Worried! Interest Rate Predictions...

inquisitivewanderer

I'm the sort of person that worries about everything.
Most recent worry is around the mortgage on our house. We moved in a couple of years back in order to have my Wifes mother move in with us - she is in poor health and did not have any money to contribute to the purchase, hence mine and my Wifes income alone support us.
We have about £1k of disposable income if we are careful in the average month, depending on whether our 2 children need anything, or there are any birthdays etc.

With the BoE raising the base rate again this week, and predictions for them to hit 2.75% next year, followed by 3% in 2024 (https://tradingeconomics.com/united-kingdom/interest-rate) what is the likely knock-on effect to fixed-rate deals?

I'm locked into two mortgages on my property, one has a fixed term until the end of 2024, and the other 2025. I am to put it bluntly - sh** scared about the possibility of fixing again in 2 years time based on what the fixed-rates could be at that time.

With said disposable income, would it now make sense to overpay on mortgage one (fixed term ending 2024)?

K_S

@luke221987 Impossible to predict mortgage rates in 2 years time but if you are extremely worried about a rate-rise when it comes to the end of your fix in end-2024 then it definitely makes sense to consider either overpaying the mortgage part or (if your rate is very low) plonk surplus funds in a Chase or other leading savings account until the end of the fix.

grumiofoundation

Luke221987 said:

I'm the sort of person that worries about everything.
Most recent worry is around the mortgage on our house. We moved in a couple of years back in order to have my Wifes mother move in with us - she is in poor health and did not have any money to contribute to the purchase, hence mine and my Wifes income alone support us.
We have about £1k of disposable income if we are careful in the average month, depending on whether our 2 children need anything, or there are any birthdays etc.

With the BoE raising the base rate again this week, and predictions for them to hit 2.75% next year, followed by 3% in 2024 (https://tradingeconomics.com/united-kingdom/interest-rate) what is the likely knock-on effect to fixed-rate deals?

I'm locked into two mortgages on my property, one has a fixed term until the end of 2024, and the other 2025. I am to put it bluntly - sh** scared about the possibility of fixing again in 2 years time based on what the fixed-rates could be at that time.

With said disposable income, would it now make sense to overpay on mortgage one (fixed term ending 2024)?

What are the interest rates on your current mortgages?
If you save in a savings account (with interest greater than mortgage) do you trust yourself not to spend this?

What are the early repayment charges on your current mortgages? (to explore remortgaging now if you are terrified of future rate rises)

simon_or

No idea about future rates but overpaying could help when your fix ends.

The ERC might cost a bomb (can be added to the mortgage if the LTV permits) but also worth looking at remortgaging the whole lot on a 5-10 year fix if you are ok with doing so at the current rates.

diystarter7

OP
Overpay but are there not limits on how much you can overpay as my son does and he is limited to 10% I think.

The other option is save hard, do overtime, two jobs etc, save the money put into fixed, or best saver rate accounts.


Come possibly the rainy days, you will be able to get a smaller mortgage, possibly increase the tern you pay over, or keep some of it back for rainy days.

As a last resort, consider renting out a room but you need to tell your lenders/ins etc but I could not do that and I've heard of stories where things go wrong, EG affairs etc especially if renters/ll's are younger and living in one property.

So plan ahead, work extra hard and if rates are not as high as most of us expect, its a win, win. If they are higher as many expect at the end of your fixed terms, then you have extra money to make things a bit easier.


Good luck.

IAMIAM

For me, these are the highest rates I have ever seen since buying in 2016, 

simon_or

IAMIAM said:

For me, these are the highest rates I have ever seen since buying in 2016,

https://www.theguardian.com/money/2012/jul/31/mortgage-price-war-banks-building-societies

You don't have to go too far back for similar rates. Think it's after 2012 that low LTV mortgage rates really took a dive and stayed there until recently.

IAMIAM

I have just checked a couple of main lenders.
HSBC Trackers for example are nearly currently 1.25% cheaper than the equivalent fixed LTV on two years. If prices are factored in, I am presuming HSBC are already knowing that BOE rates will increase beyond 1.25% soon ish that the tracker, even though looks favourable, will be more expensive or close to the fixed rate deals soon.....

But then the you look at just purely fixes with lenders, LTV is irrelevant, there is literally 0.05% difference, maximum between 60% and 80% LTV's. The if you look at terms, whether you take the 2/3 or 5 year fix, the rate is the same.....

happyc84

Difficult times, but Interest rates were always going to go upwards, try budgeting when rate is 5% and see how those figures work out.

I remember the rates during the 90's, but property was easier to buy.

RelievedSheff

IAMIAM said:

For me, these are the highest rates I have ever seen since buying in 2016, 

Our mortgage rate was 5.2% in 2007 so not all that long ago.

Ganga

RelievedSheff said:

IAMIAM said:

For me, these are the highest rates I have ever seen since buying in 2016, 

Our mortgage rate was 5.2% in 2007 so not all that long ago.

I think ours was 12.6% back in 1992 but was fixed for 2 years ,it rose to 15% for a while but by the time the 2 years were up it was about 8% ,we also had MIRAS for a short time ( tax back off the interest ) but that did not last long ,the joys of home ownership