Mortgage Rate Rises

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 ?
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Yes. We had 8 months left and the ERC was 1% for each year left. So worth the small fee to get a lower rate locked in than what is expect in the middle of next year.
Although still a bit of a gamble.
Wouldn't gave done it if it was the 5%.
We were able to do the whole thing online staying with the same provider.
 
413x said:
Gov stepped in with all sorts of support. Things change so quickly. Who could have predicted the war in Ukraine?
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Expect the unexpected?

But regardless, people generally are stupid and will take no personal responsibility for their own poor decision making. People these days think they are special and that they're owed something. Bottom line is, they're a peasant.
 
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.
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They gamble on the rate they offer. People who are locked in on a 10 year mortgage from 2 years ago are doing well and the bank isn't. They would much rather those people were on a short deal.

As to "pay or we will take it away", for some that may be true but the sort of people that could default might only own 5-10% of their homes and if prices drop 20%+ then the bank will 100% lose.
 
On the “banks lose if they repossess” point, securitisation is still a thing, so the investor in the asset backed security loses, which isn’t necessarily a bank. I know, boring detail. Any defaults are no doubt insured anyway.
 
fez said:
Thats 100% what they are thinking. They can't see a situation where high rates are sustainable for many years without something giving. Mortgages are basically a gamble the bank are willing to take. If they think rates are stable then longer term rates will be closer to short term ones. If they think its going to be grim in the short term but sort itself out relatively quickly then the longer term rates will reflect that.
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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.
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This sort of flies in the face of a lot of the actions people are taking within this thread then really right, in terms of taking ERCs now and fixing at a rate that the banks expect to drop over the fix period? Choosing a longer fix now is essentially insurance against an extended rise the banks don't expect to occur.
 
Zefan said:
This sort of flies in the face of a lot of the actions people are taking within this thread then really right, in terms of taking ERCs now and fixing at a rate that the banks expect to drop over the fix period? Choosing a longer fix now is essentially insurance against an extended rise the banks don't expect to occur.
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Yeah but people are feeling the pinch already. I can see the value in fixing and paying over the odds but knowing you can afford it. Takes a lot of stress away around the uncertainty.

Plus a few months ago rates were around 2% so just shows the banks dont know what is going on either
 
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kevman said:
Yeah but people are feeling the pinch already. I can see the value in fixing and paying over the odds but knowing you can afford it. Takes a lot of stress away around the uncertainty.

Plus a few months ago rates were around 2% so just shows the banks dont know what is going on either
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I agree in that no one knows what's going on really, that's my main point. The weird thing is that fixing for longer is actually cheaper, it is so contrary to the overarching narrative. Reading this thread makes one think if you don't suck up ££££ in ERC and refix today you're going to be bending over for 5 years.
 
Zefan said:
Reading this thread makes one think if you don't suck up ££££ in ERC and refix today you're going to be bending over for 5 years.
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Plus the media are scaremongering and all mortgage websites advising to fix asap its no wonder there is panic.

I do agree with you and i think we may just sit on a variable ans see what happens!
There is already talk of a kwasi uturn on the budget! BoE are trying to get the OBR involved
 
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Maybe this is the point we admit the Americans have the right idea with Fannie and Freddie and start offering mortgages fixed for the entire term, it does sound like a sensible option for those who would like certainty. Of course we aren’t going to have fiscal nutjobs in power for ever so the shorter alternatives should also exist.
 
CapitalOne said:
Maybe this is the point we admit the Americans have the right idea with Fannie and Freddie and start offering mortgages fixed for the entire term, it does sound like a sensible option for those who would like certainty. Of course we aren’t going to have fiscal nutjobs in power for ever so the shorter alternatives should also exist.
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Regulating our market the way we currently do was a choice, we could have always regulated it that way to allow 30-year fixed mortgages, but that would have meant less refinancing and fewer setup fees, kickbacks and bonuses for bankers and the industry.
 
Azza said:
Good job they built all those starter homes to help people get into affordable housing.


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Tories brag about building houses when in reality: 1) these didn't build anywhere near enough, and 2) these houses are not the kind of housing that we need. Their focus has been high-end developments mostly targeted at overseas buyers and foreign oligarchs (they kind of people they rub shoulders with) instead of the needs of the population here.
 
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HACO said:
Regulating our market the way we currently do was a choice, we could have always regulated it that way to allow 30-year fixed mortgages, but that would have meant less refinancing and fewer setup fees, kickbacks and bonuses for bankers and the industry.
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Do our mortgage regs bar full terms fixes? Sorry I don’t know enough detail other than the ABS side. I dunno, maybe we move too many times to make it worthwhile!
 
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CapitalOne said:
Do our mortgage regs bar full terms fixes? Sorry I don’t know enough detail other than the ABS side. I dunno, maybe we move too many times to make it worthwhile!
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The regulator here does not ban long-term fixes, but the market was never setup for them. They also don't get the protections that exist for the typical mortgages. The back-end financial infrastructure (fundraising, mortgaged backed securities, other packaged assets offered to investors, etc) was never developed for full-term fixes. So if an institution wanted to offer them they had to go off-script. There's a reason every mainstream bank in the US offers 30-year fixes and no mainstream bank in the UK does, and it's not a decision by the banks.
 
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HACO said:
The regulator here does not ban long-term fixes, but the market was never setup for them. They also don't get the protections that exist for the typical mortgages. The back-end financial infrastructure (fundraising, mortgaged backed securities, other packaged assets offered to investors, etc) was never developed for full-term fixes. So if an institution wanted to offer them they had to go off-script. There's a reason every mainstream bank in the US offers 30-year fixes and no mainstream bank in the UK does, and it's not a decision by the banks.
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So, basically there isn’t a secondary market for long term UK MBS? I’ve worked at places that issue the paper for ABS all over the world from anything from mortgages to the famous “US tractors” (lawnmowers) and the back office infrastructure is the same.

Just curious, not playing games!
 
CapitalOne said:
So, basically there isn’t a secondary market for long term UK MBS? I’ve worked at places that issue the paper for ABS all over the world from anything from mortgages to the famous “US tractors” (lawnmowers) and the back office infrastructure is the same.

Just curious, not playing games!
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In the US congress created fanny Mae and Freddie Mac which were federally mandated to provide liquidity in the residential mortgage market. This allows banks to sell 30 year mortgages as they know they can pass the risk on. The uk doesn't have a similar entity
 
sigma said:
You foresaw the Russian invasion and Truss ****ing on the non-weatlthy?
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No but at the time I purchased low rates was still a relatively new thing. Only a couple of years before 6% was the norm and if one thing history has told me is that every 10-15 years our country is due a collapse. You also need to think that a 20+ year mortgage is a long time and a lot can change quite quickly.

We have been teetering on the edge for a while now and nothing was really learnt from 08. Recent events has just brought everything forward a few years not caused it to happen.
 
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