Do people think interest rates are going to get very high?

[colosmbo]

Have sold but now panicking as will have to pay over the odds for anything I buy. Will have an ok LTV ratio & will fix for 5 years but I'm anxious what things will look like at the end of the 5 years. Obviously no one has a crystal ball but all the agents keep telling me they have never seen anything like the market now, cost of living crisis & I read today banks are starting to tighten up their lending. It's all making me panic & unsure if I should wait. We fortunately can live with family so won't pull out of my sale.

It depends what you class as very high. The governor of the BoE recently said that the base rate would've risen to around 3% by now if covid never happened, so the base rate is incrementally going up to that level.

What are you going to wait for? The base rate currently is the lowest it will be for the foreseeable future and the only time it would ever drop so low again would be another recession/economic crisis. The bank will have stress tested you so if you are accepted for a mortgage the bank has checked that you can still repay when there is a base rate and interest rate increase.

Don't sit and wait and pull out of a sale because of something that is totally out of your control. If you're going to wait for the base rate to decrease again you'll be waiting for an incredibly long time.

I'm debating about waiting because I'm worried about buying at peak prices.

I won't be pulling out of my sale.

They said it was going to crash during covid, after covid, after the stamp duty holiday.

I would buy if you find a property and fix as long as possible.

I would get a five year fix. When I was buying my first house in in 2014 I was worried as the base rate was at a historic low and mortgages were bound to go up. I remember my fitness in the 00’s getting mortgages at 5/6% and commenting that was a really good deal!

I think rates will go up but no where near to the 15% that they were in the late 80’s early /90’s.

My mortgage is still cheaper than if was renting the same house and it will still be cheaper if interest rates go up by 4%.

They said it was going to crash during covid, after covid, after the stamp duty holiday.

I know, probably just anxiety. I don't believe a crash will come just worried about what the landscape will look like at the end of my fix. High energy bills are expected to be here for at least 3-4 yrs

Low interest rates are the only thing keeping the tories in power. They will do everything they can to ensure it stays that way.

Nope, but then we bought in the 80s and 90s when they were high.

Nope, but then we bought in the 80s and 90s when they were high.

yes but prices were somewhat lower

@thegcatsmother

Nope, but then we bought in the 80s and 90s when they were high.

That’s literally like comparing apples with oranges I take your 15% to rates and three times average salary house prices every day of the week

pretty much 😆

Probably will, but only to about 4 or 5 %, so not really high, it will be harder to borrow because of affordability with high bills

I guess the other aspect is high will energy & food bills get

how high

@colosmbo

I'm debating about waiting because I'm worried about buying at peak prices.

I won't be pulling out of my sale.

Peak prices? Relative to what? There is no such thing as peak house prices. When have you known prices to peak and only fall after that. They will always get higher in the long term.

I specifically worried about stagnation & the wider economy.

Peak prices?

They have hit a record high

Relative to what?

records. And relative to the cost of living

I completely understand your concerns we bought at the top of the market in 2007 because we had no choice we literally had three children and nowhere to live so we had to buy a house however we then overpaid thousands in interest that we need not have, we got stuck on SVR because the mortgage exceeded the loan to value and our earnings dropped so we couldn’t remortgage again, he’d been made redundant in the meantime. I think a lot of people are gonna find themselves in that position when they to remortgage when the 2 fixes come to an end. all I would say is do not overstretch. As long as you can service the loan you’re not gonna be repossessed and I could service mine on minimum wage, that’s how cautious I am at the moment.

But it’s the lost opportunity as well, literally I am buying a house that needs absolutely everything doing to it and if things came down by even just 10% I could probably get a garage and a better garden. But the question is where are you gonna live in the meantime. Is that gonna cost you thousands in rent and removal costs if you need to move house again before you finally buy ?

@Nothappyatwork sorry to hear that. That's exactly my fear. It's the unknown, we do have to borrow a lot although it's not maxing ourselves & I as the lower earner could pay it myself. Although not for very long if interest rates are 10%.

We are lucky that we can stay with family in the interim so just bills to contend with.

There’s absolutely no chance, I will eat my hat if they got over 5%. The whole country would come crashing down after six months.

Unless of course that’s the plan the great reset where everything gets repossessed all assets get seized and the banks are our new landlords in which case if it’s all gone a bit mad Max to be honest I don’t think money is the biggest of our issues.

What are they stress tested to, that might give a clue

We bought our first house in 2016 and I cried the night before we completed because I read a - very convincing, very well-reasoned - article that said we were buying at the absolute peak, that house prices were about to crash and that we should have continued to rent and then bought very cheaply during the huge crash that would consume 2017. Obviously, that did not happen.

@Nothappyatwork On one hand I agree with you, it would be absolute carnage or the least of our problems but then I look at pandemic, war, energy prices & think I wouldn't have believed that years ago.

@User748956 I'm not sure, maybe 3%. I stress tested myself to 5%. There's quite a gulf between the 5 year & 2 year fixes but I feel more secure with the 5 year

Mine stress tested to 7% but quite honestly if it came to that I would send the mortgage company what I have and as long as I make a payment towards the mortgage that would have to do it takes a very long time for things to go completely pear-shaped.

@HardbackWriter in my part of London some property (mainly flats) have stagnated pretty much since Brexit once you factor in stamp duty & work. Prices are high though & the stamp duty pause got things moving again. I do think there is an affordability issue & I read more FTBs left London then ever before to buy which if it does have an impact won't show until a few years.
I also think some of the "rise" in property prices were caused by people on the ladder moving as they were stuck but stamp duty pause/covid savings helped them.

I'm trying to buy something that we can stay in for 10 years plus as I don't want to have to move again.

@Nothappyatwork my friend went through a bad divorce & her bank moved her to an interest only mortgage. I do think banks will try & encourage people to pay off their debt whether it's extending it to 40 years, part & part etc rather than thousands of repossessions.

I'm not sure but I do worry so I am making overpayments where possible for when my fixed term ends in 2.5 years.

If I can maintain the overpayments then I should have a small mortgage. If possible when it comes to renew I am going to pay it off in full as soon as I can just for the peace of mind.