I do? Genuinely I don't know. What I do think is it all depends on jobs.
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and productivity in those jobs - to wit I think working from home(apple&google&others u turned) and four day working week (Cambs councils now talking about it) also need to be quelled.
 
413x said:
For us it made a huge difference because we had a joint mortgage + ercs.

If you break up on a 10 year fix you probably have 5pc erc to pay for 5 of those 10 years.
On a 200k mortgage which is 10k.

This is quite a lot.

Most 2 year fixed are 2,1. 5 year, 5,4,3,2,1.
This is a lot more palatable.

But on a solo mortgage. I agree longer is better at historical good rates.
Unfortunately, mortgage advisors are useless at advising this. And you don't have any real world experience on your first mortgage
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It really depends, if you want to forgo a few things and save like mad ,you can pay it off faster. Let say you take out a 2 year fix on 330k. Overpayments during the fix period of 10%,( before it hits svr) pay down £139 extra a month after 2 year you pay off around 3k for the 2 years off your principle. When svr kicks in down pay 60k during the remortgage, you just saved paying 34k interest minus admin fee of £999. You mort is now 267k.

If you rent it out you are now offsetting large part your interest, one of the main reasons why banks don't like you renting your home, you will be able to pay it of faster. We kept our mouth shut, and paid the council tax on the property when renting it out, moved into parents home, told the bank they paid for everything.
Money from rent£ 6000 what was left over from renting after living expenses to parents, they paid it back as a gift that was an extra £6000 a year between us ( not to link the account rent with our owe wage account for the mortgage bank to not be aware). There are more bits to this but you can really push it down.
 
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Mrwong said:
It really depends, if you want to forgo a few things and save like mad ,you can pay it off faster. Let say you take out a 2 year fix on 330k. Overpayments during the fix period of 10%, hits svr pay down £139 extra a month after 2 year you pay off around 3k for the 2 years off your principle. When svr kicks in down pay 60k during the remortgage, you just saved paying 34k interest minus admin fee of £999. You mort is now 267k.

If you rent it out you are now offsetting large part your interest, one of the main reasons why banks don't like you renting your home, you will be able to pay it of faster. We kept our mouth shut, and paid the council tax on the property when renting it out, moved into parents home, told the bank they paid for everything.
Money from rent 6000K what was left over from renting after living expenses to parents, they paid it back as a gift that was an extra 6000k a year between us ( not to link the account with our owe account). There are more bits to this but you can really push it down.
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If we decide to stay in the UK (I hope We don't) I think I could get ours down to 150 from 200 in 5 years.
5 years would naturally leave it at 550*50(50 months left) so only about 180k naturally. But if I really needed to I could for sure get that down to 150k. I but obviously not if we emigrate.

Could probably get it doen further. At 100k for example id be much less concerned about interest rates
 
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Mrwong said:
If you rent it out you are now offsetting large part your interest, one of the main reasons why banks don't like you renting your home, you will be able to pay it of faster. We kept our mouth shut, and paid the council tax on the property when renting it out, moved into parents home, told the bank they paid for everything.
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Naughty naughty. Did you declare the income or just pocket that too?

Mrwong said:
Money from rent 6000K what was left over from renting after living expenses to parents, they paid it back as a gift that was an extra 6000k a year between us ( not to link rent the account with our owe account for the mortgage bank to not be aware). There are more bits to this but you can really push it down.
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£6 million pound?? What were you renting, Buckingham Palace? :eek:
 
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