Are we expecting BOE to remain at 4.75% on 8th February 2025?

Altior

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

Altior

TerryDuckworth said:

Altior said:

What was the mortgage stress test?
The affordability stress test was implemented in 2014 to make sure that the 2008 financial crisis could not happen again.

The 2008 crisis was a result of banks lending more money than borrowers could afford to repay, leading to a housing market crash.

The affordability stress test was designed to prevent people from getting loans that they could not viably pay back. The idea was to calculate borrowers’ ability to meet monthly payments at the current interest rate, and to ensure that should rates go up, borrowers would still be able to continue with their payments.

Here it was:

Following the Bank of England’s Stability Report in 2017, lenders are required to stress test mortgages at 3% above the rate at which fixed or capped rate loans will revert or 3% above the lender’s Standard Variable Rate (SVR). If the SVR of a lender is say 4.75% then the stress test might be conducted assuming a notional interest rate of 7.75%.

So I can imagine if someone has taken out a mortgage rate out at 2% they will be stress tested to 5%. So it looks like many people may have gone over the 3% extra threshold. I suppose with the cost of everything that could be a double blow with all of this inflation. Let us hope interest rates don't go higher but seeing the news lately it looks like they might go  even higher.

No, it was based on the SVR. Even when rates were on the floor, SVR's were never 2%.

Although, as I alluded to, the Bank abandoned this protection just before they hiked the rates back to normal. 

(Rishi has just today praised Bailey's track record at the Bank, and has given him his 'full support')

TerryDuckworth

Altior said:

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

That is probably why I have seen and heard many stories on TV-Radio lately with people calling in explaining that they won't be able to afford these new rates on their mortgages.

Altior

TerryDuckworth said:

Altior said:

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

That is probably why I have seen and heard many stories on TV-Radio lately with people calling in explaining that they won't be able to afford these new rates on their mortgages.

Can't is probably more like don't want to. 

I don't suppose anyone challenged them and started digging into their circumstances. The new world order, it's always somebody else's fault. 

TerryDuckworth

Altior said:

TerryDuckworth said:

Altior said:

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

That is probably why I have seen and heard many stories on TV-Radio lately with people calling in explaining that they won't be able to afford these new rates on their mortgages.

Can't is probably more like don't want to. 

I don't suppose anyone challenged them and started digging into their circumstances. The new world order, it's always somebody else's fault. 

I can't comment on everyone's individual circumstances. But surely if people have less money to spend in the economy it could be very bad for businesses.

MobileSaver

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

I would be careful taking advice from this thread, some people have agendas! Personally if I wanted a 2 year deal I’d fix because I wouldn’t expect rates to come down drastically within 2 years so wouldn’t lose out on much. I’d be considering whether I’d need to fix for longer if rates could keep increasing. Depends on fees / early repayment charges / other factors of course.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down.

Many people think house prices may slowly fall by perhaps 10% over the next year or so (accompanied by a fall in supply and therefore transactions so not quite the win that some potential buyers are hoping for.)

The reason house price crash fanatics get shot down is because they've been on this site for well over a decade predicting every single year that house prices will crash by 30% to 50% and of course they've been wrong every single time.

TerryDuckworth

MobileSaver said:

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

I would be careful taking advice from this thread, some people have agendas! Personally if I wanted a 2 year deal I’d fix because I wouldn’t expect rates to come down drastically within 2 years so wouldn’t lose out on much. I’d be considering whether I’d need to fix for longer if rates could keep increasing. Depends on fees / early repayment charges / other factors of course.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down.

Many people think house prices may slowly fall by perhaps 10% over the next year or so (accompanied by a fall in supply and therefore transactions so not quite the win that some potential buyers are hoping for.)

The reason house price crash fanatics get shot down is because they've been on this site for well over a decade predicting every single year that house prices will crash by 30% to 50% and of course they've been wrong every single time.

They may go higher or they may go lower. I have been interested in these posts as of lately there seems to be a big interest around this with interest rates going up. I don't have a crystal ball so who knows what will happen in the next few years. 

TerryDuckworth

MobileSaver said:

TerryDuckworth said:

weddingringman said:

TerryDuckworth said:

steve866 said:

tony863 said:

Prior to reading the last few pages of this thread I convinced myself a tracker mortgage might be worth the punt being around half a percent lower than fixed. My finger in the air feeling was that the rate would peak around 5-5.5% and then fall steadily back down to 2 or 3%.

Having now read some of the recent comments am I right in guessing the higher rates are here to stay? I appreciate it's a crystal ball moment, but maybe the better question is - would anyone opt for a 2yr tracker mortgage right now? 

I would be careful taking advice from this thread, some people have agendas! Personally if I wanted a 2 year deal I’d fix because I wouldn’t expect rates to come down drastically within 2 years so wouldn’t lose out on much. I’d be considering whether I’d need to fix for longer if rates could keep increasing. Depends on fees / early repayment charges / other factors of course.

Thanks for that Steve. Reading your post I will be very cautious when taking advice off anyone on here. 

People are just tired of generations of people that actively support and attempt to prop-up house prices that are wholly unaffordable for many people now.

I watched rates being slashed during the pandemic and surprise surprise - house prices rocketed. People borrowing record multiples at record lows, and at the same time having the audacity to only fix for 2 years because it’s £20 cheaper per month than a more secure 5 year fix. 

Now that the gambles not paid off, people are crying out for mortgage support which would cost the tax payer billions, continue to prop up house prices, and cause inflation in itself.

In 10 years time I want to help my kids buy a house so I’m afraid we need a house price correction. 

I have been having a good read over some of the posts on here and it seems if anyone mentions a house price correction or crash they get shot down.

Many people think house prices may slowly fall by perhaps 10% over the next year or so (accompanied by a fall in supply and therefore transactions so not quite the win that some potential buyers are hoping for.)

The reason house price crash fanatics get shot down is because they've been on this site for well over a decade predicting every single year that house prices will crash by 30% to 50% and of course they've been wrong every single time.

Here is the link i promised.

https://www.researchaffiliates.com/publications/articles/965-history-lessons

Altior

TerryDuckworth said:

Altior said:

TerryDuckworth said:

Altior said:

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

That is probably why I have seen and heard many stories on TV-Radio lately with people calling in explaining that they won't be able to afford these new rates on their mortgages.

Can't is probably more like don't want to. 

I don't suppose anyone challenged them and started digging into their circumstances. The new world order, it's always somebody else's fault. 

I can't comment on everyone's individual circumstances. But surely if people have less money to spend in the economy it could be very bad for businesses.

Of course. But if someone is telling me that they can't afford their mortgage payment as their rate has gone up to 6% from 2%, I won't accept that on face value (knowing the hoops that are required to be jumped through to obtain a mortgage). Even from a close friend. I would want to know why they did not anticipate rates being higher, especially after the vast expansion of the money supply, directly to consumers (as that would inevitably be inflationary, and the only real tool to tackle inflation is raising the cost of borrowing).

TerryDuckworth

Altior said:

TerryDuckworth said:

Altior said:

TerryDuckworth said:

Altior said:

Sea_Shell said:

But it's only ever a spot check at the time of borrowing.

Nothing to stop someone overstretching their outgoings after the deal's done.   Either through bad luck or design.

 Of course, and they are free to take that risk., and also meet with the consequences if it goes the wrong way for them. 

That is probably why I have seen and heard many stories on TV-Radio lately with people calling in explaining that they won't be able to afford these new rates on their mortgages.

Can't is probably more like don't want to. 

I don't suppose anyone challenged them and started digging into their circumstances. The new world order, it's always somebody else's fault. 

I can't comment on everyone's individual circumstances. But surely if people have less money to spend in the economy it could be very bad for businesses.

 especially after the vast expansion of the money supply, directly to consumers 

What makes you think the vasts amount of the money supply went directly to consumers? If you were furloughed you were only getting 80% of your wages.