What is the actual future for mortgages and rates? As frankly every news article in hindsight...

IAMIAM

was wrong....

The BOE is now going to 5% as a minimum in my eyes, with rates set to continue into 6% over next 12 months. 

Surely this has got to stop eventually, how anyone can now afford a mortgage with stress rates at 8% is beyond me, especially if single, first time buyer or even upgrading homes. 

And I don't need to know that rates were artificially low for the last 15 years, or that mortgage payments were 50% of take home pay 15 years ago, or yada yada yada. Society has moved on from those days. Especially as I can remember when a Freddo was 10p and an iphone didn't exist. 

Altior

You can definitely ignore most media, and apply loose logic. The BoE will follow the Fed. 

That logic again, it was pretty obvious that inflation was going to be harder to get on top of, and even more difficult to get close to the target rate than any of the authorities were letting on.

In theory, the Bank has one job, and it doesn't involve being concerned about whether people can afford mortgage rate increases.

COYI123

IAMIAM said:

was wrong....

The BOE is now going to 5% as a minimum in my eyes, with rates set to continue into 6% over next 12 months. 

Surely this has got to stop eventually, how anyone can now afford a mortgage with stress rates at 8% is beyond me, especially if single, first time buyer or even upgrading homes. 

And I don't need to know that rates were artificially low for the last 15 years, or that mortgage payments were 50% of take home pay 15 years ago, or yada yada yada. Society has moved on from those days. Especially as I can remember when a Freddo was 10p and an iphone didn't exist. 

That’s life unfortunately. What you have to realise is , houses are not no where near worth what they are currently priced at . A house shouldn’t be that much money . It’s all about control of people from big groups . You’re average joe nowadays that works an average job owns a brand new Mercedes because of the status people want in this new generation , but what comes with that is a lot of debt when they are paying stupid car payments a month and that’s just one form of finance . So when something like interest rates go up , most people moan because they have every other bill as well . But in reality , if you earn 50k a year for example , you shouldn’t be driving a 50k car , but a lot of people out there are . As the old saying goes , too many people are living a champagne lifestyle on lemonade income .

Altior

Yes, there is no shortage of work currently, and not many people will go all the way to a repossession if they are employed. It does not feel like we are close to carnage due to rate increases, unless (let's hope not) there's a world event that triggers another deep global recession.

The media will of course ramp up the fear and make out the floor is about to fall out of society because mortgage costs have increased for some people. It's more damaging politically, which means an increased risk of knee jerk reactions by policymakers, that are far more damaging than the problems they are hoping to mitigate (and election obliteration). 

Edi81

Demand ie population is far greater than supply. Personally I can’t see a huge house price correction. 

JohnJ76

IAMIAM said:

was wrong....

The BOE is now going to 5% as a minimum in my eyes, with rates set to continue into 6% over next 12 months. 

Surely this has got to stop eventually, how anyone can now afford a mortgage with stress rates at 8% is beyond me, especially if single, first time buyer or even upgrading homes. 

And I don't need to know that rates were artificially low for the last 15 years, or that mortgage payments were 50% of take home pay 15 years ago, or yada yada yada. Society has moved on from those days. Especially as I can remember when a Freddo was 10p and an iphone didn't exist. 

Yes it will stop eventually but your text in bold is one of the major contributory factors as to why we are where we are whether you like it or not.  I spoke to an estate agent the other day and they have sold three houses over £350k to a family from Hong Kong - all 3 in cash.   Just because you may not be in a position to see how people can afford 8% stress tests doesnt mean that lots of other people can't. I can quote another example, my BIL was given a very large sum by his family, as a first time buyer he bought a £500k house.  to the outsider ''how can he afford that'' - to those in the know, he has a £150k mortgage and rates would need to hit 20% before he curbed his spending i imagine.   Unless people lose their job (in which case it doesnt matter if you are mortgaged or rent) its amazing how resourceful people can become when faced with a huge mortge rise.  We are at ''normal'' mortgage rates more or less. We may go a bit higher, may start to tail off but there still seems plenty of money about from whatever the source.

dunstonh

Historically, inflation has been controlled by increasing interest rates above the rate of inflation.   This time is a little different which is why you are seeing inflation figures being referred to as a split.  e.g. core inflation.    If the historic methods are used, interest rates would need to move to above 7%.  

ader42

IAMIAM said:

Society has moved on from those days. 

And now it’s moving back to those days.

The average BOE base rate from 1971 to 2023 is 7.11%

We will be moving back to the average imho, but they don’t want to let everyone know this straight away… hence every month the can gets kicked a bit further down the road. 

So many people are on fixes that the mortgage rate hurt hasn’t even started for most people (like me) yet. 

We will see the start of the end only when we keep getting media reports of ever increasing amounts of repossessions. We are nowhere near there yet. 

weddingringman

Had mortgage rates remained around 4-5% these last 10 years then property would probably be 30-40% cheaper. 

Look what happened when the inept Bank of England slashed the base rate to 0.1% in 2020. Typical mortgage rates dipped to just 1-2% and prices rocketed. And no wonder when money is that cheap. It’s virtually interest free credit!!

When will people learn?

housebuyer143

weddingringman said:

Had mortgage rates remained around 4-5% these last 10 years then property would probably be 30-40% cheaper. 

Look what happened when the inept Bank of England slashed the base rate to 0.1% in 2020. Typical mortgage rates dipped to just 1-2% and prices rocketed. And no wonder when money is that cheap. It’s virtually interest free credit!!

When will people learn?

I can agree that I bought a much larger house than I needed because rates were so cheap, it was an actual conscious decision as repayments were cheap and money was better off increasing in value in property than it was in the bank earning no interest. 

As it happens I can afford my house at 10% so it's fine but how many people did this and can't... We are going to see some people in trouble in the coming few years.

Aberdeenangarse

It looks like we’ll be stuck with higher Interest rates for the foreseeable future.

The Bank of England will not get inflation back under control until the end of 2025 because of soaring food prices and a "concerning" rise in wages, according to Goldman Sachs.

The Wall Street giant predicted it will take at least two-and-a-half more years for policymakers to bring the headline rate back to its 2pc target from the current 8.7pc level.

It blamed a "more gradual decline in food inflation" and the UK's tight jobs market for the slower decline.

While Goldman said a sharp fall in gas prices will help bring down household energy bills significantly this year, it added: "food inflation, on the other hand, remains at record levels and has shown limited signs of slowing so far."

Ibrahim Quadri, UK economist at Goldman, added: "Given the tightness in the labour market, we remain concerned about the risk of wage growth not cooling sufficiently and sustainably over the medium term."

Goldman analysis shows there is roughly a six-month lag between any significant rise or fall in producer prices and its impact on the cost of the weekly shop. While this relationship suggests supermarket prices "should moderate going forward", it added that the decline was likely to be more "gradual" than usual.

It expects food prices to keep rising at an annual pace of at least 2.5pc until 2026.