Fears grow of a spike in mortgage rates as the Government battles to curb rising inflation

Marvel1

I just ran a mortgage calculator on what I have left to 15% and monthly repayment is cheaper than I first started.

Could do with going up now, I have benefitted being on the BMR for 12 years but savings not so much.

ACG

annabanana82 said:

ACG said:

Half of those will be out of their 2 year deal within 12 months....
But it is not just your mortgage is it. You might be able to stretch to the extra repayments, but what about your gas bills, council tax, food, fuel etc etc. It soon adds up. 

How many people have stretched themselves when buying their new home in the last 12-18 months because of the stamp duty holiday? 

ACG said:

Half of those will be out of their 2 year deal within 12 months....
But it is not just your mortgage is it. You might be able to stretch to the extra repayments, but what about your gas bills, council tax, food, fuel etc etc. It soon adds up. 

How many people have stretched themselves when buying their new home in the last 12-18 months because of the stamp duty holiday? 

Shouldn't the stress testing that mortgage brokers undertake mean that any rises remain affordable even if it is tighter? 

Only to some extent. 
I cant imagine many lenders/brokers accounting for fuel, energy, shopping going up by around 15-20% in the space of 6 months. Or interest rates going up 12 fold in the space of 12 months if you believe the 6% quote. 

You also have people who take out loans and credit cards to do up their new home or get a new car and then you have the people who have been recently made redundant or had to take reduced hours due to covid. 

I am not saying rates will not rise, but 6% within 12 months is someone wanting to get their name in the news. 

socks_uk

In 2008 we took out a 10 year fix at 5.4%. We had looked at historical percentage rates and took a gamble on the rates going up or down for the knowledge that we knew for 10 years we'd be paying the same amount.
In 2018 we fixed again for another 10 years but at 2.79% but we carried on paying the same monthly payments which means we are overpaying our mortgage by £100 each month. Yes, in hindsight we could have saved quite a bit in interest on the first 10-year fixed rate but the peace of mind was worth so much more to us!
We still have 7 years left on the fixed rate and we still have about £37,000 (plus the interest) but with us overpaying each month we'll have paid it off before then and our little bungalow will be all ours. We did the right thing for our own peace of mind and don't regret it.

goodwithsaving

@YBR 18% on a much small mortgage than people tend to have these days. 18% on 90k is the the equivalent monthly payment of a 6.5% mortgage of £220,000. That's without the higher council tax, pension contributions, student loans, etc. etc. Sure, wages are higher, but not by the same multiples. 

Pixie5740

YBR said:

My mother would say 6-7% is nothing, being the generation that paid up to 18%, I feel that was somewhat etched into her memory!

Is MIRAS also etched into her memory? 

getmore4less

london21 said:

ACG said:

Half of those will be out of their 2 year deal within 12 months....
But it is not just your mortgage is it. You might be able to stretch to the extra repayments, but what about your gas bills, council tax, food, fuel etc etc. It soon adds up. 

How many people have stretched themselves when buying their new home in the last 12-18 months because of the stamp duty holiday? 

The stamp duty holiday has really favored the sellers, I do not understand saving £15k stamp duty but house price up £30k

the next few months will be interesting. think the market will slow down a bit. 

I just happened to look at transactions yesterday as Sept data is out.

trend is still up from pre covid days, any backlog looks to be out of the system.


https://www.gov.uk/government/statistics/monthly-property-transactions-completed-in-the-uk-with-value-40000-or-above/uk-monthly-property-transactions-commentary

getmore4less

sevenhills said:

ACG said:

The country would go to pot as a lot of people would not be able to afford their mortgage. 
There are some lenders who charge 6-7% now, but those are for people with VERY bad credit, so it is not unheard of but it is also only a very small number of people - maybe 1-2% of mortgages. 

Surely a good percentage of borrowers have at least a 2 year fix, so the pain would be felt very slowly.

sure someone in the trade has more accurate data but looking at one source 

https://www.bsa.org.uk/statistics/mortgages-housing
(says from BOE)

last 12months(Sept-Aug) Mortgage approvals have been between  125.5k and 155.5k a month

Roughly 1.6million people doing something to their borrowing last 12m
( a mix of purchase, remortgage, other?)
2018/2019 were nearer 1.5m 

only dropped below 100k a month for 3 months  

April 2020	54,550
May 2020	42,802
June 2020	95,200

  

csgohan4

interest rates will rise, how quickly is crystal ball time. I suspect 0.25% at a time for each increase at worst.

I am on a boe+1.08% so not too bad I guess, but this will finish mid next year, so will need to remortage and likely to a 5 year rate. I wont rule out a 10 year rate if interest rates are reasonable for me

j.a.mcguire

After climbing from < 1% two weeks ago to 1.14%, the HSBC 5 year fixed has dropped by 0.1% in the past 48 hours to 1.04%.

So if the orginal article mentioned here is correct, why the fall in interest rates?  Anyone with boots on the ground got a better impression of the state of things to come?

aoleks

Affordability tests take into account some extreme fluctuations which are not feasible in real life. Even if my rate went up from 1.9% to 7%, I would still afford my mortgage.

This is what people ignore, this is not the US in 2007, when illegal Juan could lie about his income without anyone checking the facts, causing a global recession.

Yes, there will be some people who will lose their home, but not enough to trigger a crash.