Nationwide mortgage rates

[GreenLunchBox]

They updated them last night and a 2 year fix is now 5.89%.

Shit just got real

I work in mortgages and many lenders have suspended all applications for new customers. The ones that haven't are offering scary rates. I've never seen anything like it.

How long is this going to last!

w e have just over 2 years left on a 0.9% deal and I’m very worried about the way things are going!

Our own fixed term ended last week and we went from 1.09% to 4.14% overnight. Thankfully it's a small mortgage so not a huge amount extra per month but still an extraordinary leap percentage wise. I think things will have calmed down in 2 years but I don't think we'll ever go back to the days of 0.9% rates sadly.

I think anyone currently on a low fix needs to overpay as much as possible (obviously within the allowance of your particular mortgage) while on the low interest rate fix.

I stuck my mortgage details into a rate rise calculator today and at 6% my monthly repayment would jump from £450 to £850 which is unmanageable. I'm fixed until March 2023 and will be putting every spare £10 towards my mortgage to chip away at total between now and my fix ending.

What calculator did you use please.

Rates have been artificially low for ages. When I worked in Mortgages 20 years ago 5.89 was a standard rate. We got a 3.99 rate and everybody went mad for it - went to Ibiza on all the overtime I’d earned.

I worry that the incredibly rapid rise will be followed by a very slow decline. It is hard to know if mortgage rates will ever get down to below 1%, but if they do I do think it will be an incredibly long time. It is very worrying.

I agree with this. It's the same with energy prices, food cost, petrol etc. I think even if these all come down slightly it won't be by much and we'll just have to accept a new set point for the cost is living. Scary times ahead.

We bought our first house in 2010, and our rate then was 5.89% for a 3 year fix, at the end of that it was 4.2%, we had a 15% deposit and we never got a rate close to those that everyone seems to have now before we paid the house off. Genuine question but for those who have had a house 10+ years were your rates so much lower than ours were? This level seems normal to me because of when we first bought.

@VikingsandDragons i was on a 5.99% fix in 2008 and fixed for a long time so never got to take advantage of the super low 0.9 rates etc mentioned upthread either- worth it for the security though as I am extremely risk-averse

For those asking for payment/over payment calculators. If you Google Halifax overpayment calculator that is very good.

I thought that the mortgage companies were stress testing applicants with an MMR of 6% ?
if so, 6% rates should be affordable.

I've had a mortgage since 2003. I don't think I've ever had a rate above 2.75%.

I'm currently on a 4yr fix at 1.64 that runs out in Jan 2024. Wishing I'd gone for longer now!

I've had a mortgage since 2003. I don't think I've ever had a rate above 2.75%

I find that a little difficult to believe. BoE base rate was 3.75% and then went up to 5.75% over the next few years, before tumbling in 2008. Lenders normally price in a bit of margin to make a return on residential mortgages. I can't recall my rate in 2003, but I know in 2001 it was 5.99%.

if I had a low (below 2 percent) rate fixed mortgage right now that was due to expire in a couple of years, and the ability to apply extra cash towards reducing that debt, then if I knew I had the discipline not to spend "extra" money, I would not overpay the mortgage now using that. Instead, I would put aside the "extra" into a separate interest-bearing account reserved for "mortgage balance reduction" when the low interest rate fix ends. I would probably use time deposits, or buy short government gilts with a maturity coming up before my mortgage fixed term ends, in order to maximise interest earned without risking the principal. That should allow me to earn around 4 percent, while paying 2 percent interest on the mortgage, and to keep the difference. Taxation can reduce that 2 percent spread, but if possible, I would save on taxes by either putting the extra money into an ISA, or buying low coupon gilts so that the appreciation back to nominal value is tax-free.

Then, when the mortgage comes up for renewal in 2 years or so, I would have the accumulated cash available to reduce the balance in one chunk, and I would have benefitted from the interest rate spread during the remaining period of the fix.

Genuine question to any mortgage advisors, why are nationwides rates 5.89 and others still around 4.25 etc, why are they so different? We have exchanged and our new portion of mortgage is fixed but we are porting our existing portion and can’t fix that until we complete next week, absolutely stressing massively! Yesterday we could have fixed with NatWest at 3.99, which is manageable but feel sick with worry what it might be by next Friday!

That can't possibly be true www.mortgagestrategy.co.uk/analysis/historical-interest-rates-uk/

@Beach1983 I've been wondering the same about Nationwide. Are they just taking a bit longer to settle after the mayhem started last week or will they remain higher than others 🤔

keep an eye on the savings rates with interest rates going up if you have low interest on your borrowing you might be better putting as much as you can in savings so you’d earn more than you’d save by paying more into the mortgage.

@INeedNewShoes I agree with @Billybagpuss I have posted this before from money saving expert www.moneysavingexpert.com/mortgages/mortgages-vs-savings/

For the vast majority of people who fixed in the last few years when interest rates were low, taking advantage of higher interest rates on savings is better than overpaying. You then pay off a lump sum from your mortgage when your fix ends and you are remortgaging.

It also means you have access to ready cash over the next few years before the fix ends.

You do just need to watch that you are better off after tax, but for most people their savings allowance plus a cash isa means they are.

keep an eye on the savings rates with interest rates going up if you have low interest on your borrowing you might be better putting as much as you can in savings so you’d earn more than you’d save by paying more into the mortgage

This. Overpaying the mortgage when you're paying around 1% and can double that is unnecessary. Save the money instead, you'll get double that rate in instant access and can even more if you use regular or fixed savings products. Only caveat would be if you're at risk of job loss as you would be expected to live on your savings before being eligible for universal credit. But if the chance of needing to claim/being eligible for UC is low (eg if you both earn above average, chances are you wouldn't be entitled to it anyway if one of you lost your job) then save instead.

Premium bonds are also tax free and you're likely to get close to the 2.2% pay out rate over time if you have more than about £10k in.

That is fine at the point you take your mortgage but people don't think like that when they make life decisions after that point, they tend to look at what they are paying now and decide what thy can afford on that basis. There will be many people who have had children, got a lease car or even 'just' a pet since getting their mortgage, and that is before we even think about other cost of living increases.

This is the new normal IMO, the silly too low rates are not coming back, inflation is the new boogeyman not a house price crash, people have had LOADS of time, many many years in fact, to get their debt paid down at super low rates and get their economic house in order.

The majority of people have anticipated higher rates, have their debt paid down and their economic house in order, or indeed no mortgages at all. Consequently, you won't find many posts entitled "Oh sh*t, I've got 30% LTV and enough cash in the bank to pay off my mortgage at any time". That's the silent majority.

But you keep dancing around the sheeple.