Interest rate rise

[Thisandthat2017]

How do you think this is going to affect the market? Buying has already slowed up here in the SE, is it about to get worse????

Let's hope it cools. Really, if people are panicking about a .5% rise then they have overstretched or are thinking of overstretching.

it is half that. Rise is 0.25%. A quarter of one percent.

just drink slightly fewer lattes and don't replace the brickphone as often.
high inflation is screwing everyone much more but no-one is capable of noticing.

Agree about inflation. The big short-term question is: what will happen to wages? And of course the vast medium-term question is Brexit.

Oh flip...I thought 0.5% was taking some balls to do (pathetic to have to think like that). That's what I get for reading the Daily Fail.

A pathetic 0.25%.

0.25% will add £200 a year to every £100,000 of mortgage. So not a huge amount. And no impact if this is the only rise.

If rates keep steadily rising over next 2-5 years, house prices will certainly come down. Rates of over 5% will affect those who have overstretched and there are many who have.

If rates go up to 5% (which they probably will over the next 2-3 years) I'll be paying an extra £600 a month.

Annoying but not unmanageable.

If they go up to 7% that's an extra £1k a month. I'll feel that. That's getting into a reduced lifestyle and/or reduced saving capacity territory.

It they go up to 10% I can still service the mortgage and live but not a lot else.

At 13% the mortgage payment would = my salary. Could always cut pension contributions for a bit but basically beyond 12% I'd be pretty fucked!

Going to up my over payments for the next year until my fixed rate ends, when I also want to mortgage down to a shorter term (took our 30 years but want to move to max 25 years next year when i'll be 32)

Where it may hit is btl landlords who are on the margins of profitability already - for example because of the tax changes on interest deductibility, cost of new regulatory requirements and so on. So yes they may decide to sell while the going's (relatively) good.

Or are most btl mortgages fixed rate? In which case it will take longer to work through.

Of course for buyers with fixed rate mortgages, they may find that when they come to remortgage their increased equity (if they are in an increased equity area) makes them eligible for a lower rate than last time anyway - so their payments may not go up that much.

Maybe the other effect is that people are now expecting them to go up again, so will be more cautious about how much they borrow - which would put some downward pressure on prices.

Not so much ftbs - they will still stretch themselves to the limit to get on the ladder I would have thought, but those further up the chain who don't have to move may be less willing to borrow the max allowed for their next move.

I read somewhere that 40% of mortgage payers are on variable rates - so that is a majority who won't be affected straight away - though will when they remortgage.

There is no way IR will be 5% in 2-3 years @Silver

Agree with Hip, it will be a very very slow rise.

Yes I was reading about them being 1% in 2-3 years.

I think they will want to keep the rise slow. The question is whether they will be able to with inflation driven by the pound losing value internationally due to Brexit. There is precedent for interest rate rises not to work in tackling this, requiring further rises and further rises. But I'm not an economist, so I may be talking nonsense!

@HipToBeSquare well back in 2006 no one thought IR would be

I agree if your worried about a quarter of a percent your already overstretched. Plus they’ve only put it back up to what they dropped it to after brexit

Hip may be too young to recall when base rate went from 5% to 17% in just over two years.

Yes but that won't happen right now.

If rates go up to 5% (which they probably will over the next 2-3 years)

God, is that really likely?

I expect if we try to get a fixed rate mortgage now, it'll be fixed at a high rate?

there's an old joke "This time is different." (google it)

If somebody tells you something definitely won't happen, they're just as wrong as if they say it definitely will.