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.

They will have to move , even the USA which is more Conservative than here leverages land tax there's no excuses but the grey vote keep the tories in power.

I'm already at 5.85- although in Australia our rises have happened sooner than the UK. We've had 10 rate rises in 12 months. And many who are under mortgage stress, and paying higher rates, consistently, can't remortgage because they don't earn enough, leading to even more mortgage stress. Not to mention the increases across the board of 30% on insurance and bills. However because some people are still spending, those at the lower end are being squeezed to the brink!

Was there talk about a land tax at some point? What happens to people who are asset rich, but income poor? People who bought a modest home which is now worth stupid money, but they are living on a modest pension? Which is true for a lot of older people.

I think they will increase CGT (lots of older people have 2nd properties), increase IHT ( they have already frozen it so will scoop up more anyway) & I think there may be a discussion about care in the home being funded like care out of the home is. Not making people sell but putting a charge on the homes to be recouped after death. Where else is the gov can target tax from? Don't answer with the global elite because that certainly won't happen!

By the time that has happened and your ready to make your move inflation will hopefully be under control and interest rates coming down again. Two years is my estimate.

I think it's going to play out a lot longer than 2 yrs. It took almost a decade to start recovering from 08.

I was told not to buy in 2001 when the twin towers hit, the market jumped quickly after not reversed.

I think if you’re looking for a house to live in for a while, just buy what you like and enjoy it. Trying to gamble on it is a messy game. We tried to buy in 2008/2009 and the mortgages were pulled within weeks of the mortgage advisor meeting. Then our landlord sold up and our deposit eaten into for moving.
within a year or two house prices had become unobtainable where we were.

buy A home, live in it, enjoy it. If prices go up, so will yours, if they come down. So will yours. Future proof as much as you can with bedrooms etc. But from someone repeatedly priced out the market I wouldn’t wait on the hope of a crash if I was in a position to buy now.

I did find one that was month per month, perhaps the same one. I didn’t use it due to the variables. Just wanted a quick average of the year.

It really depends if you are FTB you should buy when you can. If you in a house you don't really like very much but it will do and its not critical to move . You can wait and see how it plays out especially if you have lots of equity.
I'm upsizing ,my income is going to rise i work in a very secure line of work , my DHs will as well so it will be interesting to wait to see if I can get a better deal.

I wouldn't recommend this approach to FTBs paying huge rents. It's better to buy.

I don't think so, the props that prolonged it in 2008 won't be available.

You made a choice not to take on a big mortgage, other people decided to take on large amounts of debt and bid up house prices. As a result they have had a few years living in the posh house, while you have lived in a more modest place.

The question is, should you now be punished for taking that stance while people who did should be bailed out ?

There isn't any nuance here though... Many people sold for more than they expected which increased their budgets or saved a lot of money through covid. A FTB who bought last yr will likely be in a very different position to someone already on the ladder. Plus plenty won't be living in posh houses!

@DrySherry I really don't see low interest rates coming back in 2 yrs.

Totally agree if it will “do”. Stay put. Especially if interest rates are going to go up, stretching yourself wouldn’t be sensible.
At an incredibly basic level if you own already whatever happens with the market is almost irrelevant. So your property goes up or down with the market - obviously it has a completely different economic impact and issues with lending etc which causes outside complications with selling.

My comment was the poster above who had told young relatives not to buy so they can jump some rungs on the housing ladder.

I don’t think they should. They were artificially low and need to be higher to encouraging saving.

I did read an article that the classic 3 bed house would hold its value the most in the coming years as families want them but they are also competing with older downsizers who are invariably cash free.

I didn't make it very clear. Imo we won't see low interest rates like we had 18 months ago. Base rates will not be going back to emergency levels like after 2008. But they will be coming down from the possible 6% we might see in the near future. Once inflation has been reduced to something closer to target.

I don't think they will stay at 6% but maybe 3/4% & over the next 2 years people will still be coming off very low fixes so I think it will be long stagnation really.

I am very worried about the interest rates. I am a foster carer, I have 2 children of my own 18 and 16, split up from my husband so I’m now a single person and I have my foster child who has been with me for 5 years.
Fostering is my only income but I do get some benefits too as I am not able to work as I have to be there for my foster child.

There aren’t many lenders who will entertain foster careers, and the rates a much higher than other lenders. If the rates don’t go down for next year I will seriously have to consider leaving the fostering service which would mean my foster child having to move elsewhere (which will break my heart and theirs), and moving to a 2 bedroomed property. I won’t have any other option other than to do this 😓

Theresa May set out a plan to pay for care in the home as you suggest. It went down like the proverbial and she quickly reversed.

Lots of people do already pay towards homecare, but obviously not the full cost.

Theresa May set out a plan to pay for care in the home as you suggest. It went down like the proverbial and she quickly reversed.

I know but the landscape looks very different now.

They will always be desirable as they are so versatile in appeal.
Flats depend on first time buyers being able to buy / landlord potential.
Maisonettes with gardens (like the 1940’s/50’s ones) do buck that trend - and should probably be prioritised in council house building due to flexibility for old and young families.

Anything that makes the over 65s pay more tax won't fly politically, no matter what the benefits to society more widely. Even something that might look like like it could won't happen. Removing the triple lock won't even happen imo.

They will pay in other ways though. Need that operation, waiting lists are too long so can you afford private? Struggling in the home, there aren't enough carers to come & visit daily so you will need to source privately. But perhaps they prefer to pay that way.

They were saying (only on the radio mind) that they expect the rates to be coming down by mid 2024.

I fixed mine for 5 years last year, I'm so glad I did now, I hate all the not knowing. Shame I didn't fix it when I was first nudged as I could have fixed at a better rate, that's what dithering gets you!

I really feel for those coming off a fix soon. Hopefully they can get an advanced deal before rates go up, but then the next lot will get caught. Hopefully most people can
hang
in there jntil the rates drop, or at least stabilise!! 🤞🏼

how different are they from the conversions. Conversions are a dime a dozen in my north london suburb but i struggle to find 3 bed purpose built flats.

The ones on offer are often bought by downsizers who can buy in cash!

After a moment of panic this morning I phoned our current lender and secured a new 5 year fixed at 4.07% (no fee) starting from September when our current lovely fix (1.9%) ends. Not sure if rates do come down in the next couple of years but at least this rate is affordable. If - if rates go down to pre pandemic levels we just pay ERC and get a new deal.

Generally Much better than the conversions, small but not smaller than some flats I’ve viewed.
great for older down sizers who still want a garden, pets etc and great for people with children who want gardens, pets etc!