Mortgage interest rates are getting painful

snowqueen555

Hi all,

How is everyone coping with applying at current rates? I am getting 3.99% with a 60 LTV. Compared to a few months ago this is pretty painful. I had locked in 3.25% a couple of months ago but they will not honour it now.

simon_or

The bank withdrew the offer before expiry simply due to interest rates going up? Which bank is it, I didn't realise they were doing that.

We've had 5% high street rates (mine was at 8% or so as I had really bad credit at the time) as recently as 2012, so in that context 4% is not that bad.

dunstonh

Mortgage interest rates are getting painful

No they are not.   They are still much lower than 15 years ago.

How is everyone coping with applying at current rates? I am getting 3.99% with a 60 LTV.

At any point before 2008 people would have bitten your hand off to get a low rate like 3.99%.

The long term average is closer to 7%.

snowqueen555

dunstonh said:

Mortgage interest rates are getting painful

No they are not.   They are still much lower than 15 years ago.

How is everyone coping with applying at current rates? I am getting 3.99% with a 60 LTV.

At any point before 2008 people would have bitten your hand off to get a low rate like 3.99%.

The long term average is closer to 7%.

I understand rates are low historically, but in the current situation with really high house prices, 2-3% makes a really big difference for those trying to buy right now.

id311299

snowqueen555 said:

Hi all,

How is everyone coping with applying at current rates? I am getting 3.99% with a 60 LTV. Compared to a few months ago this is pretty painful. I had locked in 3.25% a couple of months ago but they will not honour it now.

This is really disturbing - please do share with us which bank / institution is this, and how did they justify their action? Was it a change of lender, or product change with the same lender?

norsefox

dunstonh said:

Mortgage interest rates are getting painful

No they are not.   They are still much lower than 15 years ago.

How is everyone coping with applying at current rates? I am getting 3.99% with a 60 LTV.

At any point before 2008 people would have bitten your hand off to get a low rate like 3.99%.

The long term average is closer to 7%.

As has been said, context matters.  Lower historic interest rates aren't as helpful, if the price of your average property in relation to average wages is significantly higher.

So to be fairer to the original poster - are mortgage rates becoming more painful?  Objectively, yes.  Could they get worse?  Of course.

I know you know this, but it is important.

If they ever approached anything like historic levels, then houses just become unaffordable and the prices would need to correct.

Edit: new buyers are in a particularly perilous position where they are presumably on stagnant wages, and at a time where house prices are still set on historically low interest rates, but they are having to entertain mortgage rates that don't align with current house prices (by virtue of interest rates moving much quicker than house prices or pay can correct for).  That's particularly tough for people in this position to take.

tifo

I'm on 5.99% SVR  ... and it'll rise as B of E will raise interest rates soon ...

RelievedSheff

People are too used to low interest rates. There is a whole generation who will have never known rates so high, so it is perhaps understandable that they are concerned.

However interest rates were only ever going to go one way from their historically low levels. Anyone expecting interest rates to remain so low really needs to question their logic.

We have rarely been in a situation to make the most of the low interest rates. Our first mortgage in 2007 was a Northern Rock Together (100% + ) mortgage taken out right before house prices crashed. We were stuck on a rate of 5.89% for many years after that due to negative equity we could not remortgage.

When we finally did move in 2019 a combination of a high LTV required on a new build and some adverse credit history meant we were on a fixed rate of 5.19% with an adverse lender for a couple of years until the adverse credit dropped from our files. 

We remortgaged to a mainstream lender last year and finally got a lower rate of 2.3% fixed for 5 years. We have 3.5 years left to run on that and fully expect to be paying a higher rate when the time comes to remortgage again.

Worrying about interest rates doesn't change them. They will be what they will be at the time you need to take out a mortgage.

SusieT

I am very very lucky as last year I took out a long term fix that will hopefully mean the mortgage is nearly cleared before it finishes.  However a good friend is not as lucky as they are stuck at (I think) something like 4% over base on a standard variable for their buy to let, and cannot do a remortgage, so from our last conversation will soon be selling.
I think for buyers it is worth looking at the longer term spreads on the rates, and then seeing what is affordable allowing for rates going up to say 7% so that they know that they can handle a jump in interest if it goes higher than the banks seem to expect.

4littleone

I've been offered 4.4% on a 95% LTV so 3.99 at 60% LTV seems a bit high to me? I'm fixing for 5 years, a bit nervous about that but I don't think interest rates will go back down for a while and the rate I've been offered is comfortable with room to save up a deposit again and remortgage with a better LTV in the future.

Danieljw90

I just received an offer of 4.29 fixed for 5 years.. 95%LTV