Mortgage Rate Rises

Blackjack Davy · 1 May 2024 at 09:32

IvanDobskey said:
Just made my alloted 10% overpayment for the year, down to £17k now.

Edging ever closer to being mortgage free

Paid off the mortgage early made the last payment two weeks ago paperwork just arrived in the post

IvanDobskey · 1 May 2024 at 09:45

Blackjack Davy said:
Paid off the mortgage early made the last payment two weeks ago paperwork just arrived in the post

Congrats

Looking forward to being able to do this soon

fez · 1 May 2024 at 09:48

Blackjack Davy said:
Paid off the mortgage early made the last payment two weeks ago paperwork just arrived in the post

Booooo! Vote thread ban. If you don't have a horrible mortgage with a high interest rate I'm not sure you are welcome here!

On the other hand. Congratulations! Enjoy

robj20 · 1 May 2024 at 09:56

My 1.89% fix is up July 2025. Can start looking for a new deal in February. Not looking forward to that.

Jono8 · 1 May 2024 at 10:15

413x said:
I'm not smart enough to understand what the impact of these 5pc rates would be long term.

More and more toxic loans I guess.
Business and personal.

Obviously house prices will stagnate at best.
But many businesses require these low rates to survive. I guess you could argue these as bad businesses.

So much is loaned now all over the place.
Many people's cars, mortgages, credit cards and the cost of everything else.

I suppose businesses too indebted will fail, others will stagnate and people will cut spending even more.

Still plenty of people on very cheap (relatively) mortgages.

It will all collapse again. Line goes down. The banks will get bailed out. Then line will go up again until it all collapses again. Repeat.

Boom and bust. Rich people win. Poor people lose.

That's how the system has been designed to work.

So glad I'm mortgage free now.

Richie · 1 May 2024 at 10:41

Reading yesterday and again today that the rate are going up a bit so I thought I would look at my current lender just as a comparison if I was to renew my mortgage now compared to when I did renew in late 2022 (due to renew in 2027)

So, when I renewed in 2022, my mortgage increased by £130. If I renewed again now, it would increase by another £85

I realise that, by the time 2027 comes around and hopefully get some pay increases, the increase may be "inflated away" however I really do hope rates drop to the mid 3% range by 2027 and it means my payments will remain circa the same as they are now

slinxy · 1 May 2024 at 10:56

for those who has paid for their houses in total... and living the mortage free life, could you do some maths for me?

Work out the total that you have paid for your house...
then work of the cost of the house at the time you purchased it, then adjust it for inflation using:

Inflation calculator

Use our inflation calculator to check how prices in the UK have changed over time, from 1209 to now.

www.bankofengland.co.uk

so if you paid 120k for your house in 2002 (20 years ago)... that 120k would be be equivalent of paying £214,252.54 for the house in today's money.

it's just be interesting to see if the intreast that is changed by mortage lenders is eaten away by inflation..

Pants · 1 May 2024 at 11:00

If I could get a 3.5% mortgage, my monthly payments would be £430 per month less. Crazy.

1% I would be about £830 per month better off!!

EvilRob · 1 May 2024 at 11:05

Pants said:
If I could get a 3.5% mortgage, my monthly payments would be £430 per month less. Crazy.

1% I would be about £830 per month better off!!

Still a lot of people on deals 1-2%. Shock will continue for some time.

RobDogDog · 1 May 2024 at 11:15

1.69% coming to an end at the end of the year. Good while it lasted!

Pants · 1 May 2024 at 11:18

It's not easy to see a lot of positives in buying your first house at the peak of interest, but at least I know I can (just about) afford it.

If you are used to 1.x and still have high mortgage, it's going to hurt.

What I need is a time machine...

Richie · 1 May 2024 at 11:33

Pants said:
If I could get a 3.5% mortgage, my monthly payments would be £430 per month less. Crazy.

1% I would be about £830 per month better off!!

Yes but I'd imagine your household income is multiple percentages more than mine to afford that size of house/mortgage so its all relative

EDIT - Mortgage is 30% of Nett Monthly here (probably easier way to compare)

tamzzy · 1 May 2024 at 11:37

Richie said:
EDIT - Mortgage is 33% of Nett Monthly here (probably easier way to compare)

wow that's a hefty %

Richie · 1 May 2024 at 11:51

tamzzy said:
wow that's a hefty %

Its within the "Rule of Thumb" (bear in mind I am talking NETT Pay, not Gross):

A good rule of thumb is that no more than 35 per cent of post-tax income should go on mortgage payments. However, on average, homeowners with mortgages paid approximately 17.8% of their income on mortgage in 2023, according to research by Statista.

SOURCE

robj20 · 1 May 2024 at 11:52

Think I'm going to have to overpay for the next 12 months to try and get those monthly payments down by next August.

Richie · 1 May 2024 at 11:56

robj20 said:
Think I'm going to have to overpay for the next 12 months to try and get those monthly payments down by next August.

Yeah I plan to do the same from the start of next year. All being well, the money that's being put into monthly savings will reach a level to cover about 8 months of outgoings in case of job loss and then I can overpay the mortgage by an additional 30%/month

fez · 1 May 2024 at 12:05

Richie said:
Its within the "Rule of Thumb" (bear in mind I am talking NETT Pay, not Gross):

SOURCE

That seems very low. I guess "average" encompasses a lot of people who have mortgages they have had for decades and nearly paid off. I would wager the average person who isn't coming towards paying off their home is paying a much larger chunk than that. Even the people who are still on 1.x% rates.

EvilRob · 1 May 2024 at 12:06

Richie said:
Yes but I'd imagine your household income is multiple percentages more than mine to afford that size of house/mortgage so its all relative

EDIT - Mortgage is 30% of Nett Monthly here (probably easier way to compare)

I've been about that high before. Didn't feel comfortable, but needs must. Currently at about 13%. If we are going to move, we're getting close to the time. Would like to but focussing on becoming mortgage free instead is a very tempting option.

EvilRob · 1 May 2024 at 12:08

fez said:
That seems very low. I guess "average" encompasses a lot of people who have mortgages they have had for decades and nearly paid off. I would wager the average person who isn't coming towards paying off their home is paying a much larger chunk than that. Even the people who are still on 1.x% rates.

It's usual to be a much larger proportion when you first buy and reduce significantly over time as your wages increase. Rate rises are setting that back for many, of course.

Jono8 · 1 May 2024 at 12:18

slinxy said:
for those who has paid for their houses in total... and living the mortage free life, could you do some maths for me?

Work out the total that you have paid for your house...
then work of the cost of the house at the time you purchased it, then adjust it for inflation using:

Inflation calculator

Use our inflation calculator to check how prices in the UK have changed over time, from 1209 to now.

www.bankofengland.co.uk

so if you paid 120k for your house in 2002 (20 years ago)... that 120k would be be equivalent of paying £214,252.54 for the house in today's money.

it's just be interesting to see if the intreast that is changed by mortage lenders is eaten away by inflation..

I don't understand what you are getting at?