When do you think mortgage rates will go down?

[YouLittlePlonka]

?

Not sure they will.

We they might a bit but the historical lows if the past decade I very much doubt our kids will see those rates.

The previous Governor of the Bank of England was talking last night about much higher interest rates for years and years to come. It’s a grim prospect for our kids who may have wanted to get on the property ladder.

I think it's unlikely in the next 5-10 years personally.

A more suitable question may be when will they stop rising I think...they may not come down for a while but to sit at 5-6% is better than keeping going up and up and up

Current expectation is 2025.

This

how long is a piece of string?

they were under 1% for 13years, but prior to that 3-5% was pretty good. In 1979 interest rates hit 17%

Funnily enough, more 20-30year olds owned homes when interest rates were far higher than they are now, and a lot of times on just one income too.

the problem has never been the interest rates, but how house prices have been kept artificially high and beyond the reach of an average income

About 6-8% is fairly average in the past I would think so I guess it's not unusual for them to hover around that amount for quite a while

When inflation gets back down to 2% which is expected early 2025.

Inflation already down to 8% from 10% earlier this year, but not coming down fast enough hence further rises expected over the next 6-12 months

Exactly. If house prices were lower and interest rates higher it’s more sustainable for pensioners trying to live off their savings also.

Is it better then to pay off your mortgage in full if you can when your lower term ends?

Mine does next year and I am saving for a new deposit to move.

I don't really know what I am doing to be honest but am I better to have savings or pay off the mortgage then re start saving?

They won't.

They will hit around 5.5, the level they were in 2006, and stay there.

Even when inflation drops, the banks will be creaming it in at those rates and there's NO way they will want to give up that shot in the arm.

Wages will catch up to make things more comfortable.

But those hoping for bargain homes will be disappointed, if prices fall, they won't stay down for long.

I think people (especially those now in their 20s) need to accept that the idea of owning their own home is now something of the past. Young people now will rent until the day they die. It's something they need to plan for. Maybe a new form of pension perhaps, far bigger contributions but also a bigger pay out. Enough to pay rental costs in retirement.

Or perhaps intergenerational living will become normal again, with people only marrying someone who can bring money or property to the table.

Those who do own their homes, by whatever means, will be considered the elite of society. Phrases such as "well they own their house" will be used to describe people who are above others in social standing.

But interest rates are not coming back down again.

Maybe slightly in a couple of years but they won't come back down to the kinds of levels we've seen over the last decade.

The problem isn't interest rates- they're not especially high at the moment except by reference to the very recent past and very low interest rates cause problems of their own. The problem is house prices, which have grown so much partly as a result of very low interest rates. If higher rates act as a brake on house price rises (as they should), that will be a good thing.

Back down to where?
The 2%'s weve been seeing? Probably not in your lifetime.
Where we are now is about average. How sustainable incomes/house prices/mortgage rates are remains to be seen.

They have been too low for too long, that’s the very unpalatable truth. At around 5% is what they should have been around. It’s not interest rates it’s house prices that are the issue.

You can’t accurately predict. We fixed 3 years ago for 5 yrs hoping that would be only enough for the Brexit dust to settle but now I’m wishing we had fixed for 10 years. Things like Ukraine war and pandemic while not wholly unexpected are difficult to predict.

I added this to another thread but reposting here

https://www.theguardian.com/business/live/2023/jun/15/interest-rates-to-remain-high-carney-ecb-fed-mortgages-business-live

The money markets are pricing in a rise up to 5.75% by early 2024. While the ex BoE chief doesn't see them coming down substantially anytime soon.

Very true.

I think they might go down in another 40 years or so.

When do you think they will go down?

I don't think it's worth pointing out "averages" or trying to draw comparisons to decades ago. The situation we are in now is new, I read this week 6% today feels like 13% did in the 80s due to the level of borrowing which isn't sustainable. Something will have to give, whether that's the housing market, rates or wages, I don't know, but I very much doubt the government will let the housing market suffer too much in the long term.

I expect them to go up a little more then come back to current rates.

I doubt they’ll be lower than now unless and until there is a serious recession

no one knows when that will be.

Everything I'm reading says it will take about 2 years for them to stabilise.

But for them to actually go down?? What level???

I think in 3-5 years time we might look back at today's rate and think they were really low.

The way the economy is going, unless the cost of living improves which is tied into the war in Ukraine and Brexit, I think it will be years maybe over 10.

You got to remember there are places in the UK where you can still buy a 2 bed terrace for 80k in good condition. The only problem is the job prospects.

I don’t think they will go down significantly ever unless we have another severe recession which requires it. The rates we are seeing now are in line with the historical average. Rates were cut to encourage growth post 2008 and shouldn’t even have been kept so low for so long because now people think that is the norm - it’s the anomaly, not the 4-5% rates we are seeing now. In general in a healthy economy with a 2% inflation target you would not expect to see rates below 2% ie negative real rates.

The US Fed didn’t raise rates yesterday but signalled two more raises this year. The BoE will probably do a couple more raises too.