How are people actually coping with mortgage payments increasing?

BikingBud

fewcloudy said:

I’ve said it before and I’ll say it again.

In a successful effort to facilitate financial business/markets, the mantra from the BOE for a good number of years now has been, yes, interest rates will eventually rise from their all time historic low, but when they do it will be a slow and steady rise over a number of years.

They most certainly did NOT mean from 0.25% to 2.25% in less that a year.

Despite what some on here say about the BOE losing the plot, I feel their slow/steady plan was exactly what was required to get interest rates back to a more sensible level, and unfortunately it has been blown out of the water by some mad Tory economic plans.

Their hand has been forced, to save the value of the pound and our pensions! We are living through tumultuous times and I think there is much more drama to come.

If they drop at that rate, 4.5% > 1.5% between Nov 08 and Jan 09, they must also be able to rise at that rate.

london21

A lot of people are not yet affected due to their current fixes still running. 

The shock comes when it is time to remortgage. 

MFWannabe

We are one of the lucky ones, our current 5 year fix doesn’t end until Dec 2025 
1.34%. Have always overpaid and intend to save as much as possible between now and then to get it right down as much as possible. Who knows what the rate will be by then, I personally think it won’t go as low as 1-2% again though. 

When we first took out our mortgage it was 3.89% which was quite high then 
we could afford if it went up to 10%+ as our mortgage is relatively low 

brownbagsFTB

If people really understood total amount repaid and how much more it costs to pay a mortgage off over 35 years v 25 years then the situation may have been different.

For too many it is too late, they have sold their soul.

I think most people do understand. I was well aware of the interest on my 30 year mortgage but as I didn’t manage to save enough to buy alone until I was 39, if not then… when? Getting on the housing ladder is seen as critical for most people my age. We want assets by the time we retire and to not have to be beholden to landlords and pay a good proportion of what will likely be a very meagre pension in rent. Many people I know survived the 2008 housing crash and we will survive this. It’s better to be a homeowner (even if it it does involve a few years of struggle out of a 30 year term) than it is to be renting forever. People always have the option of overpayment when rates are low. 

Martisha

Applied last week for 5 years fixed at 5.39% now I am reading news that rates are going down next week

MFWannabe

Martisha said:

Applied last week for 5 years fixed at 5.39% now I am reading news that rates are going down next week

I think if you only applied last week you can cancel the application? If you want to? 

Not sure interest rates will come down but personally I wouldn’t fix for 5 years at an interest rate above 5% but it all depends on personal circumstances, amount owing and ltv etc, also the standard variable rate or tracker mortgage you could get 

sammyjammy

dander said:

I hate the thought of people going on to interest only. It feels like such a gamble to reduce payments and stop paying off the debt. At least with extending the term people are still gradually paying the debt off. It scares me that people might be so focussed on cost they aren't thinking about securing their homes.

Its not an option for most people these days.  Those who have it have either had it for more than ten years or have big deposits and incomes.

housebuyer143

Martisha said:

Applied last week for 5 years fixed at 5.39% now I am reading news that rates are going down next week

I can tell you that lenders are not frantically changing the interest rates every week like they were two weeks ago, which tells me they have priced the rates high enough to cover the shifting swap rates. 
This means there is room for them to come down if things improve and the fact that they are offering existing customers rates that are 2% under market rates at the moment shows this. 
At the moment they have priced a 4% margin over base rate which is loads! When works dries up, you might find they try and lure customers back with lower rates. 

[Deleted User]

In 2020, prior to searching for a home, I did calculate the interest that would be payable at different LTVs and for houses in different price ranges. It was eyes wide open. We were really motivated to be paying 1.5% interest and not 4%.  We did not have the necessity or want to move to the nicest area with the largest loan available. At 60% LTV and maybe lending 200k less than was on offer it feels like we can overpay or save until the end of the fixed rate.

Martisha

MFWannabe said:

Martisha said:

Applied last week for 5 years fixed at 5.39% now I am reading news that rates are going down next week

I think if you only applied last week you can cancel the application? If you want to? 

Not sure interest rates will come down but personally I wouldn’t fix for 5 years at an interest rate above 5% but it all depends on personal circumstances, amount owing and ltv etc, also the standard variable rate or tracker mortgage you could get 

We are porting £96k at 1.69% until June 2024 and borrowing £220k at 5.39% with Nationwide.
Ltv is 83%

This was the cheapest option last Friday.
Broker did not advise to wait, now I am questioning myself weather we should delay the application.