Are mortgage rates going to rise more?!

[Namechange1377]

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?!

The only ones to benefit from that deal and your cash is the bank.

35 years is a huge term with the interest:capital curve set so far towards the former in the first ten years that you’d barely touch the capital sum.

I think a lot depends on how secure your jobs are, what the likelihood of your salary increasing in the future is, and the lifestyle you want (cars, holidays, hobbies etc).

We bought our house 5 years ago with a mortgage of £195k - currently around £770pcm. With the wonderful benefit of hindsight we could have afforded a better house in a better area. Had we bought such a house we wouldn't have the expense of having to move again, which we will likely do from our current house. And the price difference between our house and the better ones has increased a lot, so financially it would have been a better decision to have bought one of those houses in the first place. BUT we're not risk takers, my partners job doesn't have great security, and having a low mortgage relative to our income has allowed us flexibility such as easily being able to afford (extortionate) nursery fees.

What I observe from my parents friends is that those who invested more of their income in their home (in terms of having more expensive house and larger mortgages) had more frugal lifestyles for many years but now have the advantage of downsizing and releasing equity. I think if I did buy a more expensive house I would view it in that way - as an investment in my future.

Sorry OP but you are coming across as extremely naive and idealistic. Unfortunately, it doesn’t sound like financially you are able to purchase this property. Have you been approved for the mortgage, and if so, how far have you stress tested it to? It’s a hugely irresponsible financial decision to make, taking on a mortgage nearly half of your income, especially when you have a child. The fact you have to ask if you should do this rings alarm bells!

My take home is about the same as yours and I wouldn’t risk it. Stay in your current home for a couple more years. See where rates go, prices are likely stagnant for a while and hopefully you’ll have some pay rises/promotions/job moves

Are you arse twitchy at 1850 a month when you have a 6k income?

I am on my own at the moment but looking to buy with my partner. Combined income 6000. We've been thinking a mortgage repayment even up to 2500 would be easy doable as 3500 to spare a month. Do you think we're being unrealistic?

£1600 is a big percentage of your income but if you are in stable jobs, it could be manageable, even after taking into account the fact that I assume you will also be paying extra council tax.

I would fix because I think it's easier to budget. I do think rates will rise tomorrow and again later in the year. Mind you, I'm only basing that on following the news without any insider info.

We have a retirement income after tax of £3,400 today we added up just the monthly bills, they came to £2117.00. We are mortgage and debt free.

That does not include annual expenses car insurance by two, household insurance I am sure I am forgetting some other things, about £1000.00 so call it £85 a month.

Oh yes,🙄 private dentistry and hygienist (for no reason other than the NHS provision is shocking around here, it was spot on before Covid.

Petrol, maintenance of cars I will leave that out for now.

We top up DS's pitiful wage (apprentice by about £100 -£200 on as needed basis)

We have a rainy day fund of about £30k which is not to be touched unless it rains, ditto investments which we have mentally written off for the next few years.

That leaves in theory circa £1,000, from which Costco, Marks and Spencers food hall, charitable donations come. It is ok for two retired people who are low maintenance and have back up plans I would not put myself in that situation if both of us were working, it is far too precarious. IMO

Please think long and hard. 🙏

Firstly lots of posters on here will tell you they earn 10k a month & feel uncomfortable with a mortgage of more than 1k. Unfortunately a "big" mortgage if you're younger & often cheaper then renting due to house price inflation.

However there is a balance. I don't think it's a great idea to max yourself for such a long mortgage in the current climate. I also think mortgage rates won't go down much & the days of 1% are over for a while. Do you want dc?

Not a boast at all but our joint income is £5.7K per month, our mortgage is just about to go up to £1279 and with the spiralling cost of everything else, that feels too much!

This makes no sense!

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.

The figure matters though. 42% of 10k is less stressful than 25% of 2k.

Because we went from a mortgage of 700 on 19 yrs to 1850 on 30 yrs

Its a huge jump! We are on a low rate at the moment so we will likely be looking at payments similar to what you are in a couple of years when that ends. We do save over 1k per month, im more of a saver than a spender so we do have that flex, no debts either.

I'm surprised at people saying this is 'crazy'.

Most will have bought yrs ago.

We have a monthly mortgage of £300 and a monthly income of around 8k. I'm worrying about paying £1600 a month on my income when upsizing.

lol, I was right!

Why do people come on these threads to say their monthly post-tax income is £8,000 against which a monthly mortgage of £20 feels too tight for them?

Other unexpected children came along for another friend of mine, she booked a termination but couldn’t go through with it so has a third. plus there is illness. I hasn’t noticed it would be 43% of your income. Rates have actually been too low there actually at a more sensible level now however much people don’t like that.

Tbh there are lots of assumptions here eg the sale price of your house, conveyancing results etc. I'd put in a lower offer to cover the possibility of having to lower your house price, and to lower the LTV slightly. If you get it, it might ease the pressure a tiny bit. I'd be tempted by a short term fix for the certainty but hedge for rates to fall in the medium term.

Why do people come on these threads to say their monthly post-tax income is £8,000 against which a monthly mortgage of £20 feels too tight for them?

It's actually bizarre.

Sorry I should actually answer your question, no I don't think it's unrealistic but it depends on your other expenses, your future plans and the house you buy. We don't have childcare costs, no debts. DH has a company car. I work from home so barely use any fuel. Both have higher earning potential and secure jobs. I am completely unmaterialist, DH not so much! The house we have bought needs loads of work (worst house on the best street kind of thing), so an investment in my eyes, were taking our time to make it as we want it but obs need the cash flow for this.

The % of your income on that mortgage is not abnormal - even in the 80s we spent far more than 50% of our joint income on the mortgage.

What’s abnormal is the 35 years, you need to make it 25 years at most at your age. You should plan on being mortgage free when mid 50s.

Also disinformation on here about historical rates. The historical average Bank Of England base rate is around 7% and as we know actual mortgage rates are higher than that.

thinkplutus.com/uk-interest-rate-history/

www.propertyinvestmentproject.co.uk/property-statistics/uk-interest-rate-history-graph/

I think rates will continue to rise, albeit slowly, over the coming decade.

A 35 year mortgage is not really abnormal now. They will pay it off before state pension age as it is currently set at, I took out a 35 year mortgage on my previous house and got it down to 19 years in 8 years of mortgage payments, it's not set in stone.

My house hold income is around £3300 a month after tax. Mortgage is £720 a month and don’t have much left over.

we do pay £600 a month in shares though and seeing as you have a few 100 a month extra I would say the mortgage is just about affordable for you.

A lot more than what I would want to commit to mind and I think it would be a squeeze.

I bought a house 6 years ago so it wasn't years ago. 3 bed semi. The thing is sometimes you don't adjust to feeling secure having a higher income. I'm worried that I might become sick , or DH lose my job etc. I'm quite risk adverse I could be living in a much bigger flashier house but literally at the minute I could afford to run my home working part time just me. I drive a city car, I do like nice holidays though The freedom knowing I'm not shackled to a particular job is amazing. I will probably go ahead and buy end of this year or next as bigger properties gain more equity over time. I can't say it doesn't worry me a bit as yes I will be more under pressure.

I’m paying £1500 rent in a 3 bed terrace!
could only dream of having a mortgage for £1600pm!

Personally I’d wait as house prices are coming down and mortgage rates going up.
Waiting 12 months won’t do any harm. You’d like to move, not need to move at the moment.
Also what is your job security like and earning potential? Are you both easily re-employable in the local area in your chosen professions?
You could also try saving the mortgage differential every month and see if it’s doable.

I ran the sums (also on 6100 income but will increase to 6500 as DH only has 12k on student loan) and it's not easy if you have childcare for 1 child. I am now aiming to spend £1700-1800 on mortgage and solicit for 1 day childcare from MIL (childcare fees I save will go on any interest rate rises).