How are people actually coping with mortgage payments increasing?

Penelopa.Pitstop

We have 0.84% fix until end of 2024. When choosing the product in October 2021 I was afraid to choose longer than 3 years, due to family situation, but it ended ok after all. Back then, 5y fix was 0.94%.

Our mortgage amount should come down significantly by the end of fix and I plan to overpay it with lump sum and then fix or stay on tracker, depending on situation. We're saving one salary every month and I'm keeping it in high interest accounts and moving savings around to get the best interest and avoid tax.

Ballymoney

Genuine question…How many people who are going to really struggle with the higher interest rates actually paid attention to the “If interest rates hit 6% your repayments would be £xxxx per month” line in their mortgage offers on their current low % fixes?

Did you read it and automatically assume those rates will never actually happen? 

I’ll hold my hands up and say that I paid next to zero notice of the warning of higher rates but I’m intrigued to know other peoples experiences.

housebuyer143

Ballymoney said:

Genuine question…How many people who are going to really struggle with the higher interest rates actually paid attention to the “If interest rates hit 6% your repayments would be £xxxx per month” line in their mortgage offers on their current low % fixes?

Did you read it and automatically assume those rates will never actually happen? 

I’ll hold my hands up and say that I paid next to zero notice of the warning of higher rates but I’m intrigued to know other peoples experiences.

I paid attention and stressed my loan to 8-10%. I'm sure others did but life changes best laid plans and peoples situations change. 

fewcloudy

20vt-rs said:

I have a fix @ 1.94% that ends end of May 2023, the lenders current SVR is 5.04%. This jump has a massive impact on people who have hundreds of thousands remaining, especially if you were stretched at the previously low rates.
I would be looking at re-mortgaging and extending the term as much as possible, as well as tightening the belts in other spend areas, however this sounds simple, it is not always straight forward or easy. 

if folks were stretched at historically low interest rates, maybe they are the type who were always going to struggle financially...

simon_or

fewcloudy said:

20vt-rs said:

I have a fix @ 1.94% that ends end of May 2023, the lenders current SVR is 5.04%. This jump has a massive impact on people who have hundreds of thousands remaining, especially if you were stretched at the previously low rates.
I would be looking at re-mortgaging and extending the term as much as possible, as well as tightening the belts in other spend areas, however this sounds simple, it is not always straight forward or easy. 

if folks were stretched at historically low interest rates...

And historically high house price to income ratios...

simon_or

Ballymoney said:

Genuine question…How many people who are going to really struggle with the higher interest rates actually paid attention to the “If interest rates hit 6% your repayments would be £xxxx per month” line in their mortgage offers on their current low % fixes?

Did you read it and automatically assume those rates will never actually happen? 

I’ll hold my hands up and say that I paid next to zero notice of the warning of higher rates but I’m intrigued to know other peoples experiences.

My offer (with a fixed rate between 1-2%) actually says "if the interest rate rose to 10.84%, your payments could increase to xxx"

Like you, I can honestly say that I saw that only as a very remote possibility and definitely not within a year or two...

mi-key

A lot of people have taken out mortgages who could only afford them because of the very low rates for the past years, and could only get them on short term fixes. Sadly these people will always be the first to suffer with a big rate rise. I don't think it's so much that people ignored how much the payments could go up by, it was just the only way they could ever hope buy a property and they hoped they would stay the same.

A 4% jump in mortgage rates in a month really is unprecedented, and nobody was expecting it
 

RelievedSheff

sancahojo said:

RelievedSheff said:

simon_or said:

Why? Plenty of people coming off a fix who were probably paying something between 1-2% are now looking at rates between 5-6%.

For a 200k mortgage over 35 years, that takes your monthly payment from £565-663 to £1,009-1,140.

Running our own figures for when we come around to remortgage if we use todays figures our repayment would at worst increase by £200.

(£129,000 remaining balance over 10 years)

Not a massive increase and certainly one that wouldn't be cause for concern.

My remaining balance is £582k, so take your £200 and x5

Presumably your salary is many times more also to match that figure?

What percentage of your take home pay is your mortgage payment?

RelievedSheff

Ballymoney said:

Genuine question…How many people who are going to really struggle with the higher interest rates actually paid attention to the “If interest rates hit 6% your repayments would be £xxxx per month” line in their mortgage offers on their current low % fixes?

Did you read it and automatically assume those rates will never actually happen? 

I’ll hold my hands up and say that I paid next to zero notice of the warning of higher rates but I’m intrigued to know other peoples experiences.

Our previous two mortgages have been at much higher rates than we are currently fixed at so we took a lot of notice of what our repayments would be at higher rates.

We knew full well that rates would not stay so low.

It does genuinely befuddle me how some people are already saying they are struggling when rates have not risen by that much really and with the cost of living only going one way for the foreseeable a lot more people look set to be in the same situation 🤔

Ksw3

We haven't bought yet but looking at a 60% increase in our monthly payments if our offer expires. (I had a 3% payrise this year so barely a dent!). The sale could all fall through and we still won't be on the ladder.