Mortgage rates going up

Thrugelmir

wotsthat wrote: »

I've paid 2.5% on my mortgage for three years now and the highest rate I've ever paid was 6.85% (at 95% LTV) since 1992. The average rate I've paid over the last 20 years is probably around 4.5% - and that's based on fairly cautious fixed rates apart from the last 3 years.

The lowest base rate reached in 1992 was 7%. I think that you are wrong. I was paying over 10% on a 5 year fix in 1991.

Mr._Pricklepants

Jimmy_31 wrote: »

My position is a lot better than pretty much every home owner i know.

This is because i dont own a home.

Yes, we're all envious of your caravan, Jimmy :rotfl:

Rustic_Ron

I think most mortgage holders do realise that payments will rise eventually. But wages are not rising, living costs are rising ,fuel costs are rising .So when rates do rise again I think a lot of people will panic and alot may not manage. This could then have a knock on effect on the recovering economy.. I say keep rates low for at least 15 years....
Well nice try anyway.....

Thrugelmir

Rustic_Ron wrote: »

I think most mortgage holders do realise that payments will rise eventually. But wages are not rising, living costs are rising ,fuel costs are rising .So when rates do rise again I think a lot of people will panic and alot may not manage. This could then have a knock on effect on the recovering economy.. I say keep rates low for at least 15 years....
Well nice try anyway.....

Alternatively house prices fall ..............

Then money would go further.

Jimmy_31

suburbanwifey wrote: »

Its not better to be renting, your rent will increased annually at least every year of your life and you'll pay someone else's mortgage until the day you die. Not sure your position is better than me or others like me, I own my own home, no mortgage. Your situation is better than that? stop knocking people when they are down! There is always someone better off out there isn't there! :cool:

You are just shouting at yourself there.

I dont know you.

I havent knocked anybody.

What i said still stands.

shortchanged_2

suburbanwifey wrote: »

Its not better to be renting, your rent will increased annually at least every year of your life and you'll pay someone else's mortgage until the day you die. Not sure your position is better than me or others like me, I own my own home, no mortgage. Your situation is better than that? stop knocking people when they are down! There is always someone better off out there isn't there! :cool:

This isn't strictly true because there are some BTL'ers who are not doing so well, so you aren't really paying their mortgage off are you. You might just be helping them keep their heads above water, or not in some cases.

Emy1501

wotsthat wrote: »

If someone bought an average house at £160,000 and their mortgage payment went from 3% (say) to 8%. On a 100% mortgage (for dramatic effect only) their interest payments would increase by £666 per month.

How many people have a spare £666 per month especially if they are a FTB and just bought a house? To me, and I'm fairly cautious, that seems like far too timid an approach.

People also need to factor in pay rises, bonuses and remember that as their mortgage debt reduces the effect of an interest rate rise reduces with it.

This is the problem though as the economist on newsnight said mortgage rates were allowed to go to low especially for those who were bad risks. SVR's were always going to increase and when the recovery comes SVRs of 7-8% is not unlikely.

Therefore those who are unable pay are likely to default and by then the banks are unlikely to be government owned and will therefore be able to repossess.

Therefore people should start getting their finances in order before its too late

Thrugelmir

Emy1501 wrote: »

Therefore those who are unable pay are likely to default and by then the banks are unlikely to be government owned and will therefore be able to repossess.

By then the borrowers in trouble now will be mortgage free!

wotsthat

Thrugelmir wrote: »

The lowest base rate reached in 1992 was 7%. I think that you are wrong. I was paying over 10% on a 5 year fix in 1991.

I might be as I can't find the docs. I started looking for a house in 1992 just as the UK left the ERM. I completed in mid-1993 - I was on a Halifax fix at less than SVR - I fairly sure it was sub 7% and it fell rapidly from there.

The point still stands. When you were on 10% did you build your finances around being able to withstand an increase in of 5% to 15%. That's what is being suggested by GD.

It's far too cautious. I would never have purchased my first house using this method when I had no problems whatsoever in financing it.

I'm applying some hindsight bias but I wish I'd borrowed more and moved up the ladder more quickly.

Graham_Devon

wotsthat wrote: »

I might be as I can't find the docs. I started looking for a house in 1992 just as the UK left the ERM. I completed in mid-1993 - I was on a Halifax fix at less than SVR - I fairly sure it was sub 7% and it fell rapidly from there.

The point still stands. When you were on 10% did you build your finances around being able to withstand an increase in of 5% to 15%. That's what is being suggested by GD.

It's far too cautious. I would never have purchased my first house using this method when I had no problems whatsoever in financing it.

I'm applying some hindsight bias but I wish I'd borrowed more and moved up the ladder more quickly.

And that period of time is a different period of time to the period we are about to live through.

You are basing your assumptions of not having to prepare for higher rates on times gone by.

What you are suggesting is extremely bad advice. Gambling in fact. It's exactly the same as what Ray Boulger suggested in 2006....to get the biggest interest only mortgage you possibly can and switch mortgage in 2-3 years. Those people are now screwed. May have worked 5 years previously.