what percentage of interest rates have you factored in for affordability

geoffky

pickles110564 wrote: »

Dont feed the Troll.

prickles--why is this a troll..its a question far too many people do not ask themselves....

iscrimger

Euphoria1z wrote: »

in my case i can afford my mortgage rate at 5%, struggle at 6%, really panic at 7% and loose it at 8%...this is not @ BOE but the rate thats applied to my mortgage, and this doesnt even take into account my other loans or out goings!!!

That's very concerning.

Eventually the BOE rate will increase and eventually mortgages will go up so you will feel the effect of that. If you're on a fixed rate you're fine for now but I'd be worried about what happens after that rate ends. Banks apply interest currently around 3-4% + BOE rate. So if the rate went backup to over 5% you could find yourself paying 8% easy.

mbynwa

Does anyone know what the rough average was for fixed rate mortgages when the BOE rate was about 5%?

ILW

Euphoria1z wrote: »

in my case i can afford my mortgage rate at 5%, struggle at 6%, really panic at 7% and loose it at 8%...this is not @ BOE but the rate thats applied to my mortgage, and this doesnt even take into account my other loans or out goings!!!

Oh dear....

wymondham

People should cost in being able to cope at 10%.

benjo

current rate 4.49% fixed for 5 years - very affordable at 480 per month and overpaying by 200 per month, essentially I am making a monthly payment (including overpayment) that would match around 8.5%...

So at 8.5% my overpayment would be converted into regular payment of mortgage and I wouldnt be out of pocket.

10% is managable, but would make me grumpy since I would struggle to make overpayments.

12% would be tight if it went on for any length of time, since that would prevent overpayment and significantly reduce my ability to save and that would hurt of the roof fell in.

15% and I wouldnt be sleeping (I remember interest rates hitting 15% back in the 1990's I think for a day).

But my contingency plan is to overpay as much as I can during the 5 year fixed rate period so that future periods of higher interest rates will at least be paid on a reduced amount of capital owed.

InMyDreams

Currently fixed at 5% for another 3.5 years. Offset, interest only. We are 35 and 38.

We are currently making monthly payments that will clear the mortgage in 13.5 years.

Leaving the payments the same, if the rate went up today (which it won't because we've fixed)...
At 8.5% it would take us 21 years.
At 10% it would take 36 years.
At 10.25% our current payment would only cover interest only.

That's why we fixed.

However, because we know that we've got another 3.5 years of 5%, we'll be down to 10 years left when the fix runs out. At that point, keeping the same payment...

A jump to 8.5% would take us extra 3 years (so 16.5 from now)
At 10% would take us another 5 and a bit years (nearly 19 years)
At 12% would take us another 13 years (26.5 years)
At 13% our current payment won't even cover the interest.

So overall, even though our 5% fix is more than others are paying on their enviable trackers at the moment, I can sleep easy at night. We couldn't really tighten our belts more than we are without giving things up that we don't want to give up. I'm hopeful that we won't have to.

Joe_Bloggs

I worked out that 15.5% would wipe out my overpayment and it would then be equal to a regular payment for the full term of the mortgage. If rates really get this bad then the economy will be in more trouble than it is today.
I have savings that I expect to increase over the next few years. As the mortgage level reduces and my savings increase the effect off a potentially high mortgage rate is diminished.
J_B.

Deleriad

Currently stuck on NR's SVR and overpaying. Can deal with rates up to 16.5% before no longer being able to overpay. If rates hit 19% then I start eating into savings.

Historical average for NR's SVR seems to be around Base Rate +2.75%. As base rates increase, I don't expect the SVR to hit any more than its current margin of Base Rate +4.25%.