Active discussions

Meet the Other Phone. Protection built in.

Meet the Other Phone.
Protection built in.

Buy now

Please or to access all these features

Talk
Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

Original poster

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

57 replies

colosmbo · 10/04/2022 11:12

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.

OP posts:
XingMing · 10/04/2022 18:41

I get that you are all concerned about interest rates increasing, with good reason IMO. Buy the house that does what you need, as fast as possible. Don't wait. Inflation is about to hit big time. Not house prices, but the whole economy.

Original poster
colosmbo · 10/04/2022 18:45

@XingMing why is it better to buy now before inflation hits?

OP posts:
Nothappyatwork · 10/04/2022 18:46

[quote colosmbo]@XingMing why is it better to buy now before inflation hits? [/quote]
Because the interest rates will rise at least this way you will potentially be able to get the two years on the fixed.
if there ever is a house price crash what happens then is the banks protect their interest by not handing out mortgages so we literally the only people that get richer in that scenario are cash buyers.

Original poster
colosmbo · 10/04/2022 19:03

doh, of course that makes sense!

OP posts:
Starseeking · 10/04/2022 20:34

My mortgage was approved in September last year; my lender (Santander) stress tested to 6%. A user on this board explained to me how they come to those figures, and it's basically where the bank thinks rates will go in the next 5 years.

Original poster
colosmbo · 10/04/2022 21:34

eek 6% would really eat into our disposable income but with that coming I guess we could save/overpay in those 5 years.

OP posts:
65honeybee · 10/04/2022 21:46

No, very unlikely they'll go very high. I imagine 3% by start of 2023 tops. The govt will do everything in its power to prevent them going over that

Somanyquestions1984 · 10/04/2022 22:09

No one actually really knows

Horcruxe · 10/04/2022 22:12

@65honeybee

No, very unlikely they'll go very high. I imagine 3% by start of 2023 tops. The govt will do everything in its power to prevent them going over that
The government will do everything it can, but they've ran out of tools.

Its because they've been artificially suppressing the I interest rates that inflation is so bad right now.

In the end when the shit hits the fan, they wont be able to stop it.

Original poster
colosmbo · 10/04/2022 22:23

That's what i'm worried about what, how can they actually stop it? The BOE not long ago were saying inflation was a blip, now despite rate rises it's not a blip & forecasted to go higher.

OP posts:
Original poster
colosmbo · 10/04/2022 22:24

Its because they've been artificially suppressing the I interest rates that inflation is so bad right now.

I agree with this. Relying on QE for so long & not allowing a correction after 08 has damaged the economy.

OP posts:
rainingsnoring · 10/04/2022 22:59

@colosmbo

Its because they've been artificially suppressing the I interest rates that inflation is so bad right now.

I agree with this. Relying on QE for so long & not allowing a correction after 08 has damaged the economy.

I agree with this too. No one knows when 'the shit will hit the fan' though. Inflation has already hit and is clearly going to get worse. There will be interest rate rises but nothing like historical levels at this point. The bank are fully aware that there would be a huge crash if they hiked rates significantly so they have been trying to avoid. As @Horcruxe, they have run out of tools to manipulate things further so they are currently trying to maintain a balancing act but it won't work and there are already problems.
Walkingthedog46 · 10/04/2022 23:02

I hope not. When we bought our first home in 1980 the mortgage rate was an eye-watering 15%.

Padderbadger · 10/04/2022 23:23

Following as I am interested too

sst1234 · 10/04/2022 23:38

@colosmbo

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

That’s the point. Every new day means yesterday is history. So waiting to buy just means pricing yourself out of the market. Very few people win the waiting game. With each passing year they look and wonder why they didn’t buy earlier.
Original poster
colosmbo · 11/04/2022 06:53

I'm aware that's the usual pattern. As I said before I'm anxious about the landscape in 5 years time.
I don't think I'm odd to question when we are a cost of living crisis, that isn't the norm.
There have been some helpful posts on this thread though so thank you for those.

OP posts:
Original poster
colosmbo · 11/04/2022 06:54

I'm still going to buy but my next home may just be a little more conservative that what I originally planned.

OP posts:
Starseeking · 11/04/2022 08:15

Just coming back to add, as well as fixing for 5 years, I'd also overpay as much as I could during that time. Even £100 overpayment per month would mean you take £6k off the mortgage in 5 years, which will make a difference when your fix ends, and to any interest charges.

User843976 · 11/04/2022 08:18

Aren't rising interest rates better for cash buyers

Original poster
colosmbo · 11/04/2022 08:24

@Starseeking yes we will definitely plan to do this

OP posts:
Foolsrule · 11/04/2022 08:39

4 years left on five year fix. Making overpayments so that when it ends, we’ll be in a good position.
All you can do really!

HardbackWriter · 11/04/2022 08:48

@Starseeking

My mortgage was approved in September last year; my lender (Santander) stress tested to 6%. A user on this board explained to me how they come to those figures, and it's basically where the bank thinks rates will go in the next 5 years.
It's where they think rates could go, not where they think they will, which is an important difference!
Frazzled2207 · 11/04/2022 08:48

Recently had this panic but we did go ahead and buy.

Have fixed for five years, yes not as cheaply as I could have a few months ago but in another few months fixing will be more expensive.

I don’t think there will be a house price crash, perhaps a correction but overall I think prices will continue to rise more slowly.

We are definitely the cautious end of the spectrum so aim to overpay as much as we can over the next five years which should give us more favourable options next time round even if that includes lengthening the repayment term if needed. In the past the advice was to “mortgage ourselves to the max”. I did that in 2006 with disastrous results. Not doing that again but I’m still of the view that in the LONG term, it’s almost certainly in everyone’s interests to buy.

LoveSpringDaffs · 11/04/2022 08:49

@Walkingthedog46

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

Gulf??

Nationwide 2.14% for 2 years, 2.19% for 5 years.

LoveSpringDaffs · 11/04/2022 08:59

If you plan to stay there for 10 years, can fix for 5 years & can afford that on one lower wage I don't think waiting is a good idea. With housing stock as low as it is, I can't see house prices dropping much (if at all)

Swipe left for the next trending thread