5% mortgage rates

[SaturdayGiraffe]

Just read this article saying to expect 5%+ rates shortly.

https://www.theguardian.com/business/2023/may/25/uk-homeowners-and-first-time-buyers-warned-to-brace-for-5-plus-mortgage-rates

UK homeowners and first-time buyers warned to brace for 5%-plus mortgage rates

I just don’t know how people are going to cope, and it could go even higher.

Yeah, it's really ramping up. We are on a tracker mortgage so we'll see it straight away but fortunately we have been able to pay down the mortgage significantly over the low interest rate years so it won't scramble our finances.

It's scary isn't it. Our 1.80% deal comes to an end next year, I am really worried how we can will cope if our new rate is arounf 5%. Food and bills are already costing so much more than a couple of years ago. I really don't know how people cope, but looks like lots of people aren't worried. Many people are building extensions and buying new cars on my road. Every day another house with scaffolding going up, so looks like some people still have money to spend.

Yeah we are FTB and rate is 5.3%. We are obviously buying a cheaper house than we would have done if rates were 3% say, so we are still buying within our affordability. It sucks though, the amount that will go on interest, but happy to be getting on the ladder at last anyway.

Lots of massive extensions @Maverick197 all over the place. I suppose people built up savings during lockdown. But I get the feeling many people don’t pay much attention to the mortgage market unless their deal is up, and will get caught out. Almost think there should be some ads about it!

Wish we had 30 year fixes like USA.

Four months ago, interest rates were predicted to peak at 4.5% in summer.

Now analysts (namely stock market folks) think it's going to reach 5.5 by the end of the year before slowly coming down from Q2 2024.

So many people are gonna be fucked.

We were meant to be buying a really expensive house but that fell through. We have just decided to sit, wait and save until March 2025. Which is depressing because our rental gets us down a bit.

However bad you think it's gonna be it seems to get worse.

That energy price decrease announcement today from July? Also predicted to go back up in winter.

I remember when they were 15%, we coped, so will you!

The cost of living and house prices were nowhere near as bad. They're really not comparable.

The long-term average BOE base rate is almost 7%

They will keep going up no doubt about that. Do not believe this nonsense of topping out at 5.5% and then coming down, that’s just to give people false hope.

Food inflation is still running at 19%

Not unless prices go down significantly @Throwncrumbs was your home 4.5 timed your dual income when you had to bear 15% rates?

In 1990 our 2 bed terrace cost 3.5 times our joint income, we had a hefty 15% deposit and the mortgage payment was still more than 50% of out joint take-home pay.

Were you not keeping a note of the repossession rates in 1992, or was that peachy because you were coping?

Many didn’t. But you were alright, Jack.

Hmm 15% on our mortgage is 75k a year, just in interest. People certainly wouldn't cope. Houses are a LOT more expensive in proportion to income and people have consequently borrowed a lot more out of necessity. It's a totally different scenario.

No chance of 15% coming back now it’s out of the hands of politicians.
I can see it going to 7% though.

They love giving us false hope.

What makes you think it will be more like 7%?

All stamp duty incentives are going to go away in March 25 too, according to Jeremy Hunt.

It's like they've spent 4 years propping up the housing market and now they WANT a crash.

But that doesn't make sense to me.

Didn't take long did it, 6 posts into the thread and the first meaningless comparison to the 80/90's rates. The financial landscape and average household finance situation now is vastly different to back then so the 'we had it way worse and managed' conversation is broadly worthless and does little to calm the fears of people living through what could be a hugely troubling time.

Yeah it's nonsensical. I don't want to roll out the ok boomers, but really...

Yes it's scary

Our friendship group has seen lots of second babies, and house moves to accommodate second children and those fixed rates coming to an end and its going to be a real struggle for some.

Ours went up from 1.2 to 3% which was £250 a month. We can absorb it but who wants to!!

Well a crash won’t be in their watch as they will be out of office by then!

Really? That’s not how I remember it, but you may be an expert in my life, finances and struggles… oh no your not though are you!

Sigh.

Yeah, naively, I forgot about that.

Burn the opposition's chances of success whilst you are going down.

There's a term for that, isn't there?

It was fucking awful when interest rates were 15% - and all the years they hovered around double figures as the norm. I remember being hugely envious of my mate who worked in a bank and got lower interest rate on her mortgage as a workplace benefit - and her interest rate was higher than we see now!

Yes house prices were lower, but so were incomes so proportionately it was just as hard. Plus back then there were no tax credits, no free childcare hours when the child was 3...

Of course it's not a race to the bottom, and when interest rates hit 5%, the people who've only known ridiculously low rates of below 2% are going to struggle. It's awful. But don't kid yourselves that back in the day it was any easier. There were loads of repossessions.

Yawn, of course we never had it so good! There’s always people on here saying how hard done by they are, every generation has their struggles, it’s not a competition no

And you didn’t once moan about your struggles when interest rates went up to 15%? You just smilingly accepted it?

Sorry it fell through. You were pretty bullish about it before, what’s changed? Apart from the fact you aren’t buying it?