Mortgage Rate Rises

throwaway4372 said:
Hard to say if it's a bad idea, I'd imagine you have reasons for wanting to move. But I see the risks like this:
A) Interest rates continue to rise, at least to 5%, potentially to 10% or more. So the interest on your mortgage is going to be a lot.
B) The market crashes and you're in negative equity.
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Or he waits and house prices continue upwards regardless. Its all a bit of a gamble.
 
Minstadave said:
Might see the opposite, house prices could crash as mortgages become unaffordable.
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Housing has been unaffordable for FTBs for a long time now, so nothing has changed there unfortunately. Houses are still "affordable" for those already on the ladder.. landlords, investors etc. basically anyone with a bit of capital. Those are the Tory voters and since they've got capital they're more than happy to see prices continue to rise, which don't they generally do in a high inflation/high interest rate period anyway? :confused:
 
throwaway4372 said:
Hard to say if it's a bad idea, I'd imagine you have reasons for wanting to move. But I see the risks like this:
A) Interest rates continue to rise, at least to 5%, potentially to 10% or more. So the interest on your mortgage is going to be a lot.
B) The market crashes and you're in negative equity.
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Our house has doubled in 12 years I think it will be very difficult for ours to go into negative equity.
 
throwaway4372 said:
Hard to say if it's a bad idea, I'd imagine you have reasons for wanting to move. But I see the risks like this:
A) Interest rates continue to rise, at least to 5%, potentially to 10% or more. So the interest on your mortgage is going to be a lot.
B) The market crashes and you're in negative equity.
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So the main risk is affordability based on potential interest rate increases. Negative equity shouldn't be a problem if we aren't planning on moving again? Or is there implications when mortgage fixed terms cone to an end?
 
Lokai said:
To a simpleton, what is coming? Myself and wife planning on moving house in around 11-12 months, is this now a bad idea? Current modest property (value around 160k with around 30k left on a tracker mortgage) and looking at buying around 350-400k.
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The others have explained it, yeah interest rate rises. At least double what they are now, maybe more which puts mortgage rates in the 6%+ region.

Negative equity means you are paying for an asset that isn't worth the money, but really I wouldnt worry about that. Even if prices fall I'm sure they will rise again, we simply have more demand than supply.
 
Lokai said:
So the main risk is affordability based on potential interest rate increases. Negative equity shouldn't be a problem if we aren't planning on moving again? Or is there implications when mortgage fixed terms cone to an end?
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yeah if you're not going to move that's an acceptable risk I guess, you wouldn't want to move anyway because you'd realise the loss.
afaik if your deal ends and you're in negative equity they wont give you a new deal so you move onto the standard variable rate.
 
Im on a fixed rate 5 year with virgin money 2.5% which was a first time buyer mortgage at the time. Anyone have any clue what I would be paying more ?

My mortgage fixed rate term ends either the 31st may or 1st June next year

Been speaking with my mortgage advisor a few months back about this and also earlier in the year about ending early and paying the charge, £5k or something and wait it out.

Is there any indication in £ I could end up paying more next may/June ? Is it 3 or 6 months you need to start prepping for remortgage with the fix term ends ?
 
All these fixed rate deals look very attractive, they just don't make sense from a business point of view.
 
DJMK4 said:
Im on a fixed rate 5 year with virgin money 2.5% which was a first time buyer mortgage at the time. Anyone have any clue what I would be paying more ?

My mortgage fixed rate term ends either the 31st may or 1st June next year

Been speaking with my mortgage advisor a few months back about this and also earlier in the year about ending early and paying the charge, £5k or something and wait it out.

Is there any indication in £ I could end up paying more next may/June ? Is it 3 or 6 months you need to start prepping for remortgage with the fix term ends ?
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I believe if you're changing lender you can apply up to 6 months ahead of time.

Speak to broker about it, they can get an application going, add the product fees to the mortgage, then you cancel it later if things don't look so good nearer the time.

I recommend checking out Nationwide, they're usually competitive and haven't had any issues with them. They have a calc you can use online to get a feel for figures as of today: https://tools.mortgages.nationwide.co.uk/product-rates/find-rates

It's worth noting that it's expected for interest rates to climb another 1% or so this year, and possibly some more early next year, so I would be looking at getting your new application in as near to the 6 month mark as possible.
 
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I can remember but that kind ago 2001 ish rates went from 5 to 8.5 quite quickly over a few months.

Or rather mortgage rate not now rate
 
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Lokai said:
So the main risk is affordability based on potential interest rate increases. Negative equity shouldn't be a problem if we aren't planning on moving again? Or is there implications when mortgage fixed terms cone to an end?
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We're in a similar position to you, albeit potentially moving a bit sooner, with a slightly lower mortgage. We've also got a couple of years left on a low rate fix, so we'd be looking to port that to lessen the impact of the high interest rate rises.

We're not concerned about negative equity as we're fortunate enough to have a decent chunk of equity. So a house price collapse wouldn't be a problem for us (personally), although it would be annoying if it happened shortly after moving as we could've saved a few £££ on fees and stamp duty!

As you say, the main concern is affordability. In our situation the high interest rates arent likely to be a problem. Sure we'd have to cut back if they go crazy, but we'd survive. The problem would be if I were to lose my job as a result of the crazy economy. I bring home ~80% of our joint income, so me losing my job is by far my biggest worry.
 
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