If they say BOE will peak at 4.5%...does this mean it will then start to drop to say 2% again?

fergie_

Aberdeenangarse said:

simon_or said:

It's not going to go to 2% unless inflation crashes and the bank of england slashes the base rate (both of which are unlikely anytime soon imho) but I think high street high LTV mortgage rates will be around 4% or so by the end of 2023 or early 2024.

That’s still twice what people were paying 12 months ago!

Its not twice unless you are one of the minority on an interest only mortgage. The main element of the monthly payment is capital and stays the same. Its only the interest part that has doubled in this scenario.

Newbie_John

House prices are ruled by demand, if they were clearly unaffordable, then they will get cheaper - people that need to sell houses will reduce prices rather than wait 10 years.
The reason why they have been going up is because they are still affordable, yes, people stretch their earnings, spend less here and there but they can still afford them. And we're not talking everyone is buying 4 bed detached houses.. we drop on quality, but still can afford some space.

Another reasons is that there were many additional perks thrown into the game - reduced stamp duties, shared home ownership etc, extremely low mortgages.

Dandytf

dunstonh said:

Days of 1-2% might be gone for now.

Probably not to be repeated in our lifetime.  Governments need to get back to the more typical ranges as the ability to use interest rates to heat or cool an economy are not possible when interest rates are circa 1%.

No one knows, not even those that claim they know/ie financial experts.

No-one knows as you say. The events that will drive inflation in either direction are not yet known.    One of the major influences in the UK (and the rest of the world) is the strong dollar.   If the US keeps the dollar strong, then inflation will take longer to bring under control and the pain will have to be higher rates than predicted.   If the dollar weakens then the measures needed in the UK will reduce.

I don't expect to experience 1-2 or less % ever again.

thanks

wheldcj

I disagree that the housing market is still deemed as affordable and liken the current situation to an approaching hurricane.

There is currently high wind affecting some but most look at it as some distant problem or that it will magically change course.   Fixed rates are protecting a fair chunk of the population and houses that were being purchased/offered on recently are likely on deals already agreed months previous.

I think, like the energy crisis there may be either a feeling that government will intervene or that rates will tumble as quickly as they rise.   Also as many private sectors review pay in Q1 possibly an over optimistic expectation of wage rises?

Next year will really be the pain point to many as more fixed rate deals end, inflation is stubbornly high and has a compound impact and the real effects of drops in consumer spending and business investment start to hit the economy and talk turns to redundancy and insolvency.

I believe that we may then see a more rapid drop in house prices especially at the higher end where older people pass away in expensive areas and those inheriting want to shift and demand just isn’t there.

I tend to think that even in a deep recession there will be little appetite for BOE to drop below 3% for fear of repeating the whole cycle.

coypondboy

the cost of energy (cap removed in march) is like a 2% rise in interest rtaes for the average mortgage of 125k so peak at 6.5%.

MattMattMattUK

coypondboy said:

the cost of energy (cap removed in march) is like a 2% rise in interest rtaes for the average mortgage of 125k so peak at 6.5%.

If only it was that simple. 

snowqueen555

Newbie_John said:

House prices are ruled by demand, if they were clearly unaffordable, then they will get cheaper - people that need to sell houses will reduce prices rather than wait 10 years.
The reason why they have been going up is because they are still affordable, yes, people stretch their earnings, spend less here and there but they can still afford them. And we're not talking everyone is buying 4 bed detached houses.. we drop on quality, but still can afford some space.

Another reasons is that there were many additional perks thrown into the game - reduced stamp duties, shared home ownership etc, extremely low mortgages.

Htb  did not help.

Housing is not affordable for millions of people in this country. In an ideal economy and market there would be houses suitable for all salaries however that is not the case.

RelievedSheff

snowqueen555 said:

Newbie_John said:

House prices are ruled by demand, if they were clearly unaffordable, then they will get cheaper - people that need to sell houses will reduce prices rather than wait 10 years.
The reason why they have been going up is because they are still affordable, yes, people stretch their earnings, spend less here and there but they can still afford them. And we're not talking everyone is buying 4 bed detached houses.. we drop on quality, but still can afford some space.

Another reasons is that there were many additional perks thrown into the game - reduced stamp duties, shared home ownership etc, extremely low mortgages.

Htb  did not help.

Housing is not affordable for millions of people in this country. In an ideal economy and market there would be houses suitable for all salaries however that is not the case.

There are houses for all salaries. Trouble is a lot of people don't want to live in them.

Where we live flats and houses can still be bought for sub £60k and wages are above average.

mnkone

RelievedSheff said:

There are houses for all salaries. Trouble is a lot of people don't want to live in them.

Where we live flats and houses can still be bought for sub £60k and wages are above average.

I have to agree here, my wife and I live on a new build where the prices are slightly higher than average in the area, but still compromised so we wouldn't be stretched, but the estate also has some houses and apartments for £60k - £80k.
I think one of the issues are that too many people believe they deserve much more than what they can afford. Its not about what you deserve, its just about what's within your budget, taking potential increases in costs into account.