Barclays Mortgage Warning!!

Graham_Devon

wotsthat wrote: »

The error you've made is assuming that the mortgage balance hasn't changed in that 5 years.

£150k mortgage @ 3% over 25 years = £708.16/ month

After 5 years the balance would be £128,157

Rates increase to 4.25%.

£128,157 @4.25% over 20 years = £788.09/ month

Difference = £79.93/ month

Seriously, you worry too much.

I said "maybe £100 a month". It will be around that for many. Some are on SVRs of 4% today.

The fuss being made is a little silly.

It was just an example, hence the "maybe" to allow for variation. It wasn't a fully blown calculation. If claptoon (as an example) had said it, you'd not respond in the same way. Hounding me at every opportunity no matter what I say is very boring.

onlyroz

Right, I get it now. I've used the calculator here:

http://www.theguardian.com/money/mortgage-calculator

On my £162k mortgage (£117k repayment, £45k interest only) with 14 years to go, a 0.5% rise will increase my monthly payments by around £45 a month.

The interest only part will be paid off in around 6 years time, when our endowment matures, and I hope soon to be in a position to overpay. I'm thinking of setting up overpayments that assume the base rate is 2% and then I won't be in for any nasty surprises when and if the rates start to rise.

wotsthat

Graham_Devon wrote: »

I said "maybe £100 a month". It will be around that for many. Some are on SVRs of 4% today.

The fuss being made is a little silly.

It was just an example, hence the "maybe" to allow for variation. It wasn't a fully blown calculation. If claptoon (as an example) had said it, you'd not respond in the same way. Hounding me at every opportunity no matter what I say is very boring.

Yes it was just an example but one you chose to demonstrate the type of mortgage holder we should be 'concerned' about so don't get so upset if people work through the example. It's not a 'fuss' or 'hounding' - it's disproving your assertion using maths.

Even if you want to take the same mortgage and assume it's going from 4% to 5.25% the difference is still only £85/month.

What's more important is the situation of the household that's on the receiving end of that £85 (and let's not forget that's 4 x the average increase being calculated). Barclays reckon 20% of mortgaged households pay 50% of income on the mortgage - that's sub optimal but I still maintain that as long as that income continues they'll be able to ride it out.

IMO an upturn in unemployment is much more likely to impact arrears and repossessions than a modes increase in rates.

wotsthat

onlyroz wrote: »

Right, I get it now. I've used the calculator here:

http://www.theguardian.com/money/mortgage-calculator

On my £162k mortgage (£117k repayment, £45k interest only) with 14 years to go, a 0.5% rise will increase my monthly payments by around £45 a month.

That's not right. A 0.5% increase in your rate would increase the monthly interest by £67 on a £162k loan.

onlyroz wrote: »

The interest only part will be paid off in around 6 years time, when our endowment matures, and I hope soon to be in a position to overpay. I'm thinking of setting up overpayments that assume the base rate is 2% and then I won't be in for any nasty surprises when and if the rates start to rise.

My average mortgage rate over the last 20 years is 5.3% ranging from 2.5% to 8.95%. A 2% BoE base rate seems like a decent assumption but I wouldn't like to have to rely on it.

onlyroz

wotsthat wrote: »

That's not right. A 0.5% increase in your rate would increase the monthly interest by £67 on a £162k loan.

Using the calculator I get the following:

Current interest rate 0.99%
£117k, repayment, 14 years, £746 a month
£45k, interest only, 14 years, £37 a month
Total £783

Interest rate of 1.49%
£117k, repayment, 14 years, £772 a month
£45k, interest only, 14 years, £56 a month
Total £828

Difference £45

Have I got this right?

wotsthat

onlyroz wrote: »

Using the calculator I get the following:

Current interest rate 0.99%
£117k, repayment, 14 years, £746 a month
£45k, interest only, 14 years, £37 a month
Total £783

Interest rate of 1.49%
£117k, repayment, 14 years, £772 a month
£45k, interest only, 14 years, £56 a month
Total £828

Difference £45

Have I got this right?

Yes we're at cross purposes. The initial effect of the rate rise would be to increase your monthly interest by £67.50 but your payment would increase by £45 (and the monthly interest will fall every month thereafter).

getmore4less

Graham_Devon wrote: »

I said "maybe £100 a month". It will be around that for many. Some are on SVRs of 4% today.

The fuss being made is a little silly.

It was just an example, hence the "maybe" to allow for variation. It wasn't a fully blown calculation. If claptoon (as an example) had said it, you'd not respond in the same way. Hounding me at every opportunity no matter what I say is very boring.

Silly ... hardly you exagerated the amount by saying £100 for many


the op was talking about a base rise from 0.5 to 1.25 a rise of 0.75.

For mortgage in the £150k bracket that will be around £50, does not matter what rate they are on it is about the same for any 0.75% rise.

5 years into the terms that would be closer to £40. NOWHERE NEAR £100


A £300k mortgage @ 4% over 20y(£1818pm) 5 years in at 4.75%(£1912) an increase of £96 pm

So for terms of 20y only those with mortgage over £300k would see an incease around £100pm ( this is around 5% of the payments )

The problem is your guess was way out not just a little bit.


If you are going to challenge a report then it is a good idea to back it up with facts.

getmore4less

Right, I get it now. I've used the calculator here:

http://www.theguardian.com/money/mortgage-calculator

On my £162k mortgage (£117k repayment, £45k interest only) with 14 years to go, a 0.5% rise will increase my monthly payments by around £45 a month.

wotsthat wrote: »

That's not right. A 0.5% increase in your rate would increase the monthly interest by £67 on a £162k loan.

thats £162000 * 0.05 /12 which is the interest increase.

Mortgages don't work like that the payment does not go up by the same amount they go up by less so £45 is probably the correct amount.

edit OK see you got this in another post.

getmore4less

So what is the distribution of mortgage lending.

I don't research this much but one stat seens to be that < 40% of households have mortgages and the median is around £75k

http://www.theguardian.com/money/2013/dec/28/time-bomb-mortgage-rate-rises

So that means that for the 0.75% rise in base rates 50%(80% of housholds) would see a rise of less than £30pm