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.

@Tessasanderson Absolutely. I think bank borrows money at BoE rate for a very short time, sells the mortgage, and repackages the mortgages, and sells them on.

I am gonna have to reply in the evening when DS is asleep and i have some time to go through the pages!

What do you think is a high interest rate?

5-year fixed rates are c.3.5% at the moment. 10-year fixes are available <3%. That's still a low interest rate, and I really can't see better offers coming along soon.

We were having a conversation about this at work this week, and the overall concern is that there's a very large generation of home owners that will consider 5% interest rate to be high. The BoE is already forecasting 11% inflation by Autumn, others thing that a conservative estimate and we could be heading for 15% inflation. Unless there's a complete change in inflationary policy that's going to mean a very steep rise in the base rate with mortgage rates following it upward.

When you're mortgage is a significant amount of your spending and you have a very tight margin on your income vs. expenditure it can be a huge relief to lock-in the monthly payments for 5 years. It's a lottery whether rates fall or rise, but you know your budget going forward.

I don't think they will drop. More likely to continue rising.

It'll be years not months to drop

My first mortgage in the early 2000s was 5.5%.

I then unknowingly made the best financial decision ever by moving on to a tracker just befor IR crashed. I'm now moving to a 10 year fix to try and lock in sub 3% rates for the rest of my mortgage life.

I think the only direction they will go is up. A report in The Times today has 10 year fixed rate mortgages at an all time high.
I would take a look to see how much an early redemption charge would be against a fixed longer term rate. I did this years back - my rate in 1997-99 was 7.65% and it worked out cheaper in the longer run to take the hit on the early redemption.

I think they will continue to rise for a while. Interest rates have been ridiculously low for a long time and savers are getting virtually no interest at all.

Unfortunately, @AnxietyLevelMax , the rates are expected to go rather than come down. The rises will be as small as the BOE can get away with. Is there a possibility of you remortgaging now?

@rainingsnoring

Our old friend is back claiming that 15% interest rates were only for a matter of days.

I know. so unrealistic. I don't want to be doom and gloom but that is the current situation. It's clearly going to get much worse. It's not a case of people holding on for a year or two and it all bounces back.

I have gone through all of the posts and apologise i cannot answer everyone directly but i was not expecting so many replies.

I am happy now we were able to secure the place already at least and we are not paying rent!

Thank you all for valid points, i already emailed our broker to see if we can remortgage early etc.

I dont think i would like to extend our mortgage though, it scares me, we have 23 yrs to go (plus few months) and i think i would like to stick with this.

Our debt is with family, we had no choice and needed a few thousands, family helped and we borrowed from them long term (no interest, no pressure to pay now but we do need to clear it asap), we have about £2k on the credit card but paying it off first. I am thankful we didnt have to use a bank to get the money though.

I had no doubt we will be remortgaging for 5 yrs but after some replies i am not sure if 10yrs fixed is not a better option for us, although atm it would increase our rate by probably around £50 per month.

I am little shocked by few answers regarding the overpayments. How on earth does it benefit anyone. Posting picture below for my point. I clearly do not understand it. So paying £100 extra per month for 5 years will only reduce my mortgage for not even a year less. £100 is alot for such a long time with so little benefit. Am i missing the point here?

Overpay your paying directly to capital

your thousands better off in interest with that

and when you come to remortgage to you have a smaller capital so get a better deal

you’ve also reduced your term

@GinaDonatella so can i choose how i overpay? It seems I can only choose overpayment towards the interest or repayment in general.

@AnxietyLevelMax

£100 a month for 5 years is 6k. That's 6k off your debt.

Mortgage lenders put interest rates up by MORE than 0.25 per cent
mol.im/a/10929409

Op are you going with nationwide?
I don't like them.
Our mortgage is with Fd and there are no penalties or limits on us over payment.

First direct.

Martin Lewis over payment calculator is v clear to see and goes on.

Just to help clarify this a bit. This was back in the days when you had to persuade banks to give you a mortgage. And they could set higher rates for you if you had a small deposit, no savings, were in anyway a bad risk. We had a relatively normal 'one over base rate plus' mortgage that kept our lending rate between 15 and 18.5% for about 3 years.

We kept our flat because we were risk averse and worked out what we could repay at 20%. Quite a few if our friends literally handed in their keys and threw themselves on the mercy of the LA. It took over a decade for some of them to recover financially. Which is really hard to parse when the government, banks, building societies etc actively encouraged those on low wages to buy a house via various schemes, none of which helped when the crashes happened.

Up to 3.5-3.75 over the next year then down to about 2.5 slowly. All depends on inflation though.

@SamphirethePogoingStickerist I can speak from recent experience that you very much still have to persuade the banks to give you a mortgage we completed at the end of April and hoops I have had to go through as a single parents are borderline discriminatory.

The mortgage was also approved on the basis that I could still pay it up to 10%
The wonderful thing about history is it we do generally learn from our mistakes so it’s utterly pointless looking to the past as an indicator as to what will happen in the future we live in a very different world, for better or for worse.

The other enormous lesson I have learnt as I have become an old person is it there is literally no point in whipping people into a frenzy with worry, would I right now sign up for finance on a Jaguar 4x4 absolutely not no.

equally I’m not stockpiling tins of beans or cancelling my monthly nail appointment.

Vast vast numbers of people are totally on affected by recessions and those are the people who if it’s not you, might be your customers that keep you in work but the world will keep turning and everything will be okay.

The wonderful thing about history is it we do generally learn from our mistakes so it’s utterly pointless looking to the past as an indicator as to what will happen in the future we live in a very different world, for better or for worse.

Oh dear.

I can speak from recent experience that you very much still have to persuade the banks to give you a mortgage we completed at the end of April and hoops I have had to go through as a single parents are borderline discriminatory.

I'm a single parent and my mortgage was approved with no hoop jumping or discrimination. Unless you count proof of ID, proof of salary, proof of deposit, credit check as hoop jumping and discriminatory. Perhaps the lenders see you as high risk if you had to jump through lots of hoops - sometimes known as a sub prime borrower.

The thing is, it's stress-tested at the time of application, based on the applicant's / applicants' income and expenditure at that point.

Increases in the cost of living, plus maybe people borrowing outside of the mortgage, or changes in circumstances, lead to less disposable income, which means the money which looked available at the time of stress testing, maybe isn't there anymore when rates go up. A stress test is only as good as the data at the time of the test.