How is everyone's situation regarding interest rates?

emjay2kay

Have a 1.75% fix until July 2027 which we just moved to - was a week between the offer expiring and our old mortgage ending, so cut it fine. We're going to try overpaying about £300 a month if we can between now and when we next need to remortgage to get the balance down as much as we can, but if interest rates are up near 6-7% by then we'll have to extend the mortgage out if we can.

Marccon

tony3619 said:

Hello, 

Just curious how people are finding the current situation and the potential Interest rate rises? Have most of you planned for these types of hiked by saving/getting better paid jobs etc? 

My situation is im currently on 1.69% fixed until May next year. I'm probably looking at 5-7% rates by the time I get there. Luckily my LTV is the lowest bracket and the loan value is only about 70 grand. It is shared ownership though so I'm expecting a big rent increase as it's tied to RPI which could be like 15% by that time. It's worrying times but I have savings that will prop up my wage in the short term for a number of years. 

I just don't see how this is sustainable in the longer term for most people. It's gonna get really bad out there...

I have just retired and received a lump sum of £98K and my wife intends to retire next year with a lump sum of approximately £80K. We have investments totaling £57K. Our pensions will be approximately £32K/combined/per/year.

We own a house valued at £430K with a mortgage of £210K and I am at present in the process of re-mortgaging.

I’m unsure whether to use part of our lump sums or investments to reduce the amount we still have to pay on the mortgage, or to weather the storm as the quotes I’m getting for the remortgage are south of £650/month (interest only for 14 years as I’m 55). The mortgage we had was fixed for two years and is coming to an end in a couple of months, which we were paying £334/month.

In addition, I’m also conscious that I will need to pay the balance in 15 years anyway when (if I’m still here) I turn 70. As I have been led to believe that I wouldn’t get a mortgage after 70.

I'm not sure what to do, as I do have the means to clear or partially clear the mortgage. My biggest fear is that once this mess is over the retirement money we had to enjoy will be tied up in the house.

Sarah1Mitty2

tony3619 said:

Hello, 

Just curious how people are finding the current situation and the potential Interest rate rises? Have most of you planned for these types of hiked by saving/getting better paid jobs etc? 

My situation is im currently on 1.69% fixed until May next year. I'm probably looking at 5-7% rates by the time I get there. Luckily my LTV is the lowest bracket and the loan value is only about 70 grand. It is shared ownership though so I'm expecting a big rent increase as it's tied to RPI which could be like 15% by that time. It's worrying times but I have savings that will prop up my wage in the short term for a number of years. 

I just don't see how this is sustainable in the longer term for most people. It's gonna get really bad out there...

People I know who bought a house recently are making big efforts to build a cash fund for when their fix runs out in a few years, if rates are still higher or moving up they will try to make overpayments.

RobHT

ACG said:

RobHT said:

tony3619 said:

Hello, 

Just curious how people are finding the current situation and the potential Interest rate rises? Have most of you planned for these types of hiked by saving/getting better paid jobs etc? 

My situation is im currently on 1.69% fixed until May next year. I'm probably looking at 5-7% rates by the time I get there. Luckily my LTV is the lowest bracket and the loan value is only about 70 grand. It is shared ownership though so I'm expecting a big rent increase as it's tied to RPI which could be like 15% by that time. It's worrying times but I have savings that will prop up my wage in the short term for a number of years. 

I just don't see how this is sustainable in the longer term for most people. It's gonna get really bad out there...

Why do you think is gonna increase also the rent and up to 15%???
Are you talking about only the scam of shared ownership?

If I were you, I'd sell the house, take the equity before the crash, so you avoid the big increase of interest rates and the responsability of fixing everything inside that shared ownership house...

Reason why I don't buy, and one video is able to explain it very well, even a kid can understand: https://youtu.be/q9Golcxjpi8
Beyond this video, you can easily calculate it by yourself with more effort.

As I discussed in this forum a while ago (which generated a big discussion), it takes me 16 and more years to give a sense to buy something, if the interest rates grow at this speed, it could delay also other 10 years, at that point I'll be almost retired, and yes, no equity but no issues at all, I'll be able to pay rent anyway, otherwise it means that the entire economy crashed completely and so, also the mortgages would be extremely expensive for an almost retired person.
NOTE: it's already in this way since decades if you didn't manage your investments and pension scheme during your lifetime, NOTHING NEW.

As I predicted a long time ago, mortgages became more expensive than renting (YES, RIGHT NOW), but the truth is that it was already like that since years, but people are always searching for pigs flying.
The media always factored the prices WITHOUT the interests on top, that's one of the main reasons everyone is worried now...

In my situation, mortgages have been always 50-55% more the rent price, now it's even worst, up to 65% already...

Up to you what to do, you have the video for kids, plus some numbers here, it shouldn't take long for you to understand what to do and in what kind of trouble you've put yourself into.
Don't be too scared though, out there everyone that has a mortgage didn't understand a damn thing about economy, unfortunately arithmetic wasn't a thing for them.

In your situation, I'd be worried about the scheme though, rather then the increase, the main scam is there.

What absolute rubbish. 
I did write a big post with my personal story, but whats the point. 
Ultimately since I bought my first home, my mortgage has been around 50% of what it would cost to rent the same place. 
My home has increased that much in 5 years that even if it lost 20% of its value, I would still be quids in.

Ultimately if rates keep going up, it will increase rent - it will have to as landlords become accustomed to certain profit margins and the rent needs to be x% above the mortgage repayments otherwise they lose money and will struggle to remortgage to competitive rates. 

It could go in the way you expect, BUT...
My owner would be quite stupid to do it, because I'm probably the most reliable payer of the entire England.
He will raise the price for sure, but following the rules, not 10% overnight, which should kick me away first, and then put it again on rent to someone else, which creates tons of expenses because the agency manages all, + the risks associated with BMW owners (I hope you got it).

Surely you'll have some equity, assuming that:
1. You don't waste too much money in the process

2. You'll sell it when you want, and rent out when you need right after it, LOL, I'm already laughing at it. With the poor cash flow of people in this country, almost no one would sustain such process.

3. You mortgage should allow the equity release, or equity sell off in a short timeframe, it's not like every mortgage is like that.
Plus, in certain economic situations, the bank may not want to sell and it'll be hell to deal with the big guys... They own the house, not you, you just have some little right, which is worth 0.

RobHT

Marccon said:

tony3619 said:

Hello, 

Just curious how people are finding the current situation and the potential Interest rate rises? Have most of you planned for these types of hiked by saving/getting better paid jobs etc? 

My situation is im currently on 1.69% fixed until May next year. I'm probably looking at 5-7% rates by the time I get there. Luckily my LTV is the lowest bracket and the loan value is only about 70 grand. It is shared ownership though so I'm expecting a big rent increase as it's tied to RPI which could be like 15% by that time. It's worrying times but I have savings that will prop up my wage in the short term for a number of years. 

I just don't see how this is sustainable in the longer term for most people. It's gonna get really bad out there...

I have just retired and received a lump sum of £98K and my wife intends to retire next year with a lump sum of approximately £80K. We have investments totaling £57K. Our pensions will be approximately £32K/combined/per/year.

We own a house valued at £430K with a mortgage of £210K and I am at present in the process of re-mortgaging.

I’m unsure whether to use part of our lump sums or investments to reduce the amount we still have to pay on the mortgage, or to weather the storm as the quotes I’m getting for the remortgage are south of £650/month (interest only for 14 years as I’m 55). The mortgage we had was fixed for two years and is coming to an end in a couple of months, which we were paying £334/month.

In addition, I’m also conscious that I will need to pay the balance in 15 years anyway when (if I’m still here) I turn 70. As I have been led to believe that I wouldn’t get a mortgage after 70.

I'm not sure what to do, as I do have the means to clear or partially clear the mortgage. My biggest fear is that once this mess is over the retirement money we had to enjoy will be tied up in the house.

You just realized that investing in 4 walls and one tiny roof doesn't make people happy, and it will tie you up to that ONLY.
My best compliments to you.

You can have a look at this video that I posted above, pretty much on the same matter: https://www.youtube.com/watch?v=q9Golcxjpi8

Usually it pisses off people, but what to say, the wise are just a few.

At the end, it doesn't mean you need to sell and rip off all your dream to own an house and die inside, but it's time to start thinking on how to avoid that trap that you JUST UNDERSTOOD.
It's also a bit late, but definitely ridicolous to take an interest only mortgage, just find a way to pay it off.

If you had invested:
1. You wouldn't have nothing to think about
2. Be living in a brand new house or at least in great conditions, wherever you want
3. No maintenances from now up to the day you'll great this planet
4. More security for your investment, one house it's not better than many companies out there  

emjay2kay

RobHT said:

Marccon said:

tony3619 said:

Hello, 

Just curious how people are finding the current situation and the potential Interest rate rises? Have most of you planned for these types of hiked by saving/getting better paid jobs etc? 

My situation is im currently on 1.69% fixed until May next year. I'm probably looking at 5-7% rates by the time I get there. Luckily my LTV is the lowest bracket and the loan value is only about 70 grand. It is shared ownership though so I'm expecting a big rent increase as it's tied to RPI which could be like 15% by that time. It's worrying times but I have savings that will prop up my wage in the short term for a number of years. 

I just don't see how this is sustainable in the longer term for most people. It's gonna get really bad out there...

I have just retired and received a lump sum of £98K and my wife intends to retire next year with a lump sum of approximately £80K. We have investments totaling £57K. Our pensions will be approximately £32K/combined/per/year.

We own a house valued at £430K with a mortgage of £210K and I am at present in the process of re-mortgaging.

I’m unsure whether to use part of our lump sums or investments to reduce the amount we still have to pay on the mortgage, or to weather the storm as the quotes I’m getting for the remortgage are south of £650/month (interest only for 14 years as I’m 55). The mortgage we had was fixed for two years and is coming to an end in a couple of months, which we were paying £334/month.

In addition, I’m also conscious that I will need to pay the balance in 15 years anyway when (if I’m still here) I turn 70. As I have been led to believe that I wouldn’t get a mortgage after 70.

I'm not sure what to do, as I do have the means to clear or partially clear the mortgage. My biggest fear is that once this mess is over the retirement money we had to enjoy will be tied up in the house.

You just realized that investing in 4 walls and one tiny roof doesn't make people happy, and it will tie you up to that ONLY.
My best compliments to you.

You can have a look at this video that I posted above, pretty much on the same matter: https://www.youtube.com/watch?v=q9Golcxjpi8

Usually it pisses off people, but what to say, the wise are just a few.

At the end, it doesn't mean you need to sell and rip off all your dream to own an house and die inside, but it's time to start thinking on how to avoid that trap that you JUST UNDERSTOOD.
It's also a bit late, but definitely ridicolous to take an interest only mortgage, just find a way to pay it off.

If you had invested:
1. You wouldn't have nothing to think about
2. Be living in a brand new house or at least in great conditions, wherever you want
3. No maintenances from now up to the day you'll great this planet
4. More security for your investment, one house it's not better than many companies out there  

Even the guy in the video explained how he'd just bought a house because it was better for him in the circumstances. 

Ultimately, if you're planning on investing the money and are expecting that to do better as an investment than buying a home, then sure, you do you.

But the idea that renters are happier because they value experiences more than buyers is just odd, to me. It's entirely possible to both own a house and enjoy meals out with friends, hiking or holidays. Not sure why owning a house makes that less likely or why renting would make those experiences more likely, outside of the general demographics of renters vs owners. The greatest monthly cost is the same - the rent or the mortgage - so what money you have outside of that is mostly down to your general disposable income.

I'm not saying renting is bad, far from it. It has its place and its benefits and it's obviously a personal choice. Renting was good for me when I was on my own, or first living with a new partner, when I was younger and wanted to be near the city centre for work and nightlife etc. But now I want to be in the country, with a nice garden I can tend to and in a nicer area.

I've rented and enjoyed not having the maintenance costs I have now, sure. But I actually enjoy spending money on my home, improving it and decorating it how I want, making it a better place for me to live. And once the mortgage is paid off, that's it, my biggest monthly expense ceases to exist and that money can be spent or invested however I want.

It's fair to say you prefer renting. It's ridiculous to imply other people are unhappy or stupid for buying their home.

Kendall80

fleetingmind said:

My 5 year fixed expires September 2023 and I'm  very anxious about how high the rates will be then. Not sure if it's worth paying the ERC and remortgaging. 
They're saying the interest rate may rise .5% tmrw. 

Similar situation here. 2.08% until Sept 2023 - Have called up to confirm ERC and its high at 5% Terrible timing. If only my rate ended 12 months earlier I could lock in right now for 10 yrs at 2.72%  Calcs and projections though with that huge ERC are not good.

MToon

I took out a 5 year fixed rate at 1.56% in March of this year with Nationwide and should be at 60% LTV by the time my 5 years finishes to access the lower rates then (hopefully).  I’m obviously happy I chose a 5 year fix but kind of wish I’d gone for the 10 year now which was only another £100 a month. If I was going to take the same 5 year fixed mortgage out today I’d be paying over £200 per month more which is crazy - feel sorry for people coming out of fixes now!  

Billxx

MToon said:

I took out a 5 year fixed rate at 1.56% in March of this year with Nationwide and should be at 60% LTV by the time my 5 years finishes to access the lower rates then (hopefully).  I’m obviously happy I chose a 5 year fix but kind of wish I’d gone for the 10 year now which was only another £100 a month. If I was going to take the same 5 year fixed mortgage out today I’d be paying over £200 per month more which is crazy - feel sorry for people coming out of fixes now!  

Indeed, my son has just had a shock.  Coming out of a fixed deal the best he can get right now represents an increase of £160pm.

fewcloudy

MToon said:

I took out a 5 year fixed rate at 1.56% in March of this year with Nationwide and should be at 60% LTV by the time my 5 years finishes to access the lower rates then (hopefully).  I’m obviously happy I chose a 5 year fix but kind of wish I’d gone for the 10 year now which was only another £100 a month. If I was going to take the same 5 year fixed mortgage out today I’d be paying over £200 per month more which is crazy - feel sorry for people coming out of fixes now!  

You should overpay each month by at least that “ only £100” then, if it was within your means in March, and hopefully still is. You will not regret it in 5 years time, that’s for sure.