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?!

@Feefee00 no I meant I was right that you will get posters with a high income & tiny mortgage saying they would stress over increasing it. Clearly you're very risk adverse which is fine but logically a 1.6k mortgage on 8k is not going to be hard to service. And shouldn't impact on savings & insurances in the event of a job loss or ill health.

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).

Yes, if paying childcare it would put me off borrowing too much plus you don't know before you have dc if you want to work the same job/hours. I gave up work, then went very p/t & still work p/t.

Oh I am 90% sure I want to work the same job/hours because if possible we want to pay for private school for child in future. So have to increase earnings. The last woman to give up her job for a baby in my family was my great grandmother (and I am pretty sure that wasn't consensual as she was a maid turned concubine). But I wouldn't borrow too much still because you have to be prepared to pay full childcare as family arrangements don't necessarily work out.

I expect the rates will go up to 4% in Feb and stay there for a bit.
That mortgage is too high for us, we've not paid more than £500 for the last 5 years, this is our stress test should one of us lose our jobs. Our income is a bit higher but we are especially risk averse.

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?

Because the OP asked "is this mortgage insane" and everyone will have an opinion on an income:mortgage ratio as we've all had to decide what is comfortable to us. Surely when asking a question like that you're looking for a range.

Having only £2100 after a mortgage is pretty tight; what about holidays, birthdays, Christmas, food, car, other bills. Setting your mortgage so high limits your lifestyle quite dramatically, if the house is the priority that's fine, but it's good to reflect on how limiting that would be.

I might have a higher income now, but I've been on a similar income before and a mortgage that high would have limited our lifestyle far too much. But that might not be the OP's priority, she hasn't stated. I note she has one child which makes a difference too of course.

@socialmedia23 yes agree about family commitments to childcare. I absolutely loved my job & never thought I would walk away from it but it wasn't compatible with family life & also the industry became quite insecure.

I do like working though hence why I changed to a more flexible industry. I did imagine I would be f/t by now (both well in primary) but life is so busy. Luckily it doesn't restrict our choices financially too much.

We're buying for 400k but selling with similar figures to yours. We've decided to fix for 2 years with a 35 year mortgage. If interest rates are down in 2 years we're planning to shorten the next mortgage.

We saw a mortgage advisor last week and he said rates will,likely stay where they are now, longer term. We’re aiming for similar monthly payment, but higher take home. That seems a large amount of your take home on mortgage

I would maybe wait to buy or negotiate hard. I don't think the full impact of rate rises has filtered through as another poster said.

Fair point about 42% of what.
About 12 years ago we had a net income of about 3100 and mortgage was 1428. It was brutal. It might be doable for OP if that house is somewhere she thinks they will be for many years and can endure shortt term pain for long term gain.

Now I'm back working full time things are much better, and but with two kids under 5 that was very tight.

42% of a very high income might be easily affordable, but the OP's income isn't that high.

Household take-home pay of £3,700 equates to two people earning approximately £26,500 each (excluding potential student loan/pension deductions). Both earning below the national average salary, and if they went down to one income for any reason, or even just lost out on some income due to ill-health, they'd really struggle.

There is also a question about whether the OP would have the financial resilience required if an expensive repair to the house was required. Paying such a large percentage of income on mortgage leaves little to save for emergencies.

The people talking about what is affordable on incomes of £6k+ per month are just not comparable.

Exactly. Just because a bank will lend it doesn't make it manageable! By the time you pay for bills; food and the various unexpected things that happen in life there would be nothing left at all.......

I wouldn’t based on your income. It’s not just mortgage rates that are increasing, energy, food etc are all going to continue to rise.

Whilst you’ve only got a 5 yo now, they become expensive beasts when in secondary. Far more so than I anticipated.

Our income is about 25% more than yours OP and there’s no way I’d go to that level of mortgage under the current conditions.

Exactly. Just because a bank will lend it doesn't make it manageable!

This is such a good point. We're about to increase our mortgage and go from £650 to £1400 in mortgage payments per month. Our mortgage broker has mentioned that we could borrow double what we plan to. If we did, we'd be budgeting every other part of our life to the penny and at the mercy of interest rates when the term expires. I'd do it if it was our first step on the ladder and I was desperate but no, I'll make do for now, thank you.

Update for you all::
Dream house turned out to be not as spectacular in photos (no surprise there tbh) and being at top of budget, it just was not worth the mortgage payments!

Back to drawing board for hopefully a price a bit lower :-)

Good to hear the update. It must be a relief that house is not as dreamy as you first thought, so you won’t have to agonize over large payments. Hopefully your dream house will come along and the mortgage won’t be as intimidating!

@MysteryBelle thank you, my fingers are crossed :)

Not much stays with me once I have read the thread and posted,.

This has bothered me all day, I read it out to DH, who pronounced you bonkers.
I am so glad it’s failed to deliver.

I read it to him at the pub over lunch, another expense coming out of the last £1000 of the income I posted about.

Oh and I thought of another today £100, on match days at the club. It all adds up, and probably a taxi home.🙄

Proceed with caution on any further properties, please.

The bank rate just went up 15% to 4% ( up 50 basis points).
What Will this do to mortgages?

Most banks have already priced the forecasted rises into their fixed rates. Its not as if this is a surprise to them.

Not strictly true - the swaps market has more of an immediate impact than the BOE base rate, hence the chaos caused by Truss in the Autumn.

That sounds like a huge mortgage in a low income. I wouldn’t go for it right now!

i’m sure your dream house will be along soon and hopefully the interest rates won’t be as volatile!