Mortgage Rate Rises

[potatolord]

Sometimes 5/10 years isn't a good choice.

People are always saying.. Ooh you should have got a 5 year at 1.x percent. You fool. Rates were always gonna go up.

But it's all just luck. If you got a 5 year at 1.x in 2018 you'd have followed that advice but now you're into the 5s now at 2023 renewal

If you'd have got a 5 year in 2021 you'd be onto a winner.

You can't predict it. Many get lucky. Many get unlucky. But thinking you've done an amazing job is often a fallacy.

Many people can't (and shouldn't) treat thier house and time thier buys by planning for market moves.

As I've said a few times, there is a lot of dumb luck involved.

If our last five year fix had ended a few months months later, that would have been expensive.

I went for an offer in principle before the end of my rate (thanks OCUK people for that tip!) and locked into a good rate.

But it was really dumb luck.

 

[a1ex2001]

As I've said a few times, there is a lot of dumb luck involved.

If our last five year fix had ended a few months months later, that would have been expensive.

I went for an offer in principle before the end of my rate (thanks OCUK people for that tip!) and locked into a good rate.

But it was really dumb luck.

Totally agree we hadn’t taken longer than a 2 year deal in nearly 20 years then randomly took 5 year fix last time up just before everything went a bit mental (also fixed gas and electric for three years as a blind luck thing). I’d love to pretend it’s because I’m smart but it was luck pure and simple!

 

[gazref]

Still not seeing the knock on effect of higher interest rates causing lower listing prices yet

 

[Hagar]

Still not seeing the knock on effect of higher interest rates causing lower listing prices yet

That was not the main reason for higher interest rates. It was to encourage saving over spending and reduce inflation.

In the particular case of housing there us still a huge demand. Low quality and difficult to sell property will lose value but generally prices will be maintained. Mortgages being harder to obtain will mean a few less buyers and hence maybe a bit less inflation on price but they will still rise over time.

 

[gazref]

That was not the main reason for higher interest rates. It was to encourage saving over spending and reduce inflation.

In the particular case of housing there us still a huge demand. Low quality and difficult to sell property will lose value but generally prices will be maintained. Mortgages being harder to obtain will mean a few less buyers and hence maybe a bit less inflation on price but they will still rise over time.

I was not under the impression it was. By extension though lower prices should be a consequence. If the target audience of a house can only afford so much a month and cost of borrowing goes up then they can only afford to offer less.

I've seen the a few reductions but the majority are still listing at peak levels as the market continues to fall.

 

[Hagar]

I was not under the impression it was. By extension though lower prices should be a consequence. If the target audience of a house can only afford so much a month and cost of borrowing goes up then they can only afford to offer less.

I've seen the a few reductions but the majority are still listing at peak levels as the market continues to fall.

They will take longer to sell then. Unless offers are taken or a buyer found who does have the ability to buy.

 

[mattyprice4004]

People will be more receptive to offers, and all I’ve seen so far around here (NW England) is a pause in price increases rather than a drop.
Stuff is selling, albeit more slowly.

 

[osc89er]

As I've said a few times, there is a lot of dumb luck involved.

If our last five year fix had ended a few months months later, that would have been expensive.

I went for an offer in principle before the end of my rate (thanks OCUK people for that tip!) and locked into a good rate.

But it was really dumb luck.

I fixed for 5 years in 2016 at 2.5% and was very happy with that because even then we were thinking it was more likely to go up and than down, and secondly and very importantly it was already very low so there was a much bigger downside than up to short or no fix.

I didn't have any special knowledge of the future - I just saw that it was low enough to make me happy as there wasn't scope for interest rates to fall far.

 

[dlockers]

That's the lol about all of this. I bought at absolute bottom of market in 2018 and locked in 2.3% with a 90% LTV. I've had my 'benefit'.

 

[Nathan]

Houses are being reduced in the midlands, market is very slow

 

[Diddums]

That's the lol about all of this. I bought at absolute bottom of market in 2018 and locked in 2.3% with a 90% LTV. I've had my 'benefit'.

I always suspected you were a benefits bum

 

[a1ex2001]

People will be more receptive to offers, and all I’ve seen so far around here (NW England) is a pause in price increases rather than a drop.
Stuff is selling, albeit more slowly.

That seems to be the way locally to me as well, asking prices are about the same and roper ties are still selling just a little slower. What has probably changed is nobody will be going 10-20% over asking which every house did right up to Easter last year. Will be interesting to see the sold prices when they get published!

 

[dlockers]

I always suspected you were a benefits bum

Getting ma taxes back innit

 

[413x]

That seems to be the way locally to me as well, asking prices are about the same and roper ties are still selling just a little slower. What has probably changed is nobody will be going 10-20% over asking which every house did right up to Easter last year. Will be interesting to see the sold prices when they get published!

Got a few local ones bookmarked with thier sold price on right move and to check what it sold for.
My waaaay overpriced neighbours house is still on market. Didn't see any activity on thier open day.

 

[BigT]

The market is definitely reacting differently in different places. I’ve just put my home in Kent on the market at maybe 7.5% less than I would have a year ago. Only one interested party in a month but they loved it and got them to 2% below asking price.

By contrast in South Wales where we’re moving to the property we’re going for was advertised at 5% more than they paid last year (understandable from their point of view as a hopeful starting point) but rather than sit there going stale it had 26 viewings and three parties offering in a short space of time. Had to go very close to the asking price to secure it.

 

[b0rn2sk8]

Sometimes 5/10 years isn't a good choice.

People are always saying.. Ooh you should have got a 5 year at 1.x percent. You fool. Rates were always gonna go up.

But it's all just luck. If you got a 5 year at 1.x in 2018 you'd have followed that advice but now you're into the 5s now at 2023 renewal

While I sort of agree, I also don’t at the same time.

As far as I am aware there were not any 5 years @ 1.XX rates in 2018. High 1.8-9 over 2 but not 5.

So yes to a certain extent you can’t predict the future with any kind of certainty. However, in 2018, 2019 and early 2020 (pre covid getting out of control), it was highly likely rates were going to rise materially over both the short and long term.
The question was by how much and how quickly.

That being the case we locked in for 10 years betting that rates would go up more than 0.5% in 3 years. If they did, we would have been broken even.

They actually went down a bit due to covid but we are all paying for that now.

 

[413x]

While I sort of agree, I also don’t at the same time.

As far as I am aware there were not any 5 years @ 1.XX rates in 2018. High 1.8-9 over 2 but not 5.

So yes to a certain extent you can’t predict the future with any kind of certainty. However, in 2018, 2019 and early 2020 (pre covid getting out of control), it was highly likely rates were going to rise materially over both the short and long term.
The question was by how much and how quickly.

That being the case we locked in for 10 years betting that rates would go up more than 0.5% in 3 years. If they did, we would have been broken even.

They actually went down a bit due to covid but we are all paying for that now.

I only know what I had.

Bought house in 2020 (first house) at 1.8 for 3 years. I think must have been 5s for same.

Then in 2022 I got freaked out by those rates and paid my Erc for a 5 year at 1.93.

There was a 10 year at 1.93. And it was an agonising decision. Knowing I wanted to move abroad and it being a joint mortgage I went for the 5. It was a hard decision. Had I been commited to the UK and single I'd definitely have taken the 10.


So I do kind of agree.. Generally, while rates a really low. Go for the longest. It'll be better most of the time.

I'm almost of the mindset 2 years shouldn't be for FTBs at high ltv due to risk of Negative.

That said (by luck) if I'd have gone for 5 years at 1.9 in 2020 if be worse off vs going for 3 and even better.. 2.
2 would have put me remortgaging in 2022 at those sub 2pc rates without the ERC.


Paying my erc in 2022 is probably my best ever financial decision. And it wasn't completely luck. I put a lot Of hours into figuring out what to do. Didn't think it would be this bad though

 

[jon86]

Paying my erc in 2022 is probably my best ever financial decision. And it wasn't completely luck. I put a lot Of hours into figuring out what to do. Didn't think it would be this bad though

How much was your ERC? We don't have an ERC but it makes no sense for us to pay down our 2.5% mortgage any quicker than is absolutely required. New 30 year fixed rate mortgages are currently 7.63+% here, which is .

 

[DanTheMan]

I paid our ERC charge in March when rates when up to 0.5% iirc. Our ERC was relatively low (£3000) as we had just over a year left and the outstanding mortgage was relatively small at £150k.

My thought at the time was mortgage rates would be around 2.5% for a 5 year fix when our deal ran out, whereas we could fix in for 10 years at 1.86% then.

At the time it was a close call and I nearly didn't go ahead, as the ERC was almost as much as the saving in interest from what I recall. In the end I went for it as I thought 10 years of certainty was the slightly better option.

Never did I think that by the time our deal would have ended that 5 year fixed would be 5%+.

Paying the ERC was definitely my best financial decision in a long time. It's already paid for itself after just over a year and we would now be paying £250 more a month for absolutely no benefit.

So much of it is luck though. I imagine there were lots of people who were unable to make the switch as the ERC was too much.

When rates were so low, I could only see rates going up. Now, I'm not so sure. It seems likely that rates may come down to 4%ish but that's not guaranteed.

 

[flea.rider]

How much was your ERC? We don't have an ERC but it makes no sense for us to pay down our 2.5% mortgage any quicker than is absolutely required. New 30 year fixed rate mortgages are currently 7.63+% here, which is .

ahhh the us of a .. where wooden homes are plenty.. over here you just wouldn't do a 30 yr if offered .. i have never seen one to be honest .. but if someone did at 2.5% i'd say yes well i would have done 30 yrs ago ...