Mortgage rates could reach 7% by christmas

Watching Martin Lewis 8pm channel 3

What's the actual numbers on that please? I haven't a clue about all this!

Someone on the show asked the question should they fix for 2 years or 5?

The answer was that you could probably fix a cheaper rate in 2 years than you can today, since interest rates are predicted to have fallen by then. So for most people, a 2 year Fix seems the better option.

But if you are someone that needs the security of knowing for a fact you will be able to afford the payments, you could fix for 5 years.

I'm not in the UK, but things are pretty much the same here. While there will be landlords who raise the rent simply because they can, others won't because they know the value of having a good tenant in place.

I’ve just put it into a mortgage calculator, 15% on a 60k mortgage is 768 per month over 25 years. On a 287k mortgage over the same length of time it’s 2408 a month. I have no idea exactly what average house prices were when interest rates were at 15 percent, but my mum bought her house for 20k in 1991 so 60k is probably being generous and it’s likely they were lower…

Martin Lewis just made the point that if you can afford to overpay your mortgage at the moment but the interest you are paying on it is low, you are better off putting the money into a high interest savings account.

Put your money wherever the interest is highest - your mortgage or your savings account.

Sorry reply above was aimed at @SeamsLegit but forgot to tag! I agree with the other poster that it’s shit then and it’s shit now, but I am getting fed up of hearing people going on about previously high interest rates when it’s just not comparable.

We fixed last June and managed to get a 10 year deal for 2.2%. We have 13 years left but we’re going to overpay so it’s cleared by the end of the fixed deal. I know rates will
come back down but still feel the rate we managed to get is good and like the certainty.

The average age of a FTB is now about 35. People can't afford to buy a studio flat in their 20s! Sounds like you were very privileged.

Buying a studio at 35 when you're starting a family isnt feasible.

its because FTBs are so much older now. the average FTB is in their 30s.

I bought a starter 2 bed flat because I bought at 27. I also married at 22 to a native londoner so was able to stay with my DH's mum while we saved. When we were buying, everyone kept telling us we should stretch to buy a house somewhere further out. The good thing I suppose is that we couldn't as i was on a visa so they mainly looked at DH's salary when deciding how much we could borrow so the kind of house we could have bought in the Home Counties was the same size as a flat in London.

We’re now back at the levels we temporarily hit with Truss’ budget. 😟

Why would you overpay though, while you can get higher than 2.2% even on easy access savings accounts? I'm getting 3.8% with Chase and can access the money immediately if I wanted to. Higher rates than that are available, I know.

Yes, we are on a fixed rate of 1.7% till 2026 (no presience on my part, I just couldn't be arsed dealing with the mortgage for five years so fixed at that and then everything hit the fan) and will (very sadly) be getting an inheritance that will clear the mortgage, but because our interest rate on mortgage is so low and savings rates are on the up, we will be better off in the long run putting the lump sum into savings and then repaying the mortgage when the deal ends.

You can get up to 6% on a fixed savings account for two years at the moment, so it makes far more financial sense to put that money in savings than (over)pay your mortgage if you're fortunate enough to still be on a low rate.

The "remember when rates were 15%" brigade seem to have forgotten that house prices were much lower in real terms then . In 1993 the average house was 3.1x the average salary. 30 years later its 8.3x. There is a reason that people have been forced to take out larger mortgages. I feel very fortunate to own my home but despair that my children cannot afford to buy

Holy moly, that's crazy!!!!

WRT overpaying v savings, another factor to take into account is whether you're on UC. Some people on even quite high incomes can be if they have significant childcare costs, and the capital limits are strict. The award starts being withdrawn at 6k and entitlement stops altogether if you have 16k savings.

He is good at what he does but it's as clear as mud to me !

MSE has an overpayment v savings calculator (scroll down to compare to savings): https://www.moneysavingexpert.com/mortgages/mortgage-overpayment-calculator/ Worth working it out as the difference could be a lot of money.

We fixed in April for 5 years at just over 4% so feel lucky as the rental prices per month are so ridiculous there would be no way we would afford and glad we bought when we did. However, on the flipside a 9% mortgage would pretty much ruin us, im not long off maternity leave and it doesn't bare thinking about.

9% mortgages are not a thing anyone is predicting outside this thread where we will apparently have them by Christmas!

Can't watch Martin Lewis at the Monet, has he said anything about how much he thinks mortgage rates will reduce by when they do come down? As in, will they go back to the 1.5% sorts of deals of level off at a higher rate?

But will it fix inflation? When energy, food and mortgage/rent are so high - and water rates due to rise so we can all pay for the sewage crisis too! - these are things people can't cut back on. It seems unclear that driving mortgages higher and higher will bring inflation down while supermarkets continue to profiteer and energy companies reap enormous profits. People on extremely high salaries are telling us all we need to have 'pay restraint' and the bills going up are those that people have no choice over. So it seems like a huge amount of suffering is coming, but it won't necessarily even fix inflation. Brexit and its disastrous effect on the economy is still the elephant in the room and nothing seems to be on course to get better. The only sliver of hope is that the Tories are forced to act in advance of the general election, and they do something to control prices and give us all some breathing space.

9% mortgages are not a thing anyone is predicting outside this thread where we will apparently have them by Christmas!

@Twiglets1

I think that Martin Lewis said something about banks stress testing to 9%. That might be where this idea came from