How is everyone's situation regarding interest rates?

london21

I think a lot of people are in for a shock.

The thing is most people don’t check mortgage rates until they are about to get one for a purchase or re-mortgage.

in_my_bumble_opinion

We are ok for the medium term as we have 4 years of our 5-year fix to come at 1.39%. Hoping to do some chunks of overpayment before the current deal expires, but everything is tightening up for sure.

I feel terrible for those who are having to tackle these rates right now or soon with fixes ending.

Very tough on first time buyers, too. Anecdotally, we know two young families that have altered their plans because of current rates (both first time buyers). One family has just given up and hoping to return to the market when rates improve (could be a while!) and the other family is having to significantly re-think what type of property they are searching for.

RelievedSheff

in_my_bumble_opinion said:

We are ok for the medium term as we have 4 years of our 5-year fix to come at 1.39%. Hoping to do some chunks of overpayment before the current deal expires, but everything is tightening up for sure.

I feel terrible for those who are having to tackle these rates right now or soon with fixes ending.

Very tough on first time buyers, too. Anecdotally, we know two young families that have altered their plans because of current rates (both first time buyers). One family has just given up and hoping to return to the market when rates improve (could be a while!) and the other family is having to significantly re-think what type of property they are searching for.

Mortgage rates are still historically very low. The family who ate waiting could have a very long wait in deed if they expect rates to be sub 1% again!

Seraphi

fewcloudy said:

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.

Can I ask what might seem like a silly question - Why are people overpaying?

I completely get the logic if you are a 80 or 70% LTV and you want to get your LTV down another band or to below 60% at the time of the next remortgage for better rates

But if you have a LTV <60%, even with a mortgage rate of 3.5% surely you are better off putting your overpayment money in a S&S ISA for 10 years, and using that sum to pay down your mortgage. With post fee returns of 5% (a reasonable target and below historical trends). You'd be better off in the long run with some money left over.

alanyau88

@seraphi

It depends on the individual's background as there is a risk involved.  Shares can and have fallen considerably previously in a recession and there's no guarantee that your S&S ISA will go up.  You can't just say people shouldn't be overpaying if they are adverse to taking risks.

fewcloudy

Seraphi said:

fewcloudy said:

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.

Can I ask what might seem like a silly question - Why are people overpaying?

I completely get the logic if you are a 80 or 70% LTV and you want to get your LTV down another band or to below 60% at the time of the next remortgage for better rates

But if you have a LTV <60%, even with a mortgage rate of 3.5% surely you are better off putting your overpayment money in a S&S ISA for 10 years, and using that sum to pay down your mortgage. With post fee returns of 5% (a reasonable target and below historical trends). You'd be better off in the long run with some money left over.

I suspect a huge number of mortgages have LTV >60%

However, you are basically asking a question that is asked many times on here; Overpaying vs Saving. It’s not a silly question and there is even a guide on this site with that very title. 

Yes it’s simple maths, but I’d say it’s also down to individual personality, not just pure maths, and of course both options are truly “Money Saving”

I chose to overpay because the Overpayment was gone from my account each month, and couldn’t be spent on something else. Simple as that.

No matter if I needed that money, for repairs, breakdowns, children, holidays, life in general. Whatever was the matter, any money just had to be found from elsewhere; the mortgage always got overpaid.

I think I had a bad feeling that if I had a lot of money available in a savings pot, it would have been (too)  tempting to use some of it in times of need. We will never know, maybe maybe not. We’re all different. Attitude to risk. Managing money.

So you’re not wrong, but my way worked very well for me is all I can say.

*And of course it was very satisfying, rewarding, encouraging to watch my mortgage reduce fairly rapidly. There’s something psychologically positive about doing it my way I think.

RobHT

emjay2kay said:

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.

Fair point of view.
I wasn't saying that no one should buy, it's also possible that one day I'll buy to reduce the risks of my assets in one broker mainly, and reasons like "less monthly cost with a big deposit down".

It just doesn't seem reasonable to do it now, I consider it sick, prices are at the highest and interest rates are rising every quarter...
In the place where I live, I can get a box of 70 square meters for almost 400k, 1h with the car from London center...
A BOXXX LOL!
I forgot to mention the perks:
1. Garden of 20 square meters if you're lucky
2. Standard garage, barely connections inside (water, electricity)
3. Parking is an optional option, I mean, play the lottery is better

RobHT

london21 said:

I think a lot of people are in for a shock.

The thing is most people don’t check mortgage rates until they are about to get one for a purchase or re-mortgage.

The worst is when they don't know about the help to buy scam...

Seraphi

alanyau88 said:

@seraphi

It depends on the individual's background as there is a risk involved.  Shares can and have fallen considerably previously in a recession and there's no guarantee that your S&S ISA will go up.  You can't just say people shouldn't be overpaying if they are adverse to taking risks.

Why not? The risk is no different to a defined contribution employer pension or SIPP - most people don't bat an eyelid putting money into one of those. I can appreciate the psychological positivity perspective @fewcloudy gave though.

The risk of losing money is inversely proportional to the length of time you are invested. Had you invested in a global tracker or the S&P 500 in 2007 prior to the 2008 crash you'd have been in a very heathy profit by 2018.

From my perspective I wanted to check that there wasn't some major mathematical issue I was missing. It seems there's a data driven approach and a psychological approach.

chezzzer

Hello,

My current nationwide fixed mortgage rate is 2.14% which ends on 30/11/22.

I have accepted nationwide 5 yr fixed at 3.44% no product fee to start on 1/11/22

Is this a good deal?

I couldn’t get an adviser appointment until the end of the month and I was worried about rates changing, so accepted online.

I have 11 yr left on my mortgage.

Any advice is much appreciated, Thank you, xx