Mortgage Rate Rises

Mercenary Keyboard Warrior · 27 Sep 2022 at 20:52

I could see 2% inflation by 2024.
People forget its annual, so 2024s will be based on price changes vs 2023.

I expect it will drop a shed load in 2023 unless energy goes even more bonkers.

I expect to see deflation on shipping by then, its already been starting to show as prices have started to stabilise and drop on shipping that went mental from COVID

But its really all guess work, assuming all countries take similar measures etc

Surveyor · 27 Sep 2022 at 20:54

200sols said:
I don't think that is true. The bank doesn't gamble, the bank cant lose. If rates rise you pay or they take your asset.

The bank can lose if your asset is worth less than you owe.

kevman · 27 Sep 2022 at 20:54

200sols said:
Don't worry though, 10yr yields are rising as well so those mortgages will become more expensive soon enough

Does this apply if you stick with the same mortgage company or is it just for new products? E.g ftb or switching mortgages?

delta0 · 27 Sep 2022 at 20:55

200sols said:
Yeah, and they also said high inflation was transitory.... it isn't, they also said we wouldn't return to pre 2008 rates, we are. In short, BoE have lost all credibility hence why the markets don't believe anything they say.

Not a single chance inflation is 2% by 2024 I'd bet everything I have on that.

In the same way people didn’t think rates would rise like they have people will also continue to think things will stay bad for a long period as well. Not to say we won’t be at 2% inflation and whatever interest rate that needs to be to keep it there by 2024 but historically inflation from the point of spiking up hasn’t tended to go beyond 2 years and has often been less.

200sols · 27 Sep 2022 at 20:59

kevman said:
Does this apply if you stick with the same mortgage company or is it just for new products? E.g ftb or switching mortgages?

If you are fixed then nothing changes.

delta0 said:
In the same way people didn’t think rates would rise like they have people will also continue to think things will stay bad for a long period as well. Not to say we won’t be at 2% inflation and whatever interest rate that needs to be to keep it there by 2024 but historically inflation from the point of spiking up hasn’t tended to go beyond 2 years and has often been less.

It will fall undoubtedly, but back to 2%? I cant see that. I personally think it will be 'sticky'.

DJMK4 · 27 Sep 2022 at 21:00

Why doesn't the 5 year fixed first time buyer mortgage I had almost 4.4 years ago with virgin money mortgage have a decreasing early repayment charge. Still 5% I think . Meaning if have to wait or pay a load of money to get out early and remortgage somewhere else .

Has anyone recently remortgaged with their existing provider on a new fixed term ?

purplesky · 27 Sep 2022 at 21:02

delta0 said:
BoE expect inflation to drop to 2% by 2024 so it’s quite likely interest rates will be falling by then. Once the recession passes and the dollar strength subsides then that will further help. Recessions tend to average 9-10 months so sometime next year it will likely have passed.

Hahahaha.
You've got a big lesson to learn.

GarethSouthgate · 27 Sep 2022 at 21:02

adam cool dude said:
Maybe I am the only one but when we bought our house 12 years ago I did actually take into account rates going up and back then no one thought they would stay low for that long. That's why we went for the option of having a good sized house that we could easily afford that if needed we could sell and upgrade at a future date.

It is also not really a shock to the system. What happened with COVID was always going to mess up the world economy afterwards. I would honestly say I most likely had my head in the sand like most but if someone said what today would be like two years ago I wouldn't be surprised.

You foresaw the Russian invasion and Truss ****ing on the non-weatlthy?

kevman · 27 Sep 2022 at 21:04

200sols said:
If you are fixed then nothing changes

Sorry i meant if you have a mortgage with a bank already, and the term ends and you remortgage with them, do the new 10 year yields apply on your new mortgage? - the money has already been lent by that bank

kevman · 27 Sep 2022 at 21:09

sigma said:
You foresaw the Russian invasion and Truss ****ing on the non-weatlthy?

Exactly - there is quite a bit of smugness on here from those who have been risk adverse or conservative with house purchasing and now feel its all justified.

200sols · 27 Sep 2022 at 21:10

kevman said:
Sorry i meant if you have a mortgage with a bank already, and the term ends and you remortgage with them, do the new 10 year yields apply on your new mortgage? - the money has already been lent by that bank

Yeah new rates will apply. You can start getting quotes near the end of the fixed term.

purplesky · 27 Sep 2022 at 21:15

delta0 said:
In the same way people didn’t think rates would rise like they have

Who exactly are these people? Idiots?
I have no sympathy whatsoever for cretins buying overpriced COVID-19 property for their countryside work-from-home pad who have now been told to get back to the office immediately.

Anyone with any common sense knew that there would be harsh economic times following a pandemic.

Kill_Phil · 27 Sep 2022 at 21:18

adam cool dude said:
They should have thought of that before they mortgaged themselves to the hilt. We have become a credit card society and it has to burst eventually.

I have a very small mortgage myself that I can realistically finish by 40 and then prepare for early retirement.

I could have maxed out my mortgage on a massive 5 bed that I didn't need and had all the flash cars on the drip but I would be paying for it until I was 60.

Don't buy into this mythical belief that everyone is taking out mortgages 'to the hilt' living in 5 bedroom mansions. Not everyone has the luxury of living in an area well below the average house price.

The reality is wages have stagnated in the UK whilst inflation is through the roof, then you have an incompetent UK government adding fuel to the fire

GarethSouthgate · 27 Sep 2022 at 21:18

kevman said:
Exactly - there is quite a bit of smugness on here from those who have been risk adverse or conservative with house purchasing and now feel its all justified.

"It was obvious"
"I saw it coming"

It's doesn't take a genius to think historically low rates will rise eventually but to claim otherwise is laughable.

Kill_Phil · 27 Sep 2022 at 21:21

sigma said:
"It was obvious"
"I saw it coming"

It's doesn't take a genius to think historically low rates will rise eventually but to claim otherwise is laughable.

Really, I'm guessing your foresaw a pandemic and a war back to back? Give it a rest

delta0 · 27 Sep 2022 at 21:23

purplesky said:
Who exactly are these people? Idiots?
I have no sympathy whatsoever for cretins buying overpriced COVID-19 property for their countryside work-from-home pad who have now been told to get back to the office immediately.

Anyone with any common sense knew that there would be harsh economic times following a pandemic.

People have short memories and can get stuck thinking the status quo will continue or last longer than expected good or bad.

413x · 27 Sep 2022 at 21:27

People saying they saw all this coming.
Low rates lasted years. There's no reason this couldn't have all started years ago or years later.

So do you wait forever for a crash? That may come next year or 10 years down the line.

Also not everyone is an expert in finance. Far from it. And you're always pushed to max out your mortgage. All the "experts" you trust tell you "how much you can borrow".

And often it's no bad thing. Most of the last 10 years it's been the right thing to mortgage to the max. But you can never know either way.

kona786 · 27 Sep 2022 at 21:29

DJMK4 said:
Why doesn't the 5 year fixed first time buyer mortgage I had almost 4.4 years ago with virgin money mortgage have a decreasing early repayment charge. Still 5% I think . Meaning if have to wait or pay a load of money to get out early and remortgage somewhere else .

Has anyone recently remortgaged with their existing provider on a new fixed term ?

It's the small print you agreed to where they can shaft you.

Decent places count down every year.

glenimp617 · 27 Sep 2022 at 21:30

413x said:
People saying they saw all this coming.
Low rates lasted years. There's no reason this couldn't have all started years ago or years later.

So do you wait forever for a crash? That may come next year or 10 years down the line.

Also not everyone is an expert in finance. Far from it. And you're always pushed to max out your mortgage. All the "experts" you trust tell you "how much you can borrow".

And often it's no bad thing. Most of the last 10 years it's been the right thing to mortgage to the max. But you can never know either way.

The older I get, the more I realise nobody knows what's going on

413x · 27 Sep 2022 at 21:32

TheOracle said:
The older I get, the more I realise nobody knows what's going on

Exactly this.
I was sure covid would crash the market. Almost didn't buy.

Gov stepped in with all sorts of support. Things change so quickly. Who could have predicted the war in Ukraine?

You make the best choice you can at the time. Trying to guess things as important as house prices, especially when you're living in it, is just gambling. Especially for most people who are in no way experts.