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.

Floatyunicorn

if you’re looking at 5 years left on your mortgage- what’s the point of fixing? Jyst keep paying the mortgage off and even if you were on variable for a couple of years it’s not going to make a vast difference in your interest paid.

They didn't hit 15% for years but my mortgage in 1991 was 11.25% as a first time buyer. Followed by 5 years of payments and then having to save up to pay off the negative equity

Haven’t read the whole thread so forgive me if this has been said or if you’ve already clarified, but if the end of your fixed term is six months away or less you can set the rate now to kick in at the end of your fix period. You dont have to wait til the end of the payment period.

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.

Yes, I read that. I personally don't think the economy can cope with much higher rates.

I agree. I think they will rise more then possibly settle somewhere between where they are now and 2% in a couple of years (I have no rationale for this!)

That's interesting. My feeling is that they will settle around 5%, but again, that's just instinct. I think the double-digit rates of the 80s/early 90s are unlikely, but a peak of 7%-8% wouldn't surprise me.

Also, when you remortgage you could look at paying back for a longer term to keep the monthly costs down in the short term?

it would of course cost more in the long run but if things improve by the next time you remortgage you could always shorten the term and increase your payments then.

And remember that mortgage interest rates are higher than the Bank of England rate. If people are shocked at the rates on those graphs, mortgage rates would be even worse. When people on here are referring to interest rates, some may mean the mortgage interest rate as opposed to the BOE base rate.

Here are the historical BOE rates. I think some of you will be surprised at how high they were for extended periods. Mortgage rates were/are higher than these rates of course.

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

ivykaty44

Thank you, that is very true.
Although i should have added, it will be paid off in 5 years IF i continue with the regular overpayment, not the normal fixed amount i pay. With price rises i cant 100% say i will definitely be able to keep up with the overpayments every month.

12 years of record low interest rates coupled with high borrowing is a perfect storm that many will be unprepared for. Have a look at interest rate historical data. The rates are only going one way unfortunately.

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

Agree that % is better for the economy but how they do it with house prices as they are now I have no idea as you say. They need high house prices as they need the revenue generated by SD, CGT, IHT, it's a vicious cycle.

I think some of you will be surprised at how high they were for extended periods. Mortgage rates were/are higher than these rates of course.

I think people are aware of what they used to be but the point is prices were different then.

Bear in mind that when you overpay, the proportion of the amount of each payment that goes against the capital increases slightly each month, and proportion that is interest falls. You might find that you pay it off even sooner than 5 years. (I was astonished by how quickly the monthly interest amount went down when I was overpaying in the noughties).

Would the new 2.99% mortgage be portable? If so, 2.99% sounds attractive to me.

I hope they never get that low again. It was suppose to be a measure to help boost the economy, but now it has caused hyper inflation and makes saving money worthless, which means that people are more likely to invest which is risky, particularly for low income household.

Either way, I hope saving money will start to pay for itself again and not just be 0% and all bank fees.

I don't think interest rates will fall for several years. Inflation regardless of cause does not go away in a hurry, especially as the Russian war against Ukraine looks to be quite a long one sadly.

Great question, i do not know but i will be sure to ask my mortgage advisor, thanks!

Exactly. There is a tone of sneering to some of these posts about people being foolish to stretch themselves for a mortgage during a time of historically-atypical low interest rates, but this is largely generational: many younger people have had almost no choice but to stretch for a barely-affordable mortgage on a very long term, because the alternative is continuing to rent, which is an expensive and insecure business in the UK.

I bought my first house in 1982, sold it in 1993, and if my mortgage rate was ever in single figures during that period, it was never for very long.

In, iirc, 1991, I remortgaged at 13.5%. My friend tried to get the same deal a few weeks later, and the best she could get was 15%.

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

It was probably the worst financial decision we made tbh. We bought in 2009 and all the advice was rates could never stay that low for long. So we didn't stretch ourselves at all and fixed for 5 years at 4 point something percent.

Last week, I signed a 10 year fix with Nationwide and my financial advisor told me that's a very wise decision. I trust his opinion and he doesn't think the rates will go down now

Exactly. There is a tone of sneering to some of these posts about people being foolish to stretch themselves for a mortgage during a time of historically-atypical low interest rates, but this is largely generational: many younger people have had almost no choice but to stretch for a barely-affordable mortgage on a very long term, because the alternative is continuing to rent, which is an expensive and insecure business in the UK.

Exactly

Mortgage interest rates have been historically low for sometime.

"Interest Rate in the United Kingdom averaged 7.17 percent from 1971 until 2022, reaching an all time high of 17 percent in November of 1979 and a record low of 0.10 percent in March of 2020."

To me it has been astounding that banks have allowed such high borrowing without checking the affordability of repayments of customers at projected higher rates of interest.

Unfortunately I'd say that interest rares are going to run somewhere around the 5% mark for sometime in the near future.

The low rates enjoyed for the past 10years were never here to stay and have unfortunately lulled many into a trap of credit affordability.

OP I would discuss your options with yo

I also haven't seen many people complaining about the huge equity gains they have seen.

Posted early...
OP I would discuss your options with you lender, you might be able to extend the loan term and reduce payments that way, although this will cost more in the long run.

I know, but in a discussion about interest rates rising, the variation in rates over time is relevant.

With bigger loans in relation to earnings its going to have a big impact, and i guess the increase is the factor. If your loan was at 1.6% and it creeps up to 6.6% its the same impact as an 13 going up to 18.