IMO it is highly unlikely rates will come back down to the 2% level.
Mortgage Rate Rises
- Thread starter glenimp617
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It will destroy so many livelihoods.
Soldato
Oh really
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Its a deal with our current lender, which would icrease our currently monthly payments , on the base rate , by about £12 a month.
Other option is 3.99 on a 5 year,
Anyone got that crystal ball handy lol
Soldato
Fix at 4.09% for 10 years and possibly overpaying a bit, but secure knowing what your payments are going to be for those 10 years.
vs
Fix for shorter at lower (if those still exist) and risk increased payments when you renew again in 2/5 years.
Which would you regret more?
We've just fixed at 4.14% for 5 years, and tbh I'm starting to wish we'd gone for 10, even at that rate!
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Soldato
For us elders, every time there has been a predicted crash someone will be on local news saying "I've sold to rent, it's going to crash" and it never ends well. It might work in liquid markets (a bit like shorting) but you'd need some incredibly lucky timing to make it worth it.
Yeah, spot on. Can't live in the past and even compare, they are so different!
Soldato
I just remember fixing a mortgage on my previous property just before the interest rates plummeted. Think it was only a two year fix thankfully so it didn't cost me as much as it could have.
Selling to rent is such a big gamble, you'd be better off releasing 30% of the equity on your property and taking it to the casino and putting it on black.
Soldato
There is no shame in fixing at a rate you can afford and not trying to second guess where rates will go. Just make sure you don't max yourself out. A house is more important!
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Soldato
Yes definitely true. I still kicked myself though as I didn't have much money back then.
Soldato
This. Peace of mind is certainly worth a few ££!
Caporegime
People cheering lower house prices are not doing the maths* it would seem.
£500k @ 2% for 25 years = £2,120/month with a total spend of £635,895 (£135,895 in interest)
£500k @ 4% for 25 years = £2,638/month with a total spend of £791,426 (£291,426 in interest)
Lets keep the 4% and knock off 20% of the house price:
£400k @ 4% for 25 years = £2,110/month with a total spend of £633,140 (£233,140 in interest)
This means essentially NO monthly affordability saving, and paying almost £100k extra in interest of the life of the mortgage for a final total spend of pretty much the same.
Lets get crazy, drop prices by 50% and push interest rates up to 10%:
£250k @ 10% for 25 years = £2,272/month with a total spend of £681,465 (£431,465 in interest)
House prices are never going to drop enough to make the higher interest rates monthly affordability any better.
*calculations done using the MSE mortgage comparison tool, so assume the numbers are correct.
£500k @ 2% for 25 years = £2,120/month with a total spend of £635,895 (£135,895 in interest)
£500k @ 4% for 25 years = £2,638/month with a total spend of £791,426 (£291,426 in interest)
Lets keep the 4% and knock off 20% of the house price:
£400k @ 4% for 25 years = £2,110/month with a total spend of £633,140 (£233,140 in interest)
This means essentially NO monthly affordability saving, and paying almost £100k extra in interest of the life of the mortgage for a final total spend of pretty much the same.
Lets get crazy, drop prices by 50% and push interest rates up to 10%:
£250k @ 10% for 25 years = £2,272/month with a total spend of £681,465 (£431,465 in interest)
House prices are never going to drop enough to make the higher interest rates monthly affordability any better.
*calculations done using the MSE mortgage comparison tool, so assume the numbers are correct.
Soldato
High interest rates only benefits the already wealthy.
I recen
We did this 5 yr fix in 2009 @ 6.89% makes me reluctant to take out another 5 yr this time round
Your assuming interest won't lower in the future.
So higher outgoings for 5-10 years, but then back to 'normal' interest rates on the lower value will mean a saving over 25 years.
Soldato
I don’t think people that hope for house prices falls think that far ahead. Prices fall for a reason and that means those that couldn’t buy a house before certainly won’t be able to after. You will more likely see more wealthy individuals swoop in and take up anything cheaper as they aren’t likely to be exposed to interest rates or need a job to fund their purchase.
Nice illustration.
I agree largely, the fixation on the initial cost of purchase is a perverse one, and the wrong one. The only likely benefit of a lower initial cost of purchase tends to be the gatekeeper for first time buyers who need x% deposit to get a mortgage.
However, it must be said your argument is predicated on the interest rate being the interest rate for the entire duration of the mortgage. It also doesnt take into account inflation, which is the spectre in all of this. £2638 now vs £2638 after 6 years of 10% inflation (smoothed out) are very different numbers.
Probably older than you think unfortunately. Late on the housing ladder. Much to my cost.
37 now.
I've only had a house 2 years. Due to poor decision making and generally being indecisive about it.
So I've never seen high rates.
5 pc is high for mortgages now. Especially for recent buyers who (like me really) over stretch to maximum.
The pull to max out is strong. Moving is expensive. You're likely in your first house 5 years at least. It makes choosing a lower option harder.
But end of the day 5pc will cripple many. Hopefully we have enough warning for people to pay ERCs etc and get on long term fixes so by time it is 5-6pc many have dodged it.
Also hoping it doesn't stick around that high too long. For the sake of everyone with new or recent mortgages
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