What will happen to mortgages

[NotKeenOnSwede]

Forgive me if this sounds a bit dense. I have a few talents but understanding how the world works financially is definitely not one of them and I know there are some intelligent people on here who may have an insight to this.

I took out my first mortgage last year, two year fixed rate. So next year just before the end of that period my mortgage broker will visit me and remortgage for a better deal. He said (at the time) my monthly payments will go down (I plan to overpay) because I'll be borrowing less and I'll be 2 years into the mortgage etc. Okay great.

But what will happen now because of everything going on? Are monthly payments likely to still go down or shoot sky high in interest rates if banks are going to end up in trouble financially? Any help explaining this would be appreciated!

It's not really bad to be on the SVR at the moment, it's just more expensive than the majority of the deals out there.

As with a lot of this financial stuff, we have no idea what will happen to interest rates, inflation, house prices, the economy etc and it depends on your view on this and level of risk you want to take.

I'm half way through a 5 year fixed deal at 2%, which is higher than some, but I'm happy to stick with this for now. Others would be choosing to remortgage etc.

Our current deal runs out in November, intention is to take another 5yr fix assuming we get a good offer. LTV has gone from 90% to c.55% (valuation dependant) on last 5 yrs so hoping to see a big difference.

Interest rates have gone down since you took out your mortgage, however, there are major factors now disrupting the property market and the economy as a whole and negative equity could become a main obstacle to remortgaging.

How much deposit did you put down?

The SVR for most of mortgages is around 3-4% whereas you can fix for around 1.4%. So yes it is bad!

Wonder if we should try to fix. I know we’re 3.59% or 3.79% atm but our mortgage is very affordable to us.

You need to weigh it up - use Martin lewis' mortgage calculator on moneysavingexpert.com. To go from paying 3.7% to 1% (for example) could make quite the difference in mortgage payments, if you wanted you could pay the same monthly payment and shorten the life of your mortgage, but you also have to consider any fees you'd need to pay to leave your existing deal.

Well it would be much more affordable at half the interest rate and you’d be saving thousands and thousands of pounds long term

For £100k over 25 years at 3.7% compared to 1.4% you’d be saving over 1,500 a year

@Starrynightsabove I’m not sure if you’re replying to me or not but in case you are ...

We have £35000 left with 14 years to go. I don’t even know what our payments are cos we’ve always just paid X amount to overpay. We originally didn’t move to a new deal because we possibly wanted to borrow more for an extension but now might move (Pre-Corona thoughts, who knows now!). We just hadn’t decided yet so didn’t want to commit. So i suppose it’s worth working out if the saving is still worth it with a possible early repayment fee if we did want to remortgage again for more money or moved house.

You don’t usually incur fees for moving if the mortgage is portable. Same for adding to it in terms of for an extension. Definitely check it out as not worth paying money you don’t need to!

@Patch23042 we never needed to provide anything when we re-mortgaged with Natwest, we had a desktop valuation which wasn't binding, i.e. if the valuation was higher than the existing valuation we could use that, otherwise we could use the existing valuation. If we'd have wanted a proper valuation, then that was binding.

Banks and BS are brutally slashing rates for savers to almost zero. They are doing this to maintain profitability. At the same time they are edging up rates on personal loans and remortages again, to boost profitability. Its a potential downward spiral as savvy savers will pull their money. How will the banks and BS replace it? Ive pulled a lot of money from my BS. Why? Because the rates are crap and because im guarding against a run on a bank or BS in the near future due to the fallout of the crisis.

@Arnoldthecat have you got it under the bed then?