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.

There were definitely additional checks made on maintenance payments etc to ensure that if the little lady couldn’t manage the mortgage the big man would come in and save the day. I found those distasteful.

And actually back in the day, I didn’t have to prove where deposits etc came from, don’t even remember taking ID in. So isn’t it wonderful that we now have all these checks and balances in place to make sure that we’ve learnt from the past.

But at the end of the day if it’s Subprime lending at 1.9% fixed for five years lucky old me imagine the deal I would’ve got if I wasn’t such an enormous risk 🙄

And actually back in the day, I didn’t have to prove where deposits etc came from, don’t even remember taking ID in. So isn’t it wonderful that we now have all these checks and balances in place to make sure that we’ve learnt from the past

You mean the anti money laundering legislation? That's been in place since the early 2000s at least.

There were definitely additional checks made on maintenance payments etc to ensure that if the little lady couldn’t manage the mortgage the big man would come in and save the day. I found those distasteful.

They have to check up on the income you are using to fund your mortgage payments. My mortgage advisor advised against using maintenance payments, as my salary is more than sufficient to cover the mortgage.

Fanny Mae and Freddy Mac 😬

Vast vast numbers of people are totally on affected by recessions

And vast numbers are affected, as several posters have pointed out.

The economy was riding on the fact that mortgages fell from around 6% in the early 2000's to the historic low levels seen now, many people spent the money saved from payments and the economy reflected this. (Along with the billions returned from PPI)

How many people hedged against the reduced monthly repayments and either continued to pay off the mortgage at the previous rate before the drop or invested the money saved so that they accrued a rainy day fund when rates rose again.

Everyone knows the housing market is volatile, property values fluctuate and interest rates change to control the economy between inflation and recession.

It should not come as a surprise that rates will rise from the very low levels of the past few years and a bit of forethought as to the implications of rate rises would be beneficial now and when taking out a loan.

If you have to max out to buy a home now you're not in the right financial position to purchase in your chosen area. Move to a cheaper area or more affordable property. The property bubble will soon burst I'm afraid as loans are defaulted, hopefully property values will align to sensible levels.

Quite!

As so many have said, rates have been so low for so long that folk have forgotten just how artificial the situation has been
Historically I believe the average has been around 4-5% and that's roughly what I'd expect them to return to - or even more for a while if that's what it takes to control inflation

Nobody denies it'll be tough, but surely people didn't expect near-zero rates to last forever?

The problem is that interest rates have been at an historical low and held low following the banking crisis of 2008. This has led to the expectation that this is normal when it’s not. There is a whole generation of home owners who haven’t seen anything other than this.

History shows that a mean average of 5 or 6% is more normal, though I too fixed my first property at 10%.

I don’t personally believe they will rise to the levels we’ve seen before but they will rise and settle at a higher rate.

1/3 are mortgaged
1/3 own outright
1/3 rent (I am unsure how that sits in the terms of mortgaged)

so in theory and in home ownership terms interest rate rises affect the 1/3 mortgaged. So it’s not as many as you may think.

the reality is obviously much wider affecting borrowing for cars and the rentals

Not as much as the early 90s? They need to go up way higher and faster than the early 90s IMO, my memory of the early 90s was a property bubble bursting and a recession, or have I got the time wrong? This time the property bubble is just at stupid levels and very badly needs to burst and we have inflation at its highest since about 1980. I think base rate will hit about 7% this time.

interest rate rises aren’t all bad news though. It will make saving more attractive instead of money essentially devaluing in the bank account.

Interest rate rises affect those with a mortgage because they pay more for their debt, but also anyone trying to sell because their potential buyer will be paying more for THEIR debt. It could affect landlords as well if their mortgage debt gets more expensive and the economy won`t support rent hikes. Basically if you bought property at bubble prices you are going to have to tighten your belt a lot unless you are very wealthy.

www.lse.ac.uk/business/consulting/assets/documents/The-Profile-of-UK-Private-Landlords.pdf

@EvilPea profile of landlords link

1/3 rent (I am unsure how that sits in the terms of mortgaged)

about half looks to be the answer?

it's more "helpful" than lying to her.

Ultimately they need to go up, but not as much as they did in the early 90s , when millions went into negative equity.

wasn't the negative equity caused by irresponsible lending during the late 1980s boom, with 105% mortgages offered and then obviously when property did crash (which is rarer) the buyers were in a bigger mess than they have been if the banks had been more prudent - which they seem to be now but charge

Back in the 1990 mortgages weren't charged for and in fact some banks gave money to borrows to entice them in to borrow

This bubble compared to the 80s and 90s is like comparing Moby Dick to the fish in your living room tank, when it pops there is going to be a very big mess.

Mmm! Not sure any financial crash that fucks up multiple economies can ever be shrugged off. We, UK public purse. Still own parts of a bank or two, 30.ish years later.

If interest rates keep going up rents will have to go up too. Landlords can't deduct the cost of the mortgage interest any more so they're going to have to pass that on to their tenants.

Good luck with that in a cost of living crisis/recession, smart landlords will have fixed recently or bought their property years ago.

Just remember kids, you can leave a rented flat but you can`t leave a bubble mortgage debt (not without a lot of financial pain anyway)

Or the landlords lenders may force them to sell? BTL mortgages have very different Ts&Cs and there is less forbearance. Could result in forced sales, increase in supply and more downwards pressure on prices.

I think it's 5-6 % but other than that I agree with your post.

OP could you default on all your other debt and just concentrate on paying the mortgage, they can`t take the mortgage away once you have it for a bad credit score?