Do you think mortgage interest rates will continue to rise?

[Charlize43]

Am I being reasonable to fix my mortgage interest rate now at 5.39% for the next five years or do you think mortgage rates will go down soon?

I can't work out whether I'm being sensible or overracting due to media hysteria?

Some of my more optimistic friends are saying that this is a momentary economic blip while others are saying nail it now as better to be safe than sorry.

What would you do?

How much will you pay to come out early after e.g. 3 years? If not too high, you can always do that if you want to swap early.

I wouldn’t fix for 5 years. Take advice but I’m optimistic since too many will default.

Depending on when that offer was issued, it may be worth approaching another broker or lender for a new offer.

If it was issued between between ~26 Sept and 11 Oct, then that would have been the time when 5-year swap rates reached an interim peak. So an offer issued now could be lower. On the other hand, if it was issued before Sept 23rd then it would have been issued when 5-year swap rates were lower than they are now, meaning that a new offer would likely be worse.

I've gone for a deal fixing it at 5.39% (better safe than sorry). If interest rates drop before January 1st (which I think is unlikely) then I'll put in for another deal. It's a relatively small mortgage and I don't want to instigate moving to another lender.

The BBC is reporting 6.5%

www.bbc.co.uk/news/business-63387955

Mortgages have been getting more expensive throughout the year, as the Bank of England increased the benchmark interest rate. After the mini-budget, there was a further surge, with borrowers now paying about 6.5% on a new, typical two- or five-year fixed-rate home loan.

I think that’s wise

Don't worry, Rishi is going to fix it all.

I fixed for 10 years for peace of mind. I could afford the payments, in retrospect being on a tracker would have saved some money, but I needed the certainty.

Well he has got the job now and I’ve just had a message that it’s gone up again….

@DrManhattan

Not so sure about that!
My text message from Barclays yesterday…

Hi (my name), the Bank of England has increased the base rate from 2.25% to 3.00% - this will apply to your mortgage from 1 December. We'll send a letter with your new payment amount, but if you'd like to get an idea in the meantime, search 'Barclays Mortgage interest calculator' online. Your Barclays team

Unfortunately I was being sarcastic lol
It's funny how quick the banks are to put up their rates on mortgages but not so fast when it comes to savings accounts

It's not funny though is it, it's the way interest rates work and have done for centuries, did you not know that?

@AllThatFancyPaintsAsFair
Centuries??? Lol

I’d fix it, as least you know then that for 5yrs you can afford it. I’d be concerned about much higher rates. I don’t think it’s just scaremongering unfortunately

Of course, as long as people have been lending other people money there will been disparities between when interest rates change

Did you think you were making some kind of insightful observation?

@AllThatFancyPaintsAsFair
No I was just commenting on a post. Do people avoid you in real life?

I would fix the rate now. At least you then know how much you will be paying for your home for the next 5 yrs. Stability.
Some people are going to come unstuck trying to predict costs.

Yes, they absolutely will.

Unfortunately politicians don't have much power over economies. The rates have been unrealistically cheap for years to try and stimulate the economy.

They are going up everywhere around the world.

My SIL has just been offered a 6.75% rate fixed for 5 years!!! It is a shared ownership property so a bit more specialist mortgage. It is unfortunate she is trying to fix when the base rate jumped by 0.75% yesterday.
Still I think it's crazy. Not sure what she is planning to do next, her housing situating is desperate - she can't find anywhere to rent and she can't afford to buy a full price property. Even getting a chance at a shared ownership is a small miracle!

I would go for the cheapest offer, not sure why you don't want to change lenders

I think there will be further rate rises.

Rates have been unusually low for so long now, that I think they will stay a fair bit higher than we have been used to in recent years for some time.

Iirc, the average base rate over the last 100 years or so is around 7%.

Well, not as far as I can tell. No one crosses the street if they see me, no one doesn't return my messages but if someone who isn't important to me is ignoring me how would I know?

I mean clearly it would be a non issue but you raise an interesting question. Let me know how I can find out and I'll report back.

@nutbrownhare15 totally agree. There aren't many benefits to being loyal to a particular company at the moment. Shopping around is the way forward

Nobody can tell you really - you have to base your decision on your own circumstances. We are fixing for 2 years at 5.35% - our current deal ends in January. We've decided to fix because we like to plan several years ahead and because we have another very large outgoing that is not necessarily a fixed amount, so it helps to know where we stand with our mortgage. We are also thinking fairly short term, as we should be in a position to pay our mortgage off in 2025 (not completely guaranteed though...). I think the economy is very unstable at the moment and it is wise to create as much stability as you can within your own finances - that's what we're doing anyway.

Rude