Mortgage rates have fallen?

[MsGus]

I’m reading the news online and saw this. We were about to fix for 10 years but if there will be further falls we would rather wait. It is so confusing and unstable.

www.telegraph.co.uk/personal-banking/mortgages/mortgage-rates-drop-first-time-since-mini-budget/

Following with interest... we need to make a decision about our mortgage. It's a strange market.

I have applied for a 10 year fixed. I can afford it and would rather have the certainty given the current utter shit show. My mortgage is small though.

I’ve heard rates will fall again now the mini budget has been overturned. I wouldn’t go for a long fix at current rates, it’s likely they’ll keep coming down.

And it is being reported that the Bank of England is unlikely to raise interest rates above 5% for now.

We just got our new rate of 4.85 last week fixed for 5 years. Extra few quid a month but I like to know where we are and thanks fully we are just about able to afford it

how quick will they come down?

We've been offered 6.69% ( we are shared ownership ) on a 5 year fix. We were planning to move in the next two to three years and questioning whether to go on to the SV rate for a while in the hope that they do drop again. X

they will not be returning to zero. that experiment is over. the historical norma is 4.5 to 6.5%, which is where the rates will go and stay

would be better off renting

@oiltrader that’s not what the deputy governor of the Bank of England said last week

Can I borrow your crystal ball for tonight‘s lottery numbers please ? You seem rather (over) confident 🙄

@Nw22 oiltrader is another one typing from their bedsit praying for the crash

One thing i don't get is....why is higher interest rates better than high inflation? Interest rates going Up adding hundreds of pounds on to a normal mortgage is surely worse than inflation? Why can't interest rates be kept low whilst inflation is in double digits? (Sorry if random question!)

Higher inflation means your salary in real terms will be going in reverse. Furthermore, not everyone wants to buy a house on mortgage or to take out loans. Low interest rates will benefit some people and will aid investment but will destroy everyone’s purchasing power.

@MsGus

But even renters are seeing the effect of higher interest rates on the mortgages taken out by their landlords who are passing down the costs?

I don't know anyone getting 10% pay rises just because that's what inflation is?

I don’t know what proportion of people are in private rented or who own their home with a mortgage that is due for renewal. What I know is that everyone has an income, be it benefits, pension or normal wages and they have to buy food, pay energy bills, and so on.

What about the cleaners on the other thread

Right a little bit of advice.

No one knows what the shit show will be next week after we have a new prime minister.

Maybe apply for a mortgage/ get a quote, I think they are binding for up to 6 months- depends on the bank.

Then watch and wait over the next 2- 3 months.

You should get a flavour of what is to come. And I would do this before the next prime Minister is decided.

Get the rate fixed in.

Eh? where did you find that?

DH and I have our forever home in SW London and we have a lovely apartment in London as an investment.

but the days of cheap credit are over. worldwide this is happening. the great experiment is over. People should have to work hard for their lifestyle, not putting things on credit or over stretching on mortgages to try can keep up with those who are in fact not their peers but generational wealthy

the mortgage rates are more related to the gilt market than BOE rate.

Trackers will soon become a thing of the past too.

Trackers have been around as long as I had a mortgage so about 26 years I don’t think they are going anywhere.

anecdotally Sister sold a house that they bought in 2018 for £230k a few weeks ago for £290. They literally just painted it to their taste. The house they are buying they are porting the first part of their mortgage and adding another hundred grand at 5% and fixing that for five years which I think is a mistake personally. But the vendor they are buying from purchased in 2020 and has made 80 grand profit just from living in it and the bank valuation has sailed through.

they didn't exist in the 1990s

Gillts will determine mortgages not BOE rates. so trackers may exist but will be BOE + 3.5% minimum

26 years ago is 1996 and they absolutely did exist then because we had one with Natwest. Sadly we didn’t keep it because at one point we would’ve been paying £150 a month interest on a 200,000 mortgage

One reason is because banks have to set interest rates high enough to attract savers, or they have no money to lend and you get a 'credit squeeze'. There was one of those back in the 70s and you couldn't get a mortgage unless you'd been saving with that specific lender for a few years first, and even then there was a queue.
Savers won't save money in banks if the interest rates are so low compared to inflation that their money is reducing in value all the time it is in the bank. So interest rates tend to have to go up if inflation goes up.

Because banks don’t just make up mortage rate figures for fun, it goes by the swap rate (how much it costs the bank).

Other posters keep referring to a crystal ball, you don’t need a crystal ball to see where the rates are going. Look at my previous posts over the last couple of years.

Interest rates are set by the central banks and are influenced by the treasury yield rate (10 year for destination, 2 year for direction). BoE follows the Federal Reserve as do all other central banks as the US $ is the worlds reserve currency (for now)

If central banks did not raise rates in line with inflation then the economy would end up in an inflationary spiral. See Turkey as an example of what happens when you cut interest rates in the face of inflation.

We are currently behind the US in raising rates, as are the EU and Japan which is why all currencies are currently falling against a very strong US $.

So ultimately to gain direction of rates, you would need to look at the US 10 year treasury rate, which still rising.

www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx

So yes the BoE deputy may of stated that he expects rates to fall (once the US yields are under control) but they also said there wouldn’t be inflation and if it was it would be transitory. Just look at the US housing market it’s a good indicator of where we will be by next year.

finance.yahoo.com/news/buckle-brutal-free-fall-home-090000513.html?guce_referrer=aHR0cHM6Ly90LmNvLw&guce_referrer_sig=AQAAAF6FNSVsB1YLdTmrllZsUQmoq2_fFtQftGW9Eh-vDWiAM7pOyPZQpsHNmYzf1QbdLKSm4rQGctRpmpy2S2NfLjDHe7EjG3dxKb4OM0ju04sR_d0kYD7JpxbFo0f9ptshOqih0KkJdPsbKIUcAVK16JFOQzvo_jkgTn54rnYvwVpF