Mortgage interest rates

[ChooksAndBooks]

Sorry if this has been done to death.

But what do you think will happen to mortgage interest rates over the next 2 years? We are due to remortgage from 1.54% in 18 months time and I'm worried there will be a big hike. We should be at 60% LTV by then.

I don't think there's going to be a big hike any time soon. Interest rates go up to cool an overheating economy and I don't think we'll be in that position in 2 years time - they're seriously considering negative interest rates, not putting them up.

Plus, a lot of business, personal and possibly government debt is linked to the base rate and if that gets more expensive it will fuck the economy.

Why are you expecting a hike? I don’t think economy is going that way?

Not expecting it. Just worried about what it would do to our monthly payments if they did go up significantly.

@BarbaraofSeville thanks. I'm a bit green when it comes to the economy. That all makes sense.

We just ended our fixed term and did not remortgage as the interior rates are so low right now, coming off our fixed terms actually made our current payment cheaper than on it! I was taking with my mother who says the interest rate has not increased by more than 1% since the financial crash, a 1% rise for us is around £40 so very achievable. It’s you’re unsure see what your mortgage follows. Ours is the libor rate and you can look at the history of it. Likely you’ll find it’s been very low for a long time and unlikely to increase for a very long time too. Before COVID they were considering moving it from 0.25% to 0.5% I believe

coming off our fixed terms actually made our current payment cheaper than on it

That's almost always the case, certainty usually comes at a price.

We've never fixed and it's been cheaper for all of the last 25 years apart from about 3-6 months where we might have been paying about 0.5% extra. We're currently on a lifetime tracker that we took out in about 2007 with a rate under 0.5%.

The 15% rates of the late 80s/early 90s that people always fear probably won't happen again in our lifetimes.

Thanks. That's very reassuring. I was thrown a bit because my current mortgage provider seems to be offering rates at a little above what we fixed at 6 months ago.

Plus I keep hearing about how my mum paid 15% in her youth!

Rates have gone up a bit at some lenders because of demand for mortgages at this time - they want to ration their lending. I don't think it suggests a longer term material rise in interest rates.

The interest rate on savings was very high too in those days.

Why are you so worried about something that's 18 months away and you have no control over?
Concentrate on the action you can take: overpay your mortgage; check when you can remortgage and make a note in your diary to see a mortgage advisor in advance of this; check your bills/outgoings to ensure you are not overspending in other areas. Mortgage rates will not be 15% anytime soon.

We are moving and this does worry me. But I’m a worrier anyway. We bought our current house in 2007, before the crash, and have been stuck here much longer than I ever wanted.

The 15% rates of the late 80s/early 90s that people always fear probably won't happen again in our lifetimes. I have no memories of my dad as a young child in the 80’s, apart from holidays, because of this. He worked crazy hours as an engineer, the benefits of him being paid by the hour rather than salaried at that time, and even took on an extra job window cleaning on top because of the interest rates.

I'm certainly not " so worried".

As I've explained I'm a bit naive when it comes to the economy and I wanted opinions on what people thought was likely to happen. I know we couldn't afford a massive hike in rates but posters have said that is hugely unlikely, which is great. I was just looking for a bit of reassurance form those more knowledgeable than I am.

I do make overpayments. I know when my deal is up. Our finances are good, we have a spreadsheet for all of our spending and a budget that we stick to. We have a good handle on our household finances, but obviously if our monthly mortgage payments changed significantly it would impact us.