Mortgage Rate Rises

stuie said:
Nationwide are still radio silent, I ca drop 1% if I move elsewhere they have till the 24th to keep my business then I'll be going elsewhere
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Just go elsewhere IMO.

I am stuck with them till at least September, but plan to go Tracker and extend the term by a bunch to balance the payments. Then I can go open market.
 
It's great to see rates coming down to 3pc range.
That's a much more comfortable and probably sensible range.

Even if rates drop substantially you're only going to be worse off by 1pc ish. Which is a reasonable price to pay for stability imo.

Being locked into 5-6pc and seeing rates hit sub 3 is bitter. But locking in at 3 and seeing rates hit 2 isn't so bad.
 
I took out a 2y discount tracker in May 2023. A comparable fixed 2 year at the time was 5.6% I believe as a first time buyer.

I started by winning, on 4.9%. I'm currently losing on 5.9%. and I guess I might be winning again by the time the 2 years is up if I'm lucky!
 
I'm currently in a second year of a 5 year deal at 4.01%
Early exit fees for leaving is 4% for the 2nd year, 3% for the 3 year, 2% for the 4 year and 1% for the last year.
The rates needs to drop to 0.1 this year, 1.01% next year, 2.01% for the year after and 3.01% for the last year before I even break even for switching mortage plans.

The only other thing I could do, is exit the plan.. pay a load in bulk off using savings and then take on a mortage borrowing less money.
 
slinxy said:
I'm currently in a second year of a 5 year deal at 4.01%
Early exit fees for leaving is 4% for the 2nd year, 3% for the 3 year, 2% for the 4 year and 1% for the last year.
The rates needs to drop to 0.1 this year, 1.01% next year, 2.01% for the year after and 3.01% for the last year before I even break even for switching mortage plans.

The only other thing I could do, is exit the plan.. pay a load in bulk off using savings and then take on a mortage borrowing less money.
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What would happen if you make an overpayment equivalent to what the 'exit fee' amount is?
 
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slinxy said:
I'm currently in a second year of a 5 year deal at 4.01%
Early exit fees for leaving is 4% for the 2nd year, 3% for the 3 year, 2% for the 4 year and 1% for the last year.
The rates needs to drop to 0.1 this year, 1.01% next year, 2.01% for the year after and 3.01% for the last year before I even break even for switching mortage plans.

The only other thing I could do, is exit the plan.. pay a load in bulk off using savings and then take on a mortage borrowing less money.
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Can't you just overpay the max per year? This will impact the underlying balance and subsequently how much interest it costs you overall.

Exiting means money you could be overpaying with is going to ERC instead, and then you have to overpay on top.

Usual overpayments are 10% of the original balance per year (can vary by product so check yours). My original balance was £200K for example so about £20K per year allowed on overpayments without any ERC.
 
Chihuahua7126 said:
What would happen if you make an overpayment equivalent to what the 'exit fee' amount is?
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I've not asked, but I think they are considered as two different things, overpayments are what you are making to reduce the amount you have borrowed and exit fee is the fine that you pay to the bank for breaking the agreement.

HungryHippos said:
Can't you just overpay the max per year? This will impact the underlying balance and subsequently how much interest it costs you overall.

Exiting means money you could be overpaying with is going to ERC instead, and then you have to overpay on top.

Usual overpayments are 10% of the original balance per year (can vary by product so check yours). My original balance was £200K for example so about £20K per year allowed on overpayments without any ERC.
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I am over paying, I'm only allowed to pay 10% per year on the remaining balance of the mortage at the start of each year. I'm currently paying over 25% more than the amount that I have to pay.
The issue is that my mortage amount is relatively low compared to other people, sub 86k... it wasn't even worth me paying extra for a mortage deal to lower the rate at the time of taking it.

I'm going to try and pay it all off within 7 years... could do it in 4-5.. but you know... life.
 
slinxy said:
I'm only allowed to pay 10% per year on the remaining balance of the mortage at the start of each year.
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Interesting, usually this was based on the original balance of the borrowed sum rather than the balance at the beginning of each year, at least as I understood it.

To be honest though, your mortgage is under £100K left, and I feel at that level the impact of these higher rates isn't as bad, my goal is to get the balance under £100K by the time my current awesome fix expires (late 2026).

It's doable, but won't be much below £100K if I get there.

At £100K, interest rate of 4% means £4K interest per year, ignoring compound interest. If your mortgage was say £300K that would quickly go from £4K interest to £12k, to me that is the issue, the spiralling linear costs where a high balance means higher interest sum owed, I mean £12K is £1k/month repayment as interest alone!

I currently pay £470 pcm and that includes some capital repayment as well as the interest.
 
slinxy said:
The rates needs to drop to 0.1 this year, 1.01% next year, 2.01% for the year after and 3.01% for the last year before I even break even for switching mortage plans.
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Not really. If you lock in at a new rate, you will save the difference between your current rate and new rate every year for what would have been the rest of the current term, not just the year you changed in.
So roughly if it dropped to 2% this year (as an example) you would pay a 4% ERC but save 2% a year for 4 years.
 
ci_newman said:
I certainly don't see any rate cuts happening this month. Although it does say the primary driver was alcohol and tobacco price increases as a result of tax increases...
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Its a bit strange.
If alcohol and tobacco rose due to tax.
And energy is pretty much predictable.

How has this rise in inflation come as a surprise to economists?

It must be more complex than that.. But doesn't seem it.


I do find it amusing the list of things that create the all important figures to base inflation off.

How long will tobacco be on there as its use declines?
 
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413x said:
Its a bit strange.
If alcohol and tobacco rose due to tax.
And energy is pretty much predictable.

How has this rise in inflation come as a surprise to economists?

It must be more complex than that.. But doesn't seem it.


I do find it amusing the list of things that create the all important figures to base inflation off.

How long will tobacco be on there as its use declines?
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Well, it is only a rise from 3.9% to 4%.
 
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