Mortgage rates could reach 7% by christmas

Does your step so know he can fix now?

Ours runs out in October and we fixed a rate of 4.12% about 6 weeks ago but the new higher repayments don’t start until October.

Silly comment. Nobody is trying to be Landlord of the Year. It's just a factual statement that all the headlines about LLs putting up the rent and/or selling up are not necessarily true. So in the same way that people need to be aware of the possibility of a 9% interest rate, they need to be aware of the problems inherent in renting property - but they don't need to assume that the worst will always happen. It's better to be aware and to be prepared for something bad that, with luck, won't actually arise.

It's also useful in terms of people reading this thread who haven't yet taken out mortgages to realise that the interest rate is still (relatively) not that high, and can get a lot higher. They need to think before signing up to a mortgage whether they can still afford to pay it if the interest rate doubles.

I feel for anyone remortgaging in 2024, I think that they are going to bear the brunt of this. Through no fault of their own, just very bad luck.

It may still be shit in 2025 and beyond, but at least these people have longer to prepare (and hopefully a couple of pay rises in the pipeline).

It's the fact that they have gone up so quickly that has caught people out.

It’s hardly just ‘younger people who have taken our mortgages relatively recently’ who didn’t have to pay rates of 15%. We bought 25 years ago and have never seen rates that high. I think it was 1992 when they were last 15% and I was still at school then!

I got my first mortgage in 2001. We where looking at rates of 4-5% and our broker was talking about how low there where then. He was an older guy and I remember him saying. Don't get used to these rates they won't last. Well they lasted a long time

talk to your bank about it, this time they do not want to repossess and repeat the 90s. I've read it in an article that as long as you can arrange to pay something, the bank will try to keep you in the house. the key is to communicate with the bank when the time comes.

That means you're younger than I am, as I'd left university and was applying for mortgages in 1992!

We just locked in 5.5% fix for two years starting in December. But I'm wondering if we should look at a 10 yr fix 🤔

Many landlords will be forced to sell as on interest only, bit of a myth that they are properties that have been inherited.

Agree. I don't want to hear about the 15% rates of past. It's a meaningless comparison when house prices back then where a lower % of annual income compared to today. It's a nonsense statement to make.

There were lots of lifetime mortgages on MSE earlier which is an interesting development.

But why wouldn't they? What with so few rental properties about, and so many (extra) prospective tenant.

Housing Associations will still raise rents in line with the rate the government set, which is linked to CPI so the only people who aren't negatively affected are mortgage free homeowners.

Well, everything is relative, I suppose! Im
still pushing 50 and didn’t buy even remotely recently 😂

stats showed that about 60% of lls have btl mortgages on at least some of their properties. many of them are also younger lls so would need more cashflow themselves compared to retired ones with lower expenses but are more likely to own outright.

let's say only half of the 60% of lls have their remortgage coming up in the next 2 years, that's 30% lls desperately need to raise rent to be able to keep their properties. let's say within this struggling 30%, a quater now can't make fiancial sense to keep this investment, or can't make the debt work anymore as they don't have any mortgage support as owner occupiers do. then that's 30% of renters facing rent hikes and 7.5% facing evictions due to repossessions and sell offs

I know at least 50 LL and only 3 of them own outright with no mortgage. I have 10 btl with a mortgage on 9 of them. I've got 2 coming out of their 5 years fixes early next year and at current rates I'd be paying £215 and £245 more pcm as I'm currently fixed on 1.95 percent. I can't apply yet for a new fix as more than 6 months. I'm not sure whether to sell or not. The tenants are lovely and have young children but have lived in the house for 5 and 8 years. At the moment I have only raised their rent about £10 a year for 4 years. I can't raise their rent by more than about £50 a month and I won't be breaking even on those 2 houses. There might be a crash and I'm not sure whether to just sell them up and put money into a savings account. If rates go up again I'm moving towards selling but I hate the thought of making 2 lovely families homeless. There are hardly any rental properties near me and the 3 available are extortionate and I know they won't be able to afford them. By the end of September I can apply for a new mortgage but I know rates will be even higher by then. It's run like a business but I do have a heart too. Overall the portfolio is profitable but only until the fixes run out. I've got 3 more running out Nov/Dec 2024. It's a real dilemma for me.

I sat down and worked out that for me to end my current fix early would cost me:

ERC of £800

£250 extra per month in mortgage repayments for 8 months,

so £2800 extra between now and March when I'll come out of my current fix.

Then I worked out that I'd be better off keeping that £2800 to put towards mortgage repayments at the much higher rate next year (it'll cover the difference of 6 months at 8% for me) and then I'm hoping hoping hoping things start to come down.

To answer someone upthread, a recession IS being engineered. Inflation needs to come down, we can’t afford public expenditure being pushed ahead by rampant inflation. Inflation is harder to control because there is a gap in the productive workforce. There is going to be a lot of pain.

The next five years will be worse than 1992-1997.

That's interesting to hear that 60% of the LL sector have BTL mortgages, where did you get that stat from?

I'm not disputing the fact that BTLs exist, simply that it is a very common assumption that the vast majority of LL are using BTLs. Many LLs simply do not fall into this category, but as a PP pointed out, that fact alone may not deter LLs from profiteering in this current climate. Of those 40% who are not impacted by BTL mortgage increases, let's hope only a small % are impacted by profiteering.

When I took out my mortgage in 1987 I think the rate was 15%

I understand you're in an anxious state. But what makes you think mortgage rates will be reaching 9%?? No one is predicting that so I think your imagination has got you a bit too worked up.

I will say it again, spouting “it was worse as we had 15% in the 90s” doesn’t mean anything. It’s comparing apples and orange. Cost of living, houses, average salaries have to be factored in too. Why can’t people just say it’s crap, here’s some suggestion on how to help etc. it doesn’t need to be a race to the bottom, who has it worse. Both were rubbish situations and both times people have and are going to loose their houses.

https://inews.co.uk/inews-lifestyle/money/mortgage-rates-when-go-down-how-long-inerest-rise-why-high-2469557

@Tinkietot couldn’t agree more. Average house price now is 287k, 9% interest on a mortgage of 287k is far far more than 15% interest on a house bought years ago for worth say 60k.