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.

We are paying the same interest now as the 15% times due to the house value difference.
So we are living it.

Exactly

but your wages are not 1980s rates of £6000 per year and high unemployment

different times have different issues and problems

The housing market is a relatively small part of the economy though. The BOE also has to take into account the relative value of sterling against other currencies, inflation, growth and employment.

I disagree & think that's why we have had decades of low rates & why that aren't higher now.

While mortgage rates have a big impact on those who have mortgages, they don't have much of an impact on renters, esp those in social housing, or those who are mortgage free. But inflation does, and a sterling drop affects inflation because we rely so much on
imports, esp oil prices. It also affects inward investment.

Rents are certainly increasing where I am. And lots of older people who are mortgage free rely or plan to use that wealth to fund retirement, dcs deposit etc.

"Equity release finances around £1 in every £90 spent by retired people within the UK, according to analysis."
"Total retirement spending funded by equity release could top £4 billion this year and £5 billion in 2025, according to modelling by the Centre for Economics and Business Research (Cebr), as homeowners increasingly look to property wealth to support their retirement."

On affordability, we did factor in paying up to 7% which we were told was the long term average but actually, with hindsight didnt factor in other increases such as petrol, council tax, gas and food. We sort of looked at the mortgage is isolation forgetting that other things might go up 20% to.

This.

It's not like people buying in the last 10 years had the option to go back and buy at 70s rates and 70s prices.

15% on a £50k mortgage is still less than
2% on a £500k mortgage.

but your wages are not 1980s rates of £6000 per year and high unemployment

Isn't a 6k salary in the 80s equivalent to about 25k now?

£2,300 is the average rent for a 3-bed property in my part of Sussex.

At least you're actually buying something!

We had a lot of wage growth in the 80s. I started the decade on £3kpa, and ended it on £12kpa, for a very similar role.

And I was lucky enough to avoid being unemployed, thanks mainly to living in the SE and not being a miner.

My mortgage is £2,000 a month - that would make it £2,300 a month

It's a big increase but if you borrowed that much you will have most likely had good salaries so can you afford the £300 increase?

Sorry op I don’t think they will drop for years as historically they are still very low
they might stop rising, but I feel that’s unlikely this year

The average house price far outstrips the 3x average wage formula that allowed folk to buy their own houses. I remember the higher interest rates well. This low interest rate has been going on so long now it’s normalised but I cannot for the life of me see how it is sustainable. The banking sector royally fucked up the entire world, aided and abetted by governments with skin in the game.
In the entire world I believe only one banker has gone to prison for it. We, the peasants, will ultimately pay for it.

If you can get your hands on a copy, read ‘Crash Bank Wallop’ by the whistleblower Paul Moore, who was sacked by his corrupt, lying boss at HBoS for doing his job properly and warning the bank that they were growing too big, too fast (back in 2004, the financial crash happened in 2008). It’s not the best written book but the guy had an integrity that is sadly lacking these days and you can feel just how incredulous he was that the bank was doing this and getting away with it. That was just one bank, they were all at it. Look at the PPI fiasco as just one example.

When houses became commodities rather than homes, all was lost and greed took over. The ‘right to buy’ was the worst fucking policy ever and now Boris is looking to resurrect it. Ironically it was to allow more home ownership but the reality is that houses are now priced out of reach for those trying to get their toe on the ladder and no one under 30 can afford it. I bought my first flat with my partner back in 1990 for £26k on a combined wage of £16k and our mortgage was 15%.

@yaxe

10 year fixes are going up. I have 40% deposit and I was offered 2.4% on 31st May. That mortgage is now 2.75% and will go up again in the next 6 weeks, probably by another 0.5 or 0.75% depending on the BoE base rise. That will be 1.10% increase in 3 months. We haven't seen rate rises like this for years. Around a 40% increase in the interest rate in 3 months. The FED put its interest rate up by 0.75% last week, Canada, Aus, NZ are all raising rates. We live in a global economy, the U.K. can't just do it's own thing.

Sadly, I think this is true.
Rates now are crazy low, it’s one way for some time now - and that’s up.

@TwinklingFairyLights but 2 yr & 5 yr are also going up. If banks think rates will be at 7% in a few yrs why offer a 10 yr fix at 3%?

I agree.

Our 10 year fix was 1.86% two months ago. Equivalent deal is now 2.73%. That would be about £200 a month difference on repayments.

We live in a global economy, the U.K. can't just do it's own thing.

No one has said that. However why do you think they didn't go higher this month?

Which is understandable, given that we've had sub-5% inflation for 2 decades. It hasn't been a problem, and no-one in the UK much under 60 has any experience of >10% inflation for prolonged periods.

High inflation in the late 70s/early 80s was a killer, it was over 20% for quite a while. But the unions were strong and people got cost of living rises to help incomes keep pace. I was in the public sector then, and we got 3 or 4 pay rises one year. My salary doubled in 4 years.

It was that high inflation that led to a base rate of 17%.

In the entire world I believe only one banker has gone to prison for it. We, the peasants, will ultimately pay for it.

Yep!

I have a fix of 1.39 til early 2027. I’ve stress tested what it would be at 10, 12 and 15% and worked out what I need to overpay in the next 5 years in order to be fine on a very high SVR at the end of my fix.

If I can pay £22k on top of my current monthly payments then it will be under £650 pcm even at 15%. That’s manageable for me. Not ideal but I prefer to plan worst case scenario.

I would actually prefer interest rates to be around 5% so that I could have a small income from savings in the future to help with bills. It feels more reliable than investment income as I don’t know enough about that.

High inflation in the late 70s/early 80s was a killer, it was over 20% for quite a while. But the unions were strong and people got cost of living rises to help incomes keep pace. I was in the public sector then, and we got 3 or 4 pay rises one year. My salary doubled in 4 years.

This is unlikely to happen today

They will go down from September and carry on through to around April. Great if you're remortgaging and or buying a house.

@Limesaregreen
If you can get your hands on a copy, read ‘Crash Bank Wallop’ by the whistleblower Paul Moore, who was sacked by his corrupt, lying boss at HBoS for doing his job properly and warning the bank that they were growing too big, too fast (back in 2004, the financial crash happened in 2008).

I’ll look for this book. My dh worked for Hbos. Not only did he feel royally screwed over by them, he had invested his bonuses in hbos shares, they then got taken over by Lloyds and his new boss effectively bullied him until he took early retirement.

I would be cautious if buying today with anything less that a 25% deposit but FTBs haven't got much choice. Although this is the area likely to be propped up more rather than those further up the ladder.

Inflation just now is being caused by the war in Ukraine and post-Covid global supply chain issues.

Im not convinced that interest rates will soar because reducing demand won’t actually do much to reduce prices in this instance, despite what A-level economics would claim.

If I were the Empress of the World, addressing wealth inequality would improve the economy & environment much more effectively than passing about with interest rates.

@carrotcruncher81 Why do you think they will go down from September?

Absolutely, we're living in a very different world.

Which is why the prospect of prolonged high inflation is so awful now, when we have a government that is committed to austerity and doesn't give a shit about anything apart from staying in charge so they can feather their own nests.

All the things that protected people then have gone down the shitter. There were council homes for less well-off families. Benefits were enough to live on and pay your bills. The DWP would actually pay your mortgage interest then, if you lost your job. Now they lend you the money, at an interest rate more than most people are paying, but take a charge against your house.

I'm 66 and fear for the future more than at any time in my life so far.