Mortgage Rate Rises
- Thread starter glenimp617
- Start date
We need some Zimbabwe type deal where we all agree to chop off X amount or something. That'd work I reckon.
Maybe the difference is that since 2008, the housing market has climbed way way higher, so it has further to crash this time?
You're one of the least affected by the "cost of living". Your energy costs are fixed at well below the Energy Price Guarantee for another two years and your mortgage is fixed for another four years at less than 2%.
The other consideration with all this is how people who aren't home owners will cope. My partner owns a second property she rents out which is on a tracker mortgage. 1% above base rate or something I believe. If rates go up to 5% she would be losing a lot of money every month unless she whacked up the rent to a frankly obscene amount.
People will have saved a few K on their energy only to lose 2-3 times that amount on everything else.
People will have saved a few K on their energy only to lose 2-3 times that amount on everything else.
Way things are in 5 years we could still have very high rates.
I mean 5 percent could stick around for a long while.
Its impossible to forecast how the economy is now.
If my debt was 150 or 100k I wouldn't be concerned. But at over 200k small rate changes create big life changes.
You're talking 100ppm per percent.
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In % terms it certainly hasn't climbed higher than the years prior to the 2008 crash. House prices more than tripled from about 1997 to 2007/8.
That's what I was thinking, we'll be baked into 5% rates for a decade.
Our 5 year fixed at 1.49% ends next May. Our ERC is under £1k so am looking to pay that now and lock in to another 5 year fixed at around 3.7%.
All of course gambling on what rates will be when we can lock in a new deal with no ERC toward the end of the year.
All of course gambling on what rates will be when we can lock in a new deal with no ERC toward the end of the year.
Can't help but feel this government will try and make some sort of deal with the banks to keep interest rates lower in the short term but drag out the pain for a lot longer. That seems to be their MO. The government equivalent of a pay day loan user.
Seems more like a hope than the reality. The amount of household debt is far less than then, the mortgage to salary ratio much much better than then and until recently all mortgages had to pass the 3% rise in interest rates test (base rate increasing over 3.5%) even then that doesn’t mean someone automatically can’t afford their mortgage. Mortgages are not thrown around as easily as back then.
Soldato
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Have had the same conversation with my kids whilst growing up . Both are now thriving, my eldest at 25 is a career Royal Marine and my daughter at 21 has just passed her Cemap exams and is now a qualified mortgage broker of all things.
I just set out a hard saving guide line for them so they can own their own property and mortgage with a healthy LTV whilst most of there peers are out driving new cars on ludicrous PCP deals . Of course I’ll also be helping to a degree.
My major concern for both of them is retirement planning , with the vast majority of monthly income now spent on housing for millennials where are pensions coming from?
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Soldato
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I can't see a 40% price crash on houses, I really can't. But definitely they cannot keep increasing like they have been. I fully expect a 20% drop though.
'Very high rates'. I'm guessing you're a bit younger than me.....so maybe you don't know any different. I mean, I was too young to care too much last times rates were that at that level, but I was aware of it.
5%? Normal rates. Rates that keep a lid on house price inflation, and reward savers.
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The market seizing up if what I expect will happen too. It happened last time.
There was a Twitter thread posted earlier in this thread explaining how you cannot just compare headline rates. 15% that all our parents speak of is similar to what 5-6% would be now based on mortgage size to earnings etc.