Mortgage Rate Rises

[Zefan]

I could ERC out and lock in another 2 years for a 24% increase in monthly, however the ERC is £5k, essentially making the increase 50% in real terms over those 2 years.

ERC applies until 90 days from the end of the fix, which means the end of January is the first time I can do something without an ERC (porting to another provider isn't an option)

Grim situation similar to ours, our ERC is much lower for ours ending in July but it'd still end up being around 38% increase all in over 5 years. Would fixing for longer and reducing the overall the impact of the ERC help much? I suppose it obviously depends on what happens to rates in x years.

Feels very weird to "take action" to lock such high increases in at a time of such economic uncertainty, something tells me not to rush in at this moment.

 

[krooton]

Grim situation similar to ours, our ERC is much lower for ours ending in July but it'd still end up being around 38% increase all in over 5 years. Would fixing for longer and reducing the overall the impact of the ERC help much? I suppose it obviously depends on what happens to rates in x years.

Feels very weird to "take action" to lock such high increases in at a time of such economic uncertainty, something tells me not to rush in at this moment.

Existing provider only offers 2 and 5 year options :/

 

[Zefan]

Existing provider only offers 2 and 5 year options :/

Sorry, initially said 10 years but edited just before you replied to reflect your mention of 2 years. Realistically a 5 instead 2 year would reduce the "per year" cost of the ERCs by £1500, everything else being equal of course. Perhaps a weird way to look at it.

 

[krooton]

Sorry, initially said 10 years but edited just before you replied to reflect your mention of 2 years. Realistically a 5 instead 2 year would reduce the "per year" cost of the ERCs by £1500, everything else being equal of course. Perhaps a weird way to look at it.

Yeah, I did look at that, but the main sticking point is that we don't have cash for the ERC, or the monthly increase.

Feb next year will free up like £400 as the car will be paid off, but rates are likely to be even higher then, we're pretty much screwed.

 

[Zefan]

Yeah, I did look at that, but the main sticking point is that we don't have cash for the ERC, or the monthly increase.

Feb next year will free up like £400 as the car will be paid off, but rates are likely to be even higher then, we're pretty much screwed.

Not ideal but do if you're in dire straits do you think your lender might consider it acceptable to add the ERC to the new product?

 

[BUDFORCE]

A lot of smaller lenders are pulling their fixed rates.

Apparently one lender Together, have pulled all their fixed rates, at all stages of application, as in, if you are 3 days off completing, they are pulling it.

But not just them, across the market, the cost of swap rates have gone from something like .5% to 5.9% since earlier this year.

It's simply not profitable for lenders to provide mortgages at the moment without putting up rates drastically.

High street/main stream banks will be able to tank it slightly better and of course still have deposits (people savings accounts) which are clearly not paying 5+% interest....yet, but it'll catch up.

 

[413x]

A lot of smaller lenders are pulling their fixed rates.

Apparently one lender Together, have pulled all their fixed rates, at all stages of application, as in, if you are 3 days off completing, they are pulling it.

But not just them, across the market, the cost of swap rates have gone from something like .5% to 5.9% since earlier this year.

It's simply not profitable for lenders to provide mortgages at the moment without putting up rates drastically.

High street/main stream banks will be able to tank it slightly better and of course still have deposits (people savings accounts) which are clearly not paying 5+% interest....yet, but it'll catch up.

This will probably be my plan. If savings rates start hitting 5pc with my mortgage at 1.9. I'll stick everything in a savings account. At end of the term depending on how the world looks that cash can either be...

Invested in stocks,
Back into a savings account,
Used to pay off the mortgage


It will also keep the cash relatively liquid as opposed to blindly paying off the mortgage


If anyone thinks this plan is terrible, let me know!

 

[Goodie]

as in, if you are 3 days off completing, they are pulling it.

how on earth does that work, as if you've exchanged contracts you're locked in and can't break without a hefty fee to escape?

 

[BUDFORCE]

how on earth does that work, as if you've exchanged contracts you're locked in and can't break without a hefty fee to escape?

Yup, and?

 

[Minstadave]

This will probably be my plan. If savings rates start hitting 5pc with my mortgage at 1.9. I'll stick everything in a savings account. At end of the term depending on how the world looks that cash can either be...

Invested in stocks,
Back into a savings account,
Used to pay off the mortgage


It will also keep the cash relatively liquid as opposed to blindly paying off the mortgage


If anyone thinks this plan is terrible, let me know!

Entirely sensible if you can be disciplined. No point overpaying if your mortgage is cheap and rates on savings are better.

 

[Goodie]

Yup, and?

so if they pull the mortgage offer 3 days before you're due to complete the potential buyer is just left with the payment to break contract? Surely theres an obligation on the mortgage provider at that point.

 

[BUDFORCE]

so if they pull the mortgage offer 3 days before you're due to complete the potential buyer is just left with the payment to break contract? Surely theres an obligation on the mortgage provider at that point.

Don't think so.

It's horrendous isn't it?

Only thing I will say is Together are pretty much last chance saloon lending, they accept people with all sorts of **** no other lender will touch.

 

[413x]

Entirely sensible if you can be disciplined. No point overpaying if your mortgage is cheap and rates on savings are better.

Yes I can be. I feel it might be the best course of action. Especially as it isn't locked away in house equity this way.

Let's say by some miracle rates came down to 2pc again in 5 years. I could then decide where to put that money.

I guess 5pc fixed savings accounts are not far away

 

[Maccy]

Not ideal but do if you're in dire straits do you think your lender might consider it acceptable to add the ERC to the new product?

Worth asking, Natwest did it for us a few years ago.

 

[jaybee]

I've rented all my life having moved out at an early age, not out of choice. I fell into a rent trap whilst raising a family and it continued for 18 years. We probably paid around 200k in rent. I used to listen to colleagues ask me why I rented and that "you can get a mortgage for less" than what I paid in rent, seemingly ignoring the ability to raise any deposit.

Finally in 2020 the landlord needed to move back into the house we were renting. We decided we would push hard to try to finally get on the ladder. With a combination of the timing of some small inheritance and help from family we managed to buy our first house. The whole buying experience was stressful and exhausting, especially being during COVID with the chain nearly collapsing several times. We decided to fix for 5 years at a very low rate given our very high LTV. It was a difficult decision and we nearly did 2 years with the intention of then locking in for a very long deal, which in hindsight we perhaps should have. We chose 5 for "safety" to get us going and hope to overpay a bit during that time at a rate we could be sure would not change. We have a massive mortgage and I would think would be one of the higher borrowed amounts in this thread both in amount and compared to earnings. I fear upon renewal in August 2025 we simply may not be afford to live there.

I find the whole thing so depressing. We're just trying to live. It's our first and only house. An end terrace. Knowing times will be tough you start to question whether you should buy X or do Y or go on holiday etc. I get labelled as a stressy negative barsteward when I foresee the impending doom and start to wind things back, like being an4l about the heating and costs. I don't know how some people just continue to live in complete denial about how bad things are and will get.

 

[Goodie]

Don't think so.

It's horrendous isn't it?

Only thing I will say is Together are pretty much last chance saloon lending, they accept people with all sorts of **** no other lender will touch.

Ahh I thought I had never heard of them before, still, heartbreaking for anyone who finds themselves in that position

 

[ChrisD.]

Apparently one lender Together, have pulled all their fixed rates, at all stages of application, as in, if you are 3 days off completing, they are pulling it.

 

[unwashed potato!]

Ours is up for renewal in December 2023. Have no clue what we can do. Looking likely to be £600 per month higher costs if the estimate for where the interest rates will be by then.

We currently have lodgers, but when kids arrive (were hoping to have 1 before next year end) we will need to kick the lodgers out.

That will bring us £1600 worse off per month, on top of higher electricity bills, and a kid to bring up.

Nuts to think about.

The ticking time bomb is slowly ticking away.

 

[neocon]

We're still down at 1.06 USD, I thought they were going to stabilise things...

 

[ThriceNightly]

Phew am glad to be mortgage free. Was fortunate timing wise too miss the high interest rates of 1989/90 (up to 15%) before getting my first mortgage Though housing prices were so much lower than they are now (My first mortgage was £40k) I get too thinking of all these new £££ estates that have cropped up around my town and what some must be facing.