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Original poster

Are mortgage rates going to rise more?!

173 replies

Namechange1377 · 31/01/2023 20:21

A dream house has come onto Rightmove, forever house material, We have joint income of £3700 monthly.
If we sell our house for £290,000, have deposit of £135,000, the house we would like is £465,000 and on a mortgage of £330,000 we are looking at roughly £1600 monthly mortgage payments, Fixed rates are 4.89% or tracker at 3.94% £1400. (35 years)

I know no one has a crystal ball, but what are opinions- are mortgage rates going to stabilise? Are they going to rise?

Should we fix, should we track?
Is mortgage of £1600 insane?!

OP posts:
Worriere · 31/01/2023 20:59

Caramac555 · 31/01/2023 20:57

I remember reading that if over 42% of your net income is spent on mortgage you are mortgage stressed. I have done it in the past and I was stressed, the budget was really tight.

Surely that depends on how big your income is?

Mum2jenny · 31/01/2023 20:59

We took one out with a £1600 monthly repayment in around 2008,but it has since dropped significantly as it was on a base rate tracker. So it’s a bit up to you depending on if you want to fix the rate or take a chance on which way the interest rates will go.

Michellexxx · 31/01/2023 20:59

I think if you’ll never move again and aren’t planning anymore children, then I’d probably go for it. You have the option to increase your monthly income if needed. I think your total outgoings for bills/council tax/food will probably be between 2.5-3k and if you’re happy with that level, then I think you would deal with it all ok.

It should also reduce over the years as your capital increase but that would mean paying the full 35 years.

Michellexxx · 31/01/2023 21:00

I also read that mortgage rates are u likely to go up much more than they are now. I think we’ve got too used to the very low interest rates. In the future, I expect 3-5% to be the norm, sadly.

AutumnIsMyFavouriteSeason · 31/01/2023 21:02

Sounds doable, I'd go for it as it will only get difficult once you have kids and until they are in school. Might be worth going for a tracker and switching to fixed if the rates keep going up. Likelihood is they will go up/stay where they are. The rate has now been 'corrected' rather than 'going to be corrected' in future.

sjxoxo · 31/01/2023 21:03

Seems too high percentage of your income to me if you want to have any wriggle room.. I’d be nervous. We are in France where they generally cap your mortgage at 33.3% of your income which is generally considered reasonable. Xx

SweetSakura · 31/01/2023 21:06

Am assuming you have savings for stamp duty etc

I wouldn't feel v comfortable with that % of mortgage to earnings but it depends if your earning potential is likely to go up significantly, if so it might be worth the risk.

jannier · 31/01/2023 21:06

Martin's money tips live just now said yes due to rise next week and they are doing a special on it next Tuesday

EnglishRain · 31/01/2023 21:06

I don't think I'd do it. Not unless:

Your outgoings are low enough you've got plenty of disposable income after bills to enjoy life

Your jobs are stable and in secure industries

You can overpay and have the mortgage done well in advance of retirement age

We had a mortgage of £1350 a month on about your income pre having DD and it felt too much.

We now earn £5.3k net and the mortgage is about £900. Feels way better. I wouldn't want to go above £1200 a month even now. And we will be mortgage free by the time I'm 48 if we don't overpay.

Hunkydory99 · 31/01/2023 21:06

personally I wouldn’t based on your current info and income. Do either of you work in professions with consistent and significant pay rises? It may be something to look at in a few years but £1600 p m is SO much!

Also, do you and your partner want kids? How will you afford the mortgage when on maternity/paternity leave? How will you afford it with the cost of childcare?

ivykaty44 · 31/01/2023 21:10

the prediction is 4.25 % by March

ivykaty44 · 31/01/2023 21:11

£1600 p m is SO much!

its the going rate for renting in some places for a 4 bed semi

caringcarer · 31/01/2023 21:19

In my opinion it is just too risky ATM. It is too high a proportion of your combined salaries. If we go into recession lots of white collar jobs will be cut. In 2008 even accountants and ICT people lost their jobs. I would not be taking on any more debt until it became clear where economy is going. As others have said your council tax would go up and heating cost are crippling on a larger house. I have a 6 bedroom house and I could cry every month when I see how much gas and electricity we have to pay.

dunnyknowwhattdo · 31/01/2023 21:28

These mortgages seem so high to me we are in the nw though ours is £600 a month and out take home pay is £4800. Only about.6 years to go so we are overpaying to clear it quicker

Crabbity · 31/01/2023 21:30

Our monthly income is not dissimilar, and out mortgage is £1200 approx - there’s no way I’d be ok with it being £400 more. Quite apart from anything else, to echo what others have said, don’t underestimate the cost of running a larger house, particularly if old and/or detached - our monthly DD for energy bill is also nearly £400!

4thonthe4th · 31/01/2023 21:31

kitcat15 · 31/01/2023 20:28

I wouldn’t do it on your incomings….no way

I was going to say this.

Whatwhatwhatnow · 31/01/2023 21:32

Depends on your lifestyle I'd say. I used to pay a mortgage of £1200 on an income of £2100 pm. Bills weren't as high as they are now of course and I could have decreased payments easily if necessary (I'd shortened the term quite a lot).

I would struggle to have that kind of ratio now I have kids etc.

rozzyraspberry · 31/01/2023 21:32

Namechange1377 · 31/01/2023 20:59

@Pootle40 Nationwide , who we are already with, are offering 5.5 income.

Which reminds me we already have £140k borrowing at 1.89% until November 24, so we would only be borrowing £190,000 at the higher rate for the time being...

I’m not sure that’s how it works? I had always thought a mortgage was tied to a property so you would repay your current mortgage when you sell your existing property, and take a new mortgage for the amount you need to borrow tied to your new property. So full amount would be at new mortgage rate.

I’m probably completely wrong though!

PurpleWisteria1 · 31/01/2023 21:34

Namechange1377 · 31/01/2023 20:34

Half of me is thinking no way too high and the other half is thinking go for it. 😂

Do you expect to climb the lay ladder over the next 5 years? Are you both climbers or have you settled career wise?
Do you expect to have kids / more kids and go on maternity?
Are you buying in an area which house prices historically have risen consistently?

Taking that into account and if you can afford the payments I would go for it.
If it’s your forever home and you are going to stay there for many years you can only win (provided you can meet the payments)
It always pays to get as much house for your money as you possibly can in a decent area. Always.
The first few years will seem tough with some thrifty spending and penny pinching. But as time goes on it will get easier and easier.
In 10 years time you will be thanking yourselves for going for it and 1600 will seem perfectly fine.
You will have a house you love and possibly have done some improvements to knowing you are going to stay.

SweetSakura · 31/01/2023 21:34

rozzyraspberry · 31/01/2023 21:32

I’m not sure that’s how it works? I had always thought a mortgage was tied to a property so you would repay your current mortgage when you sell your existing property, and take a new mortgage for the amount you need to borrow tied to your new property. So full amount would be at new mortgage rate.

I’m probably completely wrong though!

Show quote history

Depends on the mortgage. We were able to move our nationwide mortgage when we moved house and just take out a new one for the difference

LampHat · 31/01/2023 21:35

Fixed rates have already priced in the predicted BoE rate rises, so won’t go up off the back of it. There’s big competition in the market to get the fewer customers that are out there, so will prob carry on going down slowly for a while.

But lenders will probably check if you could pay at a 7% interest rate before approving a mortgage for you.

Good luck whatever you decide! 😊

Petronus · 31/01/2023 21:39

TheDogIsTooEarlyForTea · 31/01/2023 20:30

No one knows but my guess would be they will settle/drop a little BUT I would also guess that job security is going to drop through the floor as the economy continues to tank.

I'd not voluntarily take on more bills unless they could still be covered for several months by one wage/savings.

I agree with this. I don’t think rates are going to go back to the lows we have seen. If I had to take a punt, i would say they will rise again on Thursday, then another 0.5% rise at some point in the year, before settling back to around 3.5%, but I don’t think the economy/job market is going anywhere good at the moment and therefore I would not want to take on any unnecessary risk.

DrPollyAmory · 31/01/2023 21:42

I don't believe in the 'dream house' any more than I believe in a man being "the one". I think there are loads of houses and men we could be happy with - and the "dream" one can end up being a case of being careful what you wished for.

OP, I wouldn't want that mortgage. There's not enough wiggle room. It's feasible, but I'm not sure it's desirable.

Thirtyandflailing · 31/01/2023 21:50

Do you have children and/or cars on finance? Our take home is 9k and we’re only looking to spend £1800pm on our new home as costs are rising and we need flexibility because who knows what the future holds. You want to ensure you can still afford it if one of you needs to go on long term sick pay etc x