Mortgage interest rates are getting painful

london21

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.

Which lender?
Why would they not honour it?
Has there been a major change, for example a different property?

Compared to the past not the highest it can be, but for what we have been used to over the last 10+ years seems high.

simon_or

norsefox said:

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.

This is such an important point. I was reading an FT article on rising mortgage payments which said that, with regard to the monthly mortgage payment as a proportion of monthly household income, an interest rate of 14% back in the days of ultra high interest rates is equivalent to a 3% interest rate today. I think the number is skewed somewhat by the fact that there were a lot more interest only mortgages back then than there are now but it still shows how you can't just blindly compare interest rates in the early 80s to now.

housebuyer143

simon_or said:

norsefox said:

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.

This is such an important point. I was reading an FT article on rising mortgage payments which said that, with regard to the monthly mortgage payment as a proportion of monthly household income, an interest rate of 14% back in the days of ultra high interest rates is equivalent to a 3% interest rate today. I think the number is skewed somewhat by the fact that there were a lot more interest only mortgages back then than there are now but it still shows how you can't just blindly compare interest rates in the early 80s to now.

Exactly this. A 15% rate on a £30k loan is completely different to a 15% rate on a £300k loan.  Even a small increase in rates to 5% will cause massive issues with many in terms of repayments. 

Ksw3

I'm very nervously pushing everyone for us to exchange and complete before our mortgage offer ends. Currently with the new rates it would be an extra £245 a month, even higher I expect after this week's decision.

We've been saving for ten years to get into a good position and it feels like overnight everything has changed.