Anyone know how much mortgage interest rates might likely go up by over the next year?

[FreeBritnee]

We’re trying to move. Have accepted an offer on our house but cannot find a house to buy. We moved onto a variable mortgage rate (mortgage currently around 170k) so of course we’re moving into a situation where ideally we’d like to fix a mortgage before we get caught in the trap of increasing monthly payment but can’t find a house so may be in a situation where we have to stay put.

Anyone in the industry where they have any idea of what might happen. I know we need to try and control inflation but I know the economy can’t withstand interest rates that go too high. I lived through the crazy interest rates in the 1980s and am just so frustrated we might be forced to stay in an area we don’t want because of it.

Why can't you fix the rate now and port the mortgage when you move?

My understanding is that if you’re upsizing, hence borrowing more, even if you port the extra amount you’re borrow is attached to a new rate of interest.

Following... in the same situ....

They typically go up in small increments - you can look up the history online but I'd be surprised if they went up by more than 0.25%

No.

People who have only lived in a low-interest economy will find it hard to grasp.

Find an old person who lived through Thatcher's Britain. At one point mortgages went up to 17%

@PigletJohn

No.

People who have only lived in a low-interest economy will find it hard to grasp.

Find an old person who lived through Thatcher's Britain. At one point mortgages went up to 17%

Not sure if that's aimed at me?

I meant I'd be surprised if they go up by more than 0.25% at a time, for several quarters at least. Could have been clearer!

I agree it will be a shock to be above 5%

@pigletjohn - oldie here, I remember a few colleagues with mortgages going a bit grey on Black Wednesday when interest rates went up to 15% for a wee while - I didn’t have a mortgage then thankfully.

OP, it is conceivable they could go up 0.25 at each monthly review. I’m sure it has gone up 0.5% in a month too.

So we don’t really know do we 😬. I guess it’s going to be a tough old ride.

*rough

@PigletJohn

No.

People who have only lived in a low-interest economy will find it hard to grasp.

Find an old person who lived through Thatcher's Britain. At one point mortgages went up to 17%

yup...i fixed for 7 years once at 9%...later, rates were as you say a lot higher...i doubt they will go up much...people have been spoiled for years now with very cheap loans.....i would have loved to have paid 0.50 %...!!

@PigletJohn

No.

People who have only lived in a low-interest economy will find it hard to grasp.

Find an old person who lived through Thatcher's Britain. At one point mortgages went up to 17%

Mid 40's here and we still stress tested our ability to repay with increased rates, up to the 5% the same level rate were when we got our first place. We did it up to 10% for "fun" and the repayments were bowel clenchingly high.

Very glad we opted for a long fied rate earlier this year.

My uneducated advice would be fix while you can unless you have a short term left or plan on majorly overpaying (over 10%/year).

I remember the 15% mortgages. I had to sell my Beatles autographs to cover the bills.

I remember those extortionate rates. A neighbour had to sell. If she had stuck it out they would have been fine but they couldn't. Bought at the tail end of the price rises and then had to sell at considerably less. I'd say rates will probably rise by around 2% over the next 12 months or so. But thats just a guess.

I had a mortgage in the late 80s or early 90s at 15 or 16%. Also lived through gazundering and negative equity etc. Because of that I’ve always assumed interest rates could rise significantly. Doubt they will but I wouldn’t extend myself too much ever again.

On Martin Lewis he mentioned there were some predictions of up by 0.75% by the end of 2022 (with the usual caveats that it's only an estimate)

Anyone playing the "you don't know you're born" card ought to realise anyone buying in the last 10 years has likely borrowed a lot more money vs their wages than the 1980s due to the cost of property these days. Incomparable times.

True.

My 16% mortgage in 1988 was for £18,000

@JayAlfredPrufrock

True.

My 16% mortgage in 1988 was for £18,000

what did you earn in 1988?

£10,000 per annum I think

Page 8 of the attached gives you the full range of independent estimates of Bank rate for 2022, pretty wide range but average is not so spectacular.

assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026866/Forecomp_October_2021.pdf

I do agree that house prices have escalated faster than earnings.

But IIRC people were geting mortages of about 2.5 +1 around then.

But your mortage looks like less than twice your then earnings, which seems low.

I’ve been having sleepless nights about this.

[quote Chronicallymothering]Page 8 of the attached gives you the full range of independent estimates of Bank rate for 2022, pretty wide range but average is not so spectacular.

assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026866/Forecomp_October_2021.pdf[/quote]
not sure I'm reading it right

it looks like official bank rate estimates around 0.1%

and CPI/RPI estimates 2.5%/3.5%

so cash holdings guaranteed to lose value.

Is that how you read it?

Using inflation to shrink government borrowings is a common trick when borrowings are frightlingly high, e.g.. after a war or other costly emergency.

We bought our house in 1992. The day before completion base rate hit 15%. I remember being delighted we had secured a mortgage at 9.95% fixed - as had our purchasers. But that was exceptional. The norm was for rates to increase by .5 or 1% at a time.

Even the MPC probably don’t know yet. But it is unlikely that they will go up by very large amounts. They will only be targeting enough to bring inflation back down to 2%, but I think they would be more willing to see high inflation than large numbers of defaults because of high interest rates.

@PigletJohn

It was the house I wanted and I didn’t see the need to mortgage myself up to the hilt.

You don’t have to borrow the maximum.