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.

I have a buy to let, it has the smallest mortgage on it smaller than even most peoples credit card debt if push came to absolute shove, we will be moving into it. It would be the last property to go on the market. Ive just fixed at 4.2 adding £30 a month to the mortgage 😭😭😭😭😭
it literally can’t be sold for five years without penalty. I wouldn’t hold your breath for this onslaught first time, buyer, houses, or, indeed any. People will manage.

Sounds like you are in a fortunate position with yours. As am I - with 4 un mortgaged properties ( 3 commercials). The situation for a lot of recent btl entrants is quite different unfortunately. In our area over the last few years there has been a massive increase in new entrants who based their business model on ultra low rates and high leverage - suddenly they are finding that they can't put up rents enough to cover the new costs of borrowing. They also now face capital depreciation. I have two friends who are in conveyancing and both say the same. Trouble is coming because the numbers of relatively new investors" in this situation is high. Some will be able to subsidise the properties from their own pockets and will struggle through, some won't and will sell. Its going to be an interesting time for a couple of years at least.

I think anyone who has a stake in a property will suffer as prices slide.

I doubt it will make much difference to me. I have no plans to move.

From what I’ve seen locally I don’t think there’s been an influx of buy to let mortgages I’d say even in the last 3 years.

I had been competing with some of them to buy, and they were all cash buyers, all of them without fail.

I looked at moving my btl it onto a buy to let Mortgage . It’s currently on a consent to let. And basically even with 60/50% equity and if they didn’t want to know. Maybe that will change if they think they can charge me more but at the time the rates for 1.5% and they literally didn’t want the business. In reality, I’ll just pay it off because it’s easier.

So there’s another property that absolutely will not be coming on the market or available to anybody first time, buyer or not.

The guy I buy my hospitality tickets for the football from, 20 years old and owns two out right up north. I think people massively underestimate how well some people are doing in life we’re not all on the bones.

I think most would say the same, and your right. However, an unfortunate minority who have bought recently will be going on to SVR's if they bought with small deposits and don't have savings to offset their Ltv's as values fall. Not a nice situation to be in but numbers in this predicament shouldn't be that large hopefully. There are also quite a few people who for whatever reason, have not paid down mortgages but withdrawn equity instead as values increased. They will also suffer, no idea how popular that has been - hopefully again small numbers .

Yeah I think the idea of everyone who has a stake in a property suffering is more wishful thinking from those who enjoy that kind of thing.

Obviously the majority of us aren't planning to move any time soon so we're just observing market rises and falls not suffering or gaining from them.

not sure i agree, plenty of people without mortgages still rely on that property value for retirement, helping dc onto ladder etc

i have no plans to move but I do have a mortgage & when i come off my fix (luckily another 4.5 yrs) I won't be overjoyed for it to have dropped loads in value & I have good equity.

Why do you think they will be going onto the standard variable? As opposed to their lender, just offering them another fixed ? Which is exactly what happened with me and other people who have commented on threads recently.

I don’t think the landlords on here really need to downplay the struggle others are experiencing…seems somewhat callous.

Anyway this is an interesting view.

https://www.theguardian.com/business/2023/jul/04/risks-of-a-uk-housing-crash-rising-by-the-day-as-fixed-rate-mortgage-deals-end

As the Nationwide pointed out, 85% of mortgage payers are on fixed rates but about 400,000 will have to refinance each quarter in the years ahead. “This equates to around 20% of the fixed rate mortgage stock refinancing by the end of 2023 and c.40% by the end of 2024”, says Robert Gardner, the building society’s chief economist.

Once someone is in negative equity it becomes really hard to get any kind of fix or deal other than the current lenders SVR at the end of a fix. Maybe Rishi can persuade the banks to offer more forbearance in this current cycle ? If he does manage that it would be at the expense of all mortgage holders paying slightly higher rates than otherwise. Hard to predict what will happen because I really don't believe the government is in a position to support mortgages financially.

I disagree the last thing the banks want, is anybody defaulting or looking at what they paid into the property versus what it’s worth and handing the keys back that is a lose lose situation for the bank. They want to keep you in the property paying what you can actually afford to pay for as long as possible.
If somebody only put down a £7000 deposit. And it’s worth £7000 less. And they could save £7000 by moving back in with their parents, for example. The winner there in that scenario is not the bank.

I would say actually the recent purchasers if they put down a minimal deposit are the ones that are in the strongest position. It’s the ones that have 25 to 30% in that have more to lose. And are probably older so 13 years of negative credit has a greater impact, therefore they will by hook or by crook also stay in the property.

We got our mortgage in 1991, and then the interest rates went up to 12.5%. It was a real struggle, but we didn't have holidays, days out, didn't go to nail bars, hairdresser's, gym, pub, etc. No internet either, no mobile 'phones, no fancy trainers/shoes/bags et. People need to cut down on things they might like to have but don't really need.

Groan 😫
this is like a fucking broken record. How much did you pay for your house? And how much did you earn?

Did you get up for work in the morning before you went to bed and walk 17 miles in the snow and were you grateful for it?

How much did you pay for your house, and what was the property price in relation to your earnings?

But how do you know what the market will be doing in 4.5 years? May well be rising again.

I'm going to guess you weren't in the market in the early nineties ? Yes it was a different time - but it really was awful for lots of families. If hardship like that hits again, many of those who didn't experience it will be in for a shock. Let's hope that doesn't happen and all we get is a gradual and controlled re set. That's the best case scenario as I see it currently.

God, let's not have the same argument again about when was hardest, 1991 (record number of repossessions) or now (never been harder for people to get on the property ladder).

It was bloody hard then and bloody hard right now. That's the property market - calm and then turbulent and then calm and so the cycle repeats.

I think that's correct and the market by then may have started to move up again. Rinse and repeat. Timescale is uncertain but the pattern of the market seems to always be this way. Its just that we haven't had the significant correction part of the cycle for ages. Betting that that means things are different now is risky imo

But how do you know what the market will be doing in 4.5 years? May well be rising again.

i think that's unlikely given the current economic woes. We have the ageing population issue, labour shortages & big deficits in public services. There will have to be further tax hikes. Hopefully i'm wrong.

We didn't recover from the 08 crash when you look at wage stagnation & productivity. Low interest rates just masked it.

It's ridiculous that 60k now is akin to 36k in the mid 00s & that you have to pay higher tax on some of that.

No one can really predict what the market will be doing but it would be very unusual if it continues falling for another 4.5 years. Time will tell but I wouldn't assume the worst. Maybe because I've been through turbulent times before with the market and when things are bad it always feels like it will never improve and when prices are rising it feels like that will last forever too.

Who would have predicted that prices would rise during Covid? Totally counter intuitive but the government made it happen because it suited their agenda. Just so, so hard to predict years into the future.

I agree, I remember being in 2000 and earning 50 K was like the magic number and everything was gonna be alright in my world I could buy a house I can buy a car pay for my children’s childcare it was gonna be great.

Now I’m on more than that I don’t have a child any more to pay for, and literally it doesn’t touch the sides.

No one can really predict what the market will be doing but it would be very unusual if it continues falling for another 4.5 years.

I don't think it will continuously fall for 4.5 yrs, I think it will be a fall & then stagnation.

Who would have predicted that prices would rise during Covid?

I think the stamp duty pause fuelled a lot if it & built up savings.