Soldato
My mortgage deal runs out in July, should I be looking now or wait until the rates potentially drop?
Mortgage Rate Rises
- Thread starter glenimp617
- Start date
That will dependent on whether you want to hold off for as long as possible or not but keep an eye on deals
Soldato
- Joined
- 13 Sep 2005
- Posts
- 4,343
Just get one agreed in principle now and get a better one if one becomes available.
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Same here. I was laughed at by others at the time believe it or not. To me, fixing any outgoing for as long as possible is a good thing.
Hoping in 5 years time the LTV will be such that the hit isnt as bad.
Associate
Really regret only going for 3 years instead of 5 the last time I renewed, not looking forward to later this year 
Associate
- Joined
- 28 Jul 2015
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That's great advice, helps focus the mind on the problem. Brings reality forward to help make better decisions now, e.g. career path, pay rises, other changes, etc.
Soldato
- Joined
- 24 Sep 2007
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- 5,178
Interest rates are still at historical lows. My opinion, shared by many others, is that rates are quite unlikely to drop in the short or medium term.
Soldato
I've been over paying for 5 years and although I just locked in at a higher rate for the exact same remaining term, I'm now paying less than I was. So I can say that your tactics worked for me.
2 years into a 5 year fix at 1.64%, I'll then need to take my chances for the 9 payments I'll have left before I become mortgage free.
Or overpay each month up to your ERC limit and have it paid off before the fix ends? However, with only 9 payments left, the interest rate on a low amount should not be too much of a worry
I'm on 6% with less than 12 months left, which equates to one extra monthly payment - coming from 0.84% - 6% was
Soldato
I'm on 6% with less than 12 months left, which equates to one extra monthly payment - coming from 0.84% - 6% was
How did you end up on such a high rate with what must be really low LTV?
Sure if you are servicing a mortgage product from 20yrs ago, it wouldn’t have made much different even if the rates are going to 8%.
But housing market is propped up by new blood. It’s almost like a Ponzi. If no one enters the market new then almost everything collapse. So looking at historical rates is irrelevant.
Back in the days rates are 10% yet the mortgage sum is much much smaller and prevailing inflation was also 10-12% so against that back drop interest rate wasn’t terrible.
Now the average mortgage size is enormous plus real inflation is around 4% and having a base rate sitting at 1.25% you are basically suffering as the result.
Arguing historical data looking at sole rate number is like blind man saying the elephant is a big round pillar.
borrowing rate will move against CURRENT market condition - short and medium term. Not historical data backing 10/20/30yrs ago
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Soldato
You pay tax on that interest but in your case it’s still better than paying off the mortgage. Less so the case with new mortgages.
Exactly. Anyone on a sub 5pc fix could dump their savings in one of many 5pc ish savings accounts
This. With house prices as they are now compared with wages etc, any interest rate rises much higher than what we have now would just plunge much of the population into severe financial issues and likely mean massive amounts of foreclosures.
We are already teetering on the breaking point (which is what the BoE wants - they have been wanting to push it as far as possible to bring down inflation without totally torpedoing the housing market/economy).
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This essentially is what happened in recession, when lots people had to have their houses repossessed
We had less extra expenditure in the way of Internet, phones , streaming subscriptions.
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Soldato
Surely this is only true for mortgages that are close to being paid off?
No...basic maths... I can pay 3% to borrow £200, or make 5% on £200. Best to make the 5% (net 2% gain).
Soldato
Been keeping an eye on Nationwide as they're our lender, 4.79% on 500K was the best they had online a few days ago. That would see us paying approx 2.6K per month (up from 2k we pay now)
I'm 18 months from renewal but if things keep heading in this direction then I think we'll survive without having to sell the house (if our mortgage payment goes over 3K per month we're going to downsize so we can afford to have another baby)
I'm 18 months from renewal but if things keep heading in this direction then I think we'll survive without having to sell the house (if our mortgage payment goes over 3K per month we're going to downsize so we can afford to have another baby)
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