To ask when interest rates will likely go down?

[AnxietyLevelMax]

We are close to remortgaging for the first time. Long long time ago i was happy and excited thinking we will be paying less by £200 min per month. Right now our rate would change. We still have 5 more months before we can remortgage so we can end up paying even more than now.

how long do u think it will all last?

i dont know how we are going to do that, we cant save anything now because we are paying debts, childcare is expensive as hell, everything is expensive, we barely make it month to month paying debts off but it will still take us 1.5-2 yrs min. We have no financial cushion. I am worried as hell, cant sleep worrying if something happens we dont have any extra money.

They're still really low compared to anything I ever remember (I'm 60). I'm guessing they have a way to still climb and they won't come down for a long time if ever.

I can't see them getting to historical highs because our economy can't take a huge house price correction.

Mortgages will go back up and sit steady at 4-6% which was the pre crash norm.

To put it bluntly we are fucked. And there is not much we can do about it. We are going to have to pay for our governments running up debts and for central banks printing money.

The US Federal Reserve is driving rate rises. They've raised rates a little, and now want to see how it affects inflation, while trying not to make money so tight it causes a recession. To me it looks like we have seen only the first round of interest rates rises. Central banks around the world are likely to continue raising rates. The Bank of England has to raise UK interest rates in line with global rates or the value of the pound falls, which would fuel inflation by make imports more expensive. I would not be surprised to see UK mortgage rates at 7%. And I would not be surprised if the US, the UK, the whole world tips into recession, a major 1980s style "Money's Too Tight to Mention" recession.

If you are due to change shortly can you see if your lender will let you agree/ tie in the next deal now? Ours does that within 3 months of the deal coming to an end, maybe yours is similar?

I think interest rates will creep up in regular increments to the end of 2023. Then sit at around 5% for years meaning mortgage rates around 6/7% will be here to stay.

I'd say that was on the low side - though of course it does depend which crash you're talking about.

Mortgage interest rates historically are 'normal' at around 7-10%

It sometimes seems that no-one has wanted to heed the advice to check what repayments would be at 5% and 10% before they sign up for a large multiple, and the ability to sign up for large multiples has fuelled house price inflation.

Governments can and will let people fall in to negative equity. But I think it'll be by creep rather than by crash.

I’d love to see some evidence as to when interest rates hit 15% for a couple of years please …. my understanding is it was a matter of days before everything was brought back under control again

it was only a matter of days, it certainly wasn’t 2 years in the U.K. I had a mortgage at the time

Interest rates

They won't for a considerable time. They will however go up. We have had it good for a long time. That period is now over. When I first started maying my mortgage rates were 8%!

Mortgages will go back up and sit steady at 4-6% which was the pre crash norm.

but we’re not going to be at a pre crash norm, we have more similarities with the 1970s with high inflation and we had some high rates of interest back then to combat the high inflation.

sorry, but this situation economical we are in is not normal, which would be the period before the crash in 2008, those were good times

I dont think you've read the horizontal axis on some of those graphs properly!

And do remember that mortgage interest rates are always higher than banl base rates, typically by about 2%

I think they'll rise further and won't go down for at least a couple of years, maybe more. And when they do start to come down, the reductions will be in small increments, it's never all at once. The BoE won't want to drop rates and risk a fall in sterling, which is very low atm.

I don't think we'll see interest rates as low as they have been for many years, if ever. And I'm amazed that they've stayed as low as they have for as long as they have, tbh. Being old, I can remember the base rate hitting 17% at the end of the 70s, and rates stayed in double figures for almost all of the 80s and into the early 90s.

They've been very low for so long that it seems normal, but if you look at interest rate history, it really isn't.

I think anyone buying or remortgaging is very unlikely to lose out by fixing now, and I wouldn't think twice about fixing for 5 years.

RancidOldHag I know what was coming out of my bank account and paying the mortgage in 1990

Nov '79 to Nov '81 there wasn't much respite from 15%+

BoE link: www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

My broker made an interesting point. If you look at the longer fixes on the market at the moment they're actually not much more, and are often the same as, the 2 year fixes. So the banks don't believe that rates will keep going up, or they wouldn't be offering such cheap longer fixes.

Scary graph ivykaty, those rates will screw a lot of overstretched mortgage owners.

Interest rates as they changed

As everyone else has said the rate is unlikely to go down any time soon. Ask your lender if your repayment term can be extended to help lower your monthly costs. It might not be possible but it’s worth asking

It sometimes seems that no-one has wanted to heed the advice to check what repayments would be at 5% and 10% before they sign up for a large multiple, and the ability to sign up for large multiples has fuelled house price inflation.

House prices inflation has been caused by low interest rates. Where does the narrative come from that people who signed up for large multiples caused it?

They won’t come down unless they are trying to control something again E.g housing market crash 2008. However, they won’t use that trick if there’s a crash this time. it would have to be something else that brought them down.

The 15% rates weren’t days they were months/years in the early 80’s and early 90’s saw 10/11%. However, the interest paid on an average house is the equivalent of the interest paid now on an average house due to the cost of the house being so high. So it’s an irrelevant statement always trotted out.

www.bankofengland.co.uk/boeapps/database/Bank-Rate.asp

@AnxietyLevelMax im sorry but we are extremely unlikely to see interest levels as low as they have been for some time. They’ve been artificially low, it’s not normal how they’ve been. They need to get back to normal for pensions and savings and general economy not just lending. I think the sweet spot is probably 5-6% however, how they’d do it with the cost of houses now. I don’t know

Happy to help, @Nothappyatwork .

Can i jump in here and ask advice please?
I currently have a 5 year fixed mortgage but 3 years left on it this month, bought house 2 years ago. Its 1.69%
I overpay every month at the moment, should i consider moving my mortgage to a longer term fix for 2.99% ish which is what my mortgage advisor can offer me right now, or should i stay as i am?
Should add, by overpaying we should have it paid off in 5 years (however we have no idea whats around the corner and we may need the money for other things) but we also do want to move at some point, this is not our forever home. Providor im with has said i can port my mortgage, already asked this, i just cant add to the term.
Any advice?

I noticed that. And interestingly, we fixed 7 years ago for a very particular reason, and the rate for 5 or 10 year fixes now is everso slighlty lower. So they feel more sure that they wont go up than they did 7 years previous

Sorry, @Nothappyatwork , the link didn't appear.

Interest rates

That’s really interesting. I suppose the trouble is that sentiment and decisions change overnight. When the rate plummeted in 2008 from 6% to 1% (approx) we benefitted because we were on a tracker, but plenty of people had fixed on a much higher rate and didn’t benefit from the drop. If the reverse happens now and rates do increase substantially people will regret not taking out the todays rate fix.

if only we could read the future..! It’s such a difficult thing to predict; rates can be pulled so quickly and changed giving little time to react.