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.

There needs to be a huge readjustment but a short sharp shock will just hurt those that have joined the party late i.e. younger generations.
The housing market is a ponzi scheme and I don't know how you take one level out without the whole lot tumbling down but the current situation cannot continue.

That’s a unique middle class situation however which is not the same for the general majority of the population.
Yes middle class parents with index linked pensions haven’t really felt the inflationary pressures, alongside the likes of energy allowances too etc. Their children however would traditionally be higher tax bracket and out of the scope of any government help with high mortgages so are the ones being most squeezed by IR raises and inflation.
Most retirees however do not have private pensions that are index linked or have worked in the civil service/public sector (these pensions will have to face reform going forward). They wouldn’t be able to help out in monetary terms as you suggest.

it’s only been in the middle class whove been able to buy a house in the last 20 years. So yes their situation might be unique. That was the point I was making.

That’s right - No working class people at all have bought property in the last 20 years

Not according to the Muppets on this thread, they haven’t

You can’t have the argument both ways that only people with parental support of been able to buy houses due to the large deposit, and the only people who have had inflated salaries of been able to buy houses. And then claim that the same people won’t get parental support to ensure they stay in those houses.

Eh? I don’t get your thread.

People who had help will likely get further help.
People who didn’t, likely will not.

What’s your point?

Exactly that.

Some people are incredibly wealthy at the moment. They are the ones who are going to benefit. Generally older, seen it all before. Property owned outright. Any drop means they can clean up. Buy whole chunks of property at reduced rates to rent out. Suddenly their property portfolio is booming. As they know property will recover and they will make a killing.

I think the gov will have to come after this wealth as we have an ageing population, high taxes at the moment & the NHS, social care & education need cash asap.

Exactly. So the middle classes will either pay the govt or they’ll pay their children.

I hope my parents make the right choice.

It’s scary. We have a tiny mortgage but even that has gone up a load. I don’t know how people that are stretched will cope.

If the base rate goes to 7%, does that mean mortgage rates will be higher again- 8-9%ish?

Yes it is, I feel as if loads of people only seem to pay attention about remortgaging a month before it’s due and if they do that over the next 18 months it’s going to be a shocking time.
I wish lenders had to send a reminder every so often with the current comparable costs, or something.

Don’t you think there has been enough in the press about rising rates recently though that people know what’s happening with mortgages though? Maybe I have a particularly financial group of friends/family (I don’t think I do), but I didn’t know anyone who isn’t aware of what’s likely to be coming when they renew. My mum is due to renew next year so she’s doing her best to overpay now in preparation, and I know many others doing the same. We have 3 years left on our low rate but are already considering what we’ll do when it ends.

Particularly financially savvy, that was supposed to say.

I think loads of people are just putting their heads down, trying to work hard and keep up with the bills. We’ve had years of horrible news and my OH has certainly made a decision to stop tuning into the news because of the constant negativity and impact on mental health.
I could be wrong, and I hope I am. I just have a bad feeling that a lot of people are going to be caught out.

My bank sends an email every time interest rates rise, outlining how it will affect people. I really don’t think there are many people unaware of the interest rate rises.

Interest rates are still a lot lower than inflation, so mortgage rates are actually negative in real terms, and borrowers are literally being paid to borrow. Even now, Rish! is still asking banks to manage down these negative mortgage rates. 15 years of a manipulated rate has taught us nothing. The more you try to prevent markets from settling, the more pressure there is in the eventual explosion. Current interest rates are still struggling to normalise. They have some way to rise.

When I bought our flat in 2019, our mortgage was 22% of our income, at 2.05% interest rate and at £1020 . Assuming a mortgage rate of 6% next year when we remortgage, it would be 23% of our current income. This is because of wage inflation and overpayments..I don't think our situation is that unusual.

3B "By 2000 just 3 years later, house prices doubled. Do you not regret selling at a loss @Xenia"
No. We sold our house in 1997 at £250k and bought one for a lot more. The more expensive house would have dropped that year more than a £250k so in a sense we did better because of price drops, not worse.

We went for a fix last year at 3.4%. I'm very glad we did now. Its for 3 years and will see us to the end of our mortgage.

No offence but a mortgage in the £10000s, isn’t something to ever worry about.

Standard inflation based pay increases? And how much overpayment? Lol, anyone could say “my new mortgage repayments have barely changed since we fixed 5 years ago”, but fail to tell you they paid 50% of their mortgage off when they got a lump sum through the lottery/inheritance etc

But what can you do? Beyond fixing when you can. Worrying won’t change it. That is all people can do.
keep your head down and keep going and hope it works out.

We have switched jobs since buying our flat in 2019. Our combined Household income used to be £75k, now it's closer to £130k. We overpay £1k per month through much of the pandemic and also now. Net income used to be £4400, now it's £6500. Repayment would of course increase, in fact it will go up by £500-600 but our earnings have also increased

We were in our late 20s when we bought now we are 33 and 31 so naturally our earnings have increased. Most people who managed to even raise a deposit are often in jobs where there is a career path (and opportunities for promotion) or they are from middle class backgrounds where they got financial help from family..