Isn't there a situation where you have no choice because your fixed term has ended and you are in negative equity, so can't take out an alternate mortgage unless you have access to more funds to bring the LTV down?
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Mortgage Rate Rises
- Thread starter glenimp617
- Start date
Yes. I meant to say for him.
I very much doubt he's in negative equity on that salary.
You'd imagine not.
The thing about a high salary is it means you can borrow a lot. So going from £800 to £2000 doesn't necessarily mean SVR (although probably it does). If he was on a very long term mortgage owing £350k+ at a very low rate (say 1%), then the jump to 6% could make a fairly big difference.
It could be that lending criteria has been tightened for MPs, its the sort of thing that's a bit volatile, I mean what happens if he's voted out in the General Election, presumably he gets his severance pay but no longer his £118k salary from that employment. So he might have to go via brokers to find specialist products at higher rates. If I'm lending a geezer hundreds of thousands and his main(?) source of income could disappear within a year (without easy replacement - it's not like a job where if you get made redundant you just join another company and do the same job) I'm going to price that product accordingly.
The thing about a high salary is it means you can borrow a lot. So going from £800 to £2000 doesn't necessarily mean SVR (although probably it does). If he was on a very long term mortgage owing £350k+ at a very low rate (say 1%), then the jump to 6% could make a fairly big difference.
It could be that lending criteria has been tightened for MPs, its the sort of thing that's a bit volatile, I mean what happens if he's voted out in the General Election, presumably he gets his severance pay but no longer his £118k salary from that employment. So he might have to go via brokers to find specialist products at higher rates. If I'm lending a geezer hundreds of thousands and his main(?) source of income could disappear within a year (without easy replacement - it's not like a job where if you get made redundant you just join another company and do the same job) I'm going to price that product accordingly.
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Nationwide finally tweaked their rates; so I have been offered 4.74% 5 year fixed with £999 product fees thrown in (save £222 by paying upfront but I need to protect the capital).
I need to assess my bottle for going tracker; extending the term mega, and then consolidating in August. She said I can't consolidate "within provider", so basically I would definitely have to leave nationwide for this "trick" to work.
Will see how things go, but I think even the 2 year tracker has product fees
I need to assess my bottle for going tracker; extending the term mega, and then consolidating in August. She said I can't consolidate "within provider", so basically I would definitely have to leave nationwide for this "trick" to work.
Will see how things go, but I think even the 2 year tracker has product fees
Rates are definitely starting to come down... I gambled on a 5 year fix last Sept @ 4.02%. At the time, the 2 year fixed/trackers were a much higher rate, so I factored in having to renew every 2 years with £999 product fee's, etc. I hope I don't live to regret fixing for 5 years at 4.02% in a year or two! Mind you, I also considered what wars could break out and what insane proposals the government would make that could send them soaring again.
It's such a crystal ball decision... I wish I'd found a lifetime fixed or similar when the rates were at pre-COVID rates, but we live and learn!
It's such a crystal ball decision... I wish I'd found a lifetime fixed or similar when the rates were at pre-COVID rates, but we live and learn!
I'd be surprised if they dropped much below 4% for a five year fix to be honest. I think the drops in the mortgage rates now are pricing in a expected drop in the BoE rate soon.
I don't expect the BoE rate to drop them massively over the next few years though. It could certainly come back to 4% or slightly under, but i think it will take a while to go much further anytime soon, or they could undo the inflation reduction very quickly.
They are horrible decisions to make, and ultimately, no one has any real clue what mortgage rates will be in 2 or 3 years time.
4% for 5 years doesn't sound too bad to me.
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Thanks, that makes me feel a little bit easier. I was glad I had an 'Agreement in Principle' at 4.02% which they honoured as the sale/purchase took months and the rates had gone up massively since.
Yep, its a horrible decision to make, particularly if the rates nose dive and you work out how much extra cash you would have every month if you hadn't fixed for so long.
As per my last post, one thing I considered when I did my boring dull spreadsheet to compare deals/rates was factoring in a £1k fee every 2 years if I'd chosen to go the 2 year route. I wonder how many people do that...
It is really easy to beat yourself up about decisions like this if they go the opposite way. But ultimately, not even the most clued in financial expert knows what mortgage rates will be in 2 or 3 years time.
I guess you just have to make the most informed decision and hope it turns out ok.
At least with a longer fix, its easier to budget for. Ive always gone for 5 years in the past simply because i like to know exactly what to expect for a while.
Soldato
I don't think the base rate will go massively below 4% in the next few years unless we experience an economic crisis, it would be much better for the bank to stabilise interest rates at a moderate level it has a more controlling effect on house prices and also rewards savers which this country is very short on. I think @Matt-Page will likely be pretty happy with his 4% fix over that time period certainly not enough out of pocket to cry about as even if rates come down to 3.5% unless the mortgage is huge the savings would be pretty modest.
I also don't think 4pc is a terrible rate. Even if it drops to 3..to get that you'd have had to jump on a 5 first anyway. By that I mean to wait for 3s to come around yours need to be fixed at 5 for a 2 years or in tracker at 5 for a year or 2.
So a 4 is no really loss. Maybe a percent or 2 in years 4 & 5.
5pc plus? Yeah that's different. That's locking I think at the top of the market for 5 years? And you could be 3pc above in the 4-5 year part of things go well from now.
So a 4 is no really loss. Maybe a percent or 2 in years 4 & 5.
5pc plus? Yeah that's different. That's locking I think at the top of the market for 5 years? And you could be 3pc above in the 4-5 year part of things go well from now.
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Associate
Just got an offer of 4.18% fixed for 5 years or 4.57% fixed for two years. Thinking of just going for 5 and having some certainty.
Has anyone got any good material (or can give an overview here) as to why the UK resists whole-term fixed-rate mortgages like the US and probably other countries do?
We're locked into our mortgage @ 2.05% until March 2027 so we're OK for now. I'm just wondering whether it's worth seeking out a long-term rate as it ends, or just keep having to remortgage every 2,3,5, or even 10 years in the hope prices are coming down. With things looking like they won't come down for a while, and very unlikely returning to the <1% of years gone by, I think I could be happy with being able to just get 3-4% on the remaining 25 years.
We're locked into our mortgage @ 2.05% until March 2027 so we're OK for now. I'm just wondering whether it's worth seeking out a long-term rate as it ends, or just keep having to remortgage every 2,3,5, or even 10 years in the hope prices are coming down. With things looking like they won't come down for a while, and very unlikely returning to the <1% of years gone by, I think I could be happy with being able to just get 3-4% on the remaining 25 years.
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What you need to factor in is even if rates get cheaper that doesn't in itself mean you are worse off over the entire term, because you will have saved money in the early years even if you lost money in the later years. By that I mean, by the time rates drop to the extent that your 4.02% looks bad value (if they do at all), you'll have paid less interest than had you been on a more expensive product. This might outweigh the extra money you pay towards the end. Also a lot of mortgages have setup fees these days so if you did a short 2 year fix then you might be faced with paying another fee, so two fees instead of one compared to the five year fix.
Even absolute worst case where there was some extreme conditions pushing rates way down, realistically what are we looking at, maybe 2% mortgages at the lowest for people with 60% LTV? And that's unlikely to happen overnight, it would slowly drop down I would expect. So the size the saving can't be THAT huge, compared to the days of fixing at rates up towards 10%.
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Associate
the days of 2-3% mortgages are gone for a long time, my mortgage advisor stated it may even be a long time before sub 3.5% are back.
Caporegime
Meh. Same guys said to get two year fixes before prices shot up. Would not believe anything they say.
Your mortgage advisor doesn't know what will happen to base rates in the future. They can only make a guess while trying to sell you the dream.
Soldato
info about mortages in other countries:
How do mortgages in different countries work?
Experts at Online Mortgage Advisor have rounded up some of the key details about how mortgages work in different countries, compared to the UK.
from my little understanding on how the estate market works in the US, as I have no plans to ever live there. Houses can be brought either with a new mortage or the existing mortage can be transfered to the new owner, so that they have the same terms of the seller. Also in the US they pay propertiy tax which differs from state to state but is a percentage of the value of the house which is meant to be like our council tax.
I think it's just the status quo of how each country do what they do...
Will the UK embrace long fixed-rate home loans?
Lenders have been slow to heed Boris Johnson’s call to action on mortgage terms
www.ft.com
Associate
Just got offer of 4.49% for 2 Yr fix nationwide
2.19% ends end of Feb, sigh
Means an extra 130 odd quid a month which doesn't sound toooo bad but is still 1 and a half grand a year that would been a nice weekend away that's gone!!
2.19% ends end of Feb, sigh
Means an extra 130 odd quid a month which doesn't sound toooo bad but is still 1 and a half grand a year that would been a nice weekend away that's gone!!