Can you cope with 6/7% interest rates when your mortgage expires?

[onthefencesitter]

www.bankofamerica.com/mortgage/mortgage-rates/

American interest rates are at that level now and given the level of tax cuts that are going to be implemented, I think we would be at 6/7% at least by next year, perhaps even 8%

Vote YABU for no.
Vote YANBU for yes

No, not a chance. We pay £1000 on just over 2%, we've got 30 years left on the mortgage. Currently fixed until November 2024 so I'm praying that will give us some time to ride out the uncertainties of the market but I'm very anxious. I worked out a rise to 8% would mean repayments of around £2050 - that's half our total income.
We did stress test the mortgage up to 6% but did not consider exponential rises in all other costs.
Ideally we would make overpayments now but there's no spare at the moment. I start a new job in December which should give us a little spare and nursery fees stop in September next year.

They do stress test mortgages quite strictly. I bought 2 years ago, borrowed the max, and even at 10% interest I could afford the mortgage.

My pay has gone up a bit over the past couple of years, but not hugely. It's possible that the amount that I was able to borrow was lower due to the fact that it's just me on the mortgage.

I have another 3 years on the fix. Plan is to sell in a couple of years and buy with DP.

Yes, because we're old(er) and mortgage free - but what's the point of this post?

Do we think the mortgage interest rate will get up to 15-16% again like it did in the 1990s?

No. I’m in buy to let, so I have multiple mortgages. I’ve fixed everything for five years and not released equity, so I should not end up in trouble, but it’s not the legacy my late husband hoped it would be. I’m not complaining, but things are going to be very different. I’m planning for a housing depression, and to get a much better paying job. I’m considering getting out of property altogether, but it’s all I know.

Yes we could.

Those rates are for 30 year fixed mortgages which aren't a common product here.

No it’s currently predicted to peak next year at around 5% then drop a bit again.

Our fix comes off next year. It will definitely hurt as our mortgage payments will go up by AUD $2000 a month based on what rates will be by then. We can do it but it is really going to suck!!

We are on a lifetime tracker - Interest rate started with a fix at 3.75% for two years and then a tracker of 1% above base rate. We had a period of paying 6.75% at its highest which then went back down again. We moved 4 years ago and re-mortgaged to 0.9% above base rate. We've only got 5 years left though, going back to our original mortgage forecast that had a rate of 6% it would be about £65 more than we are paying now. (at 2.65%)

YABVU

Truss is aiming for double digit interest rates. The bigger the number the better right?

Is it a good idea to change to an interest only mortgage? Would that mean less monthly repayments? Obviously with a need to pay off the mortgage at the end. But is it not a way to effectively rent a house on the cheap?

just google mortgage calculator.

i want to see sentiment on the ground.

I am 29 and have a mortgage. It is £295,000 and i am overpaying between £1700 to £2000 a month to get it down to £244,000 hopefully by 2024 when my mortgage deal expires.

But like with the energy crisis, the government would probably do something if enough people are affected so i am curious to see if its a minority of people who would be affected. I am in London so a lot of people I know had family help and so have lower mortgages.

very relieved we went for a cheaper property. Were offered up to £600k to borrow on our incomes and bought a £235k house which is 4 bedrooms but in a slightly less desirable area (would have been £500k up the road). Because of my work most of mortgage was on Bank if England base rate for 2 years through covid we were paying large chunks of mortgage only off. We’ve paid off £32k of it already. Instead of overpaying we’ve just opted to commit to pay more when we changed rate.

Foresaw interest rate increase so switched to 1.48% five year fixed in March (in Jan was 1.28 so missed a better offer there). Yes we could afford to pay mortgage if went up to 8% and bills go up but will still be a challenge.

Am grateful we have chosen to buy within our means. Especially when it’s always tempting to stretch for a bigger house. Plan is if we’re lucky to remortgage current property and use that for deposit on a bigger house in a couple of years, renting this one out but who knows. We also want DD to go to private school for secondary school so I’d rather do up current house and prioritise that and financial stability.

Yes we would manage it but only if we don't have a second child and I'm so glad we moved to a cheaper area this year and reduced our outstanding mortgage from 204k to 130k. Otherwise we'd be fuckity fucked.

Nope! We would be almost £2k a month!!!

This is what I'm doing but due to circumstances rather than choice. No it's not a good idea unless you have a vehicle in place to ensure you can repay the capital at the end. My circumstances changed drastically so my plans were destroyed. I have no way of repaying the capital other than selling. If I had my time again.....

@Overthebow I read Goldman Sachs think it will peak at 10.8%

Actually, that might have been inflation. Time for bed I think.

No, we would be in negative equity

I think a better idea would be to extend the mortgage term. That's what I would do if I was struggling to pay.

We've ported half our mortgage and mortgaged the second half. I'm really worried now we have to remortgage the ported bit . We can afford it but it's going to be tight and it's a renovation. I'm about to be offered a new job which I don't want but is hopefully a 20% pay rise which will hopefully help cushion it slightly.

I don’t think it will be the majority affected. A large proportion of homeowners are mortgage free. Another large proportion have tiny mortgages, and another on long low fixes. Others have high enough salaries to whether it.

it will be those who were first time buyers recently, or who have large mortgages on not too high incomes that will be most affected and that percentage isn’t high comparatively.

See responses on this thread, lots will be fine.

We have a sizeable mortgage and minimal payrises. Mortgage up for renewal in June. We are already discussing second jobs.