I'm terrifed! Like many!

IvyFlood

Our 5 year fixed term (Nationwide) ends next September and we can only avoid ERC in the 3 months prior, so July. We don't actually know if we want to remortgage as I didn't realise you need to go through all the conveyancing again but depends what deal we get.

Regardless, I am absolutely terrified of what the rates will be next July. I had heard about some lenders offering deals that last 6 months so we could start looking Feb 23 ready for July 23.

We borrowed 165k and as of today we owe 143k, 18 years left next September.

I realise we'd all be millionaires if we knew, but what will things be like next year?! I've heard some right horror stories. Should we sit tight in the hope things might have calmed down or is that wishful thinking?! OR I don't know if its worth paying ERC (approx. £1400) and securing a new deal now, but then I heard that some lenders are halting new deals so not even sure about that!

Its a very scary time!

jj_43

Paying £1400 ERC so you can move quicker onto a mortgage at a much higher rate now, which may be lower than making that choice next year? Too many ifs. Stay put I suggest. If your that scared start budgeting.

ACG

You could apply for a new mortgage now with a different lender which has a 6 month offer period. Let it sit there until march time. 
If rates come down, great. If they go up, you have something secured - although in the current climate it is possible offers could get pulled. 

You could find we have a new PM or even a new government by september and that might allow rates to come down. As you say, nobody knows so it might just be a case of getting an insurance policy in place so to speak. 

IvyFlood

ACG said:

You could apply for a new mortgage now with a different lender which has a 6 month offer period. Let it sit there until march time. 
If rates come down, great. If they go up, you have something secured - although in the current climate it is possible offers could get pulled. 

You could find we have a new PM or even a new government by september and that might allow rates to come down. As you say, nobody knows so it might just be a case of getting an insurance policy in place so to speak. 

The earliest we could do that would be Feb 23 as 6 months from now is March 23 and we can only leave our current deal July 23 so it would expire before we need it.

I hope we have a new PM!

ACG

You can apply for a mortgage with a different lender now. Rate wise you would be looking at around 4.5% I imagine. 
If rates go up to say 6.5% in 6 months time, you might decide to keep the 4.5% deal and pay the ERC. 

CSL0183

IvyFlood said:

Our 5 year fixed term (Nationwide) ends next September and we can only avoid ERC in the 3 months prior, so July. We don't actually know if we want to remortgage as I didn't realise you need to go through all the conveyancing again but depends what deal we get.

Regardless, I am absolutely terrified of what the rates will be next July. I had heard about some lenders offering deals that last 6 months so we could start looking Feb 23 ready for July 23.

We borrowed 165k and as of today we owe 143k, 18 years left next September.

I realise we'd all be millionaires if we knew, but what will things be like next year?! I've heard some right horror stories. Should we sit tight in the hope things might have calmed down or is that wishful thinking?! OR I don't know if its worth paying ERC (approx. £1400) and securing a new deal now, but then I heard that some lenders are halting new deals so not even sure about that!

Its a very scary time!

The experts are predicting 5.5-6% peak now. This time last week it was 4.5-5% peak. 

Your mortgage finishes around the same time that these experts are predicting the peak (not good) 

You would need to work out your ERC and the rate deal you can secure now (Likely around 3.5-4.25%) factor in how much extra you would be paying over that 12 months plus the ERC, it might cost you let’s say £2,500 to get out now and secure a 5yr fix. 

However, if the experts are right and BOE BR is 6% this time next year and your mortgage rate is 8% then how much worse off will you be for the 2/3yr fix that you would need to take against say that £2.5k figure above. SVR rates being worse incase you didn’t want to fix. 

It’s a tricky one for sure, you would have to sit down and do the maths. 

It’s looking a little dire to be fair. For peace of mind, me personally I would want the security of knowing rather than panicking every 6 weeks when the BOE increase and increase and increase. 

MattMattMattUK

IvyFlood said:

I realise we'd all be millionaires if we knew, but what will things be like next year?! I've heard some right horror stories. Should we sit tight in the hope things might have calmed down or is that wishful thinking?! OR I don't know if its worth paying ERC (approx. £1400) and securing a new deal now, but then I heard that some lenders are halting new deals so not even sure about that!

Current estimates are anywhere between 3.75% and 8%, with most predictions seeming to settle in the 6-6.5% area, though that comes with the caveat that Truss and Kwarteng don't make any more stupid decisions/announcements. 

The best thing to do would be to overpay now as much as you possibly can, which is what I am planning on doing until my fix ends. No holidays, I have put off buying a new (second hand) car, indefinitely delayed buying additional items for home etc. because I think the absolute best case scenario is that my mortgage interest rate will go from 1.8% to 5% but realistically I expect it could be close to 7%. Unfortunately I think we are also heading for a housing crash, how much is anyone's guess but 10-30% would not be unreasonable. 

I think that for everyone but the very wealthy or ultra high earners the next five years are going to be pretty rough, which after the last two years is far from great. 

london21

IvyFlood said:

Our 5 year fixed term (Nationwide) ends next September and we can only avoid ERC in the 3 months prior, so July. We don't actually know if we want to remortgage as I didn't realise you need to go through all the conveyancing again but depends what deal we get.

Regardless, I am absolutely terrified of what the rates will be next July. I had heard about some lenders offering deals that last 6 months so we could start looking Feb 23 ready for July 23.

We borrowed 165k and as of today we owe 143k, 18 years left next September.

I realise we'd all be millionaires if we knew, but what will things be like next year?! I've heard some right horror stories. Should we sit tight in the hope things might have calmed down or is that wishful thinking?! OR I don't know if its worth paying ERC (approx. £1400) and securing a new deal now, but then I heard that some lenders are halting new deals so not even sure about that!

Its a very scary time!

No one knows what the next 6-12 months will be like with regards to interest rates.

If you are staying with the same lender it is relatively straight forward to remortgage.

If you want some certainty then paying the ERC to remortgage now or can wait till next year 3 months before deal ends when you can remortgage without ERC. You can play around with the numbers to see if it is worth paying the ERC. 

we5ley

I have bit the bullet and just paid 660 to get out of my fix which ran till the end of 2023 and gave up my 2.1 to move to 3.9, for 5 years, that means that next year i am basically paying a grand more than i should be, now, but even if interest rates only go to 5% i will save 600 a year for the 4 years after that. Interest rates will be what every they are, but i would rather pay the extra 40 quid a month and know i can cope with that than wait a year and wish i had.

Rates have been low, really low and if this was a global crash then yes they may have to go lower, but this is a tory gov shot its self in the foot crash, and the usa and others putting rates up and us having to do the same to keep up. It does not matter if the uk recovers if every one else does and puts rates up we will simple have to as well. 5% has been the norm so even they go to only that i will save, but i remember the 90s and 15% and how bad it was for my mum and dad at the time.

PK_London

IvyFlood said:

Our 5 year fixed term (Nationwide) ends next September and we can only avoid ERC in the 3 months prior, so July. We don't actually know if we want to remortgage as I didn't realise you need to go through all the conveyancing again but depends what deal we get.

Regardless, I am absolutely terrified of what the rates will be next July. I had heard about some lenders offering deals that last 6 months so we could start looking Feb 23 ready for July 23.

We borrowed 165k and as of today we owe 143k, 18 years left next September.

I realise we'd all be millionaires if we knew, but what will things be like next year?! I've heard some right horror stories. Should we sit tight in the hope things might have calmed down or is that wishful thinking?! OR I don't know if its worth paying ERC (approx. £1400) and securing a new deal now, but then I heard that some lenders are halting new deals so not even sure about that!

Its a very scary time!

I'm terrified too. Without getting all political, with energy prices where they are and the cap the government is funding, I dont see how they can borrow less. Rolling back on the taxes might make some impact on the value of the pound but not enough to mitigate circa 5-6% interest rates. I dont even think Labour's policies would make much of an impact. I was horrified to see Nationwide pretty much put new product rates up to almost 6% - when the base rate is 2.25%! Goodness know what things will be like in 6-12months when actual base rates are close to 6%. I cant BOE rates going below 2% any time soon. Sooner or later we're going to have to pay more and see the value of properties decrease as a result. 

I have been following the rates in Canada, USA and Australia and its the same thing down there.

I dont think the UK government has the power to control inflation and keep rates down. The more they spend the worse it will get. The general advice here seems to be to really see if you can swallow the ERC and remortgage early. You might be paying a bit more now but you have security for the next 5yrs when hopefully rates will be lower again.

Having said that though, i was one of the "wise" ones who locked in a energy rate much higher than the cap only for the government come in and cap everyone's bills even lower. I dont think the government will be able to swoop in and save the day for mortgage holders. Im sorry I wasnt able to offer you and positive advice and I do hope you manage to make the right choice for your personal circumstances. Good luck!

fewcloudy

Lots of terrified people, lots predicting higher and higher interest rates.
Be careful of acting in panic.
Bank of England will intervene and do things unexpected, or government will.
Many events causing this could change in the next year and finding yourself on a 10yr fix based on today's rates might be an awful position to be in 2yrs down the line.