Mortgage Rate Rises

krooton said:
Well, the mortgage lender is essentially your landlord, only with none of the responsibilities of one.
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They are on a full mortgage as well until you have paid enough of it off to cover the value of the property.

I mentioned the idea of interest only mortgages been superior to rent in another thread and its good others do agree with me, whilst the bank is your landlord, there is some very key differences.

In periods of steady interest rates, rent inflation will be far higher, but even times like this as is the case with my own rent going up over 30%, mortgage cost inflation may still be lower.
You basically there for life providing you fulfil the terms of the agreement, renters have to usually renew every 6-12 months. Some also on rolling agreements where they can be removed with 2 months notice.
More freedom to modify the property. Also to install things like solar panels better more efficient cooking hobs, insulation etc.
After enough value is added to the house an interest only owner can still sell and bag cash out of it as my dad did when he moved from our childhood home which was interest only mortgage. That money allowed him to buy a new place outright which he now fully owns.
Finally as mentioned here an interest only mortgage is in most cases going to be considerably cheaper.

LLs responsibilities are not that high as well, the bar they have to adhere to is really low.
 
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Interesting points @chrcoluk, some I missed - like the fact that a landlord can remove you from their property with a few months notice even if you regularly pay your rent. A bank cannot do this if you are keeping up with interest payments.

I've heard of people near or past retirement age on interest only mortgages (because they can't afford the payments on a traditional mortgage) with zero intent of ever paying their mortgage off, their mindset is that they'll die in the house, why kill themselves trying to pay for it. The bank can have it after their gone, why would they care. It's a strange concept to some but I understand it however it's not one I agree with.

I want to retire with my mortgage fully paid off for the security and no stress of burden plus I want to pass something on to my offspring, because the way the world is going they are going to need it.
 
Mysterae_ said:
Interesting points @chrcoluk, some I missed - like the fact that a landlord can remove you from their property with a few months notice even if you regularly pay your rent. A bank cannot do this if you are keeping up with interest payments.

I've heard of people near or past retirement age on interest only mortgages (because they can't afford the payments on a traditional mortgage) with zero intent of ever paying their mortgage off, their mindset is that they'll die in the house, why kill themselves trying to pay for it. The bank can have it after their gone, why would they care. It's a strange concept to some but I understand it however it's not one I agree with.

I want to retire with my mortgage fully paid off for the security and no stress of burden plus I want to pass something on to my offspring, because the way the world is going they are going to need it.
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Its actually an interesting one that. It would probably work for myself. I githe issue is if rates spike.

If you've paid off mortgage that spike is 0.

But as someone who isn't having kids I don't want all my money locked away in a house.

I do think how I'm going to use that cash. Oh, wait. There won't be a state pension. So yeah that's where it will go! :D
 
You are paying for stability with a fixed rate. For me personally knowing what that will be for X number of years is more beneficial to my way of living. So I know by the time I am 60 I will be mortgage free and I can then cram the free cash into my pension or sell everything and retire to a static caravan in skegvegas
 
Haggisman said:
Finally got to the point I can renew without an ERC... extra £80/month on my £72k mortgage :(
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So glad I paid my erc.
I still wouldn't be out of erc range now. And best rate is 3.4 for me (using an old search)

160ppm difference
 
Just coming up to remortgaging now. Looking at 3.5% across the board for 2/3/5/7 year fixes from our current provider. Our LTV most be about 33%. Is that competitive to what others have seen regularly? Temped to just take the 7 year fix.
 
Mysterae_ said:
Interesting points @chrcoluk

I want to retire with my mortgage fully paid off for the security and no stress of burden plus I want to pass something on to my offspring, because the way the world is going they are going to need it.
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That's only going to work provided you or your wife do some "fancy accounting" and your home doesn't need to be sold to pay for retirement fees or medical bills etc.

People with no money or housing assets get their bills paid for by the tax payer but anyone with a house to sell or cash assets will be expected to pay for their own care home fees until a certain level (unless that's changed)

Worse case you need years of assisted care home support and that nest egg you were passing to your children is significantly reduced.
 
Minstadave said:
Just coming up to remortgaging now. Looking at 3.5% across the board for 2/3/5/7 year fixes from our current provider. Our LTV most be about 33%. Is that competitive to what others have seen regularly? Temped to just take the 7 year fix.
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That's what I've been seeing for most mortgages at the moment so it seems right.

I'm kicking myself for not paying the ERC in January and locking in a 2 percent or 2.25 percent moragege for the same period.

I could still do it now but I'm going to gamble on the rates staying the same or going down by next year when we need to renew.

At least we're not having to worry about the mortgage going up AND our energy costs doubling!
 
I genuinely can't see rates coming back down in the short term, if ever.

Historically, mortgage rates (pre 2008 crisis) were always around the 5-7% range depending on term and LTV and I reckon they will end up there again in the next 3-5 years unfortunately.

I have renewed for 5 years at 3.41% which is annoying after coming off 1.57%.

Between that and the energy bills trebling, its a painful period with my spending needing to be reigned in significantly and, given a large proportion of the population's low fixed rates are ending over then next 9-12 months and going onto much higher rates, it's not going to be fun for the economy as everyone pulls in their spending.

They say a recession will be here for all of 2023 and return to growth on 2024 but, just because growth of 0.1% is not technically a recession, doesn't mean it's good for the economy or people's jobs/wages
 
I renewed this week and went from 2.34% to 3.79%, I only opted for 2 years this time. I paid off 10% so that my mortgage payments have only increased slightly.
 
Renewal imminent, and looks like my options are:

3.49% with £1,990 fee (£595/month)
Or
4.14% with no fee (£626/month)

Sense check - difference is £31/month, over 5 years fix that's a total of £1,860, so not worth paying the fee for the lower rate?

Either option stings after coming off a 1.83% rate for the last 5 years :(
 
You'd need to compare the balance at the end to see if it's worth the fee as the interest saved may be more than the fee over the period.

It's not all about monthly payment difference.
 
Haggisman said:
Renewal imminent, and looks like my options are:

3.49% with £1,990 fee (£595/month)
Or
4.14% with no fee (£626/month)

Sense check - difference is £31/month, over 5 years fix that's a total of £1,860, so not worth paying the fee for the lower rate?

Either option stings after coming off a 1.83% rate for the last 5 years :(
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£2K fee is pretty high, if Nationwide will do the same sort of rates consider switching to them. They do £999 product fees on their fixed deals.
 
£540 extra outstanding on the one with the fee at the end of year 5

If I'm working it out correctly, the difference would therefore be:

£1990 (fee) - £1,860 (lower total payments) = £130

£130 + £540 (higher outstanding amount) = £670 more expensive for the fee option
 
I'm a little hungover so hopefully my thinking is correct :o

You're left with £540 more on the fee deal than non-fee deal yet have stumped up an additional £130 in "payment" over the non-fee deal with the higher monthlies (£31 x 60 = £1,860 - £1,990 = £130)

So you'd be £670 worse off in the fee deal albeit monthly payments would be less.
 
I still think we have another 1 to 1.5pc to go on the base rate over the next 12 months before we've peaked.

75bp to be added imminently.
 
I don't see the base rate coming down below 3.5% once it's went up meaning mortgages of 5-7% dependant on term/ltv
 
Richie said:
I don't see the base rate coming down below 3.5% once it's went up meaning mortgages of 5-7% dependant on term/ltv
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I think we're in a weird situation. High inflation usually means higher interest rates based on historic situations. A major financial crisis usually means lower interest rates to kickstart the economy.

I think covid has meant lots of people have excess cash so the interest rates may go up for now but I can definitely see them coming back down again, especially if tons of small businesses go bust and people lose their jobs and we're back in a major recession.

The government taking on a crap top of debt won't want interest rates going up much either and neither will countries with massive debts either. Higher interest rates can cause defaults on payments which will trigger a tsunami of financial issues.

I think there's some major turbulent times coming and it needs someone with some economics degrees to analyse it better than I could do.

I wouldn't say interest rates are never coming down again but my guess is it will be in 2 to 3 years, right after I've fixed at the higher rate!

Edit: The government has no say over the BOE base rate but I'm sure there's something that can be done or manipulated behind the scenes!
 
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