Mortgage Rate Rises

throwaway4372 said:
Wouldn't mind some feedback on this:

Plan A
1. Next month, finish paying of mortgage. House = 3 bed semi down south, about £375-400k
2. Sell house. Buy a forever home for about £300-350k.
3. Housing market crashes. But I don't care because I'm not moving.

Plan B
1. Next month, finish paying of mortgage. House = 3 bed semi down south, about £375-400k
2. Soon after. Sell house. Move up north. Buy temporary 2 bed terraced house for £120k.
3. Housing market crashes.
4. Sell house. Buy a forever home for about £300-350k.

Do you think Plan B is worth the extra move to maybe get a better house or some spare cash as a result?
Click to expand...

Plan A sounds like a normal "move"

Plan B

1) Make sure you understand that historicially house sales and prices in the south will recover earlier and faster than those in the north so you could actually loose out if you are stuck trying to sell your northern house whilst the south goes out of reach
2) Absolutely not worth the hassle IMO, moving costs etc etc plus the pain of actually moving/selling/buying
3) You may not get a crash
4) How much are you actually trying to profit from this? If < 100k why not just start saving/investing your mortgage payments instead?
In fact - why not just start saving/investing your mortgage payments instead?
 
robgmun said:
So, someone please explain to me like I'm 5 years old. If houses are too expensive and everyone is unable to get on the housing ladder. How is it that prices are so high in the first place and where are people finding all this money to buy them? I just can't seem to wrap my head around it. I've been thinking that these prices are unsustainable for at least 10 years and yet prices just keep getting higher and never crash.
Click to expand...
People do get on a ladder and people can afford them otherwise prices would fall. It is really that simple. Mortgage checks are far more stringent than they used to be as well.
 
fez said:
This is why people will do whatever it takes to get on the ladder even though everyone accepts that prices are insane. The alternative is twice as grim.
Click to expand...

Yup, this is potentially an even scarier thing to consider when thinking that people are potentially going to lose their house because they can't afford the mortgage with the higher interest rates. The landlord that they're going to end up needing to rent from is also having to deal with those interest rates, and they certainly aren't going to pay the extra out of their own pocket, so rents are going to increase as well.
 
robgmun said:
All he's done is regurgitate what he's been reading on Facebook, he's a low quality commentator
Click to expand...

He's by far the best radio presenter out there as far as I'm concerned.

There's a good reason why he's top of LBC's ratings and has won broadcaster of the year multiple times.

Also, he's right as far as I can see...

I haven't actually sat down and calculated the affordability comparison myself, but it sits reasonably in line the quick numbers I did in my head yesterday morning.

 
Last edited:
krooton said:
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.
Click to expand...
Good point. Depends on how cash rich you are.
 
GordyR said:
He's by far the best radio presenter out there as far as I'm concerned.

There's a good reason he's top of LBC's ratings and has won broadcaster of the year multiple times.

Also, he's right as far as I can see...

Click to expand...

To give you an idea why Rob hates James so much, is that his go to for political commentary used to be (might still be) people like Guido Fawkes from order-order...
 
Last edited:
Nitefly said:
It’s not just the % rate though, it’s the extent of the borrowing. Interest on a lower % rate on a high value loan can be greater in sum than a higher % rate on a low value loan.

So nobody before has had the burden of a so called ‘normal’ % rate on a necessarily higher loan (on the basis that house prices have increased so dramatically over the last couple of years).

Obviously it’s all dynamic but you get what I mean. People just coming off a 2 year fixed with a high value loan in all likelihood worse off than those coming of a 2 year fixed in years past (with a much lower loan).

Not aiming this at you specifically, just a generally comment off the back of yours :)
Click to expand...
Yes.
Let's keep it simple. It's all about the monthly repayments vs income and some don't seem to grasp.

Low interest loans have propelled the market to insane prices. Now the banks want to increase interest rates. Something has to give. And its not interest rates, so monthly payments will increase and those who can't afford will have to downsize.
 
Freakbro said:
To give you an idea why Rob hates James so much, is that his go to for political commentary used to be (might still be) people like Guido Fawkes from order-order...
Click to expand...

Ohhh boy...

Well I suppose if your daily consumption of information consists primarily of digesting infamously laughable and totally unregulated propagandist websites that bare little resemblance to reality, then it's hardly surprising that James wouldn't be your thing.
 
kona786 said:
It's like when the apple store goes down when new products are released. Just downtime to put up new products. They'll come back with higher rates is all.
Click to expand...

I guess the point is that the Govt have created so much uncertainty that the banks aren't confident yet to know what rate to set fixed term mortgages.
 
neocon said:
So there's a rise coming and it's significant, what exactly does that mean? Straight up to 5%?
Click to expand...

No, it'll still be done in steps. The market is guessing our base rate will be 6% by the middle of next year, so that's at least half a dozen BoE meetings between now and then.

Plus of course the market may be wrong and in the meantime things could change, it might end up lower than that, or higher.
 
From the article above

Nonetheless, though, his words should leave households, businesses and the markets in no doubt. The Monetary Policy Committee will be voting for a big increase in Bank Rate on 3 November – at least another 50 basis points and, more likely, 75 basis points.
Click to expand...

Sounds about right, I'd be mightily surprised if we saw anything above a full 1% rise in one go.
 
Last edited:
You must log in or register to reply here.
Back
Top Bottom