What mortgage interest rate would be a problem for you?

[Rollercoaster1920]

All this talk of mortgage rates had me looking to see at what stage the increasing mortgage rates would be a problem for me. I have 2 scenarios:

1. Normal repayment
2. Normal repayment if I took out more for an extension.

Admittedly I have a smallish mortgage, more than half way through, especially considering where I live, and current salary. I am a cautious person too.

So for me:
25% on my current mortgage would still be doable (lucky I know - not trying to brag, years of being careful)
10% would be a real problem if I took out money needed for the extension.

Currently on a fix for another 18 months so this is theory for option 1. Option 2 could be more comfortable if I extend the mortgage to retirement (which I don't want to do really). Also all assumes earnings continue as they are and other CoL increases remain stable.

So at what mortgage rate would the tipping point be for your finances?

@Cycling2023 we had a one bedroom flat when we had our DD and she was in with us until she was 2 - and we had converted the flat to a 2-bed. It's perfectly possible to live in a flat if necessary but I'd really like to have more space.

We are prepared to stay though.

We need to remortgage in December. We currently pay about 23% of our income but based on current rates, it's looking like 38% (jump of £1200 a month - we have a big mortgage). It's brutal. I think we will make it through but will wipe out our savings, do nothing of any enjoyment which is less fun.

Someone on another thread described it as a feeling of working all hours under the sun to make no progress. I thought it described things well.

I naively assumed that those in charge were more intelligent and capable than the majority. Realised very clearly that they have no idea what they are doing. It's hard not to feel like we are lining the pockets of the richest in society.

Let's just hope guys from BoE committee don't read Mumsnet and this topic particularly. 😂Or they decide to pop rates up to 10% to make sure "people don't overspend"

I got through 15% interest rates on Black Monday in the 80's as a single parent but it very nearly destroyed us. I had to do extra nights every single weekend as well as a full time job as a nurse.
I've had fixed rate mortgages ever since. Currently on 0.5% for 5 years with another 3 years to run then it's paid off.

I read something the other day that said taking into account house cost / salaries, a 6% rate is equivalent to 23% in the 80s/90s.

My fix runs out next Spring. I have worked out that I can weather 6 months at 7% interest rates but all luxuries would have to go out the window. After that if it doesn't start falling it'll be plan B for me, which is to relocate to a cheaper area.

This was my comment the last time round which largely still applies. We’re on a relatively short term (12 years left, I’m late 30s and DH is 40) because we wanted it paid off before DD starts university or needs help getting started in house/career, but we’re going to be working until our 60s anyway so wouldn't find it difficult to increase the term. We’re fixed on a rate of 4.5% for 3 years anyway, so will reassess in 2026 by which time hopefully our pay will be higher and rates more stable anyway.

We are fixed at 2.04% until July next year. We could still live here up to 18%. However, we bought the house when there were two of us and there are now four so in an ideal world we’d upsize - and then things start to get uncomfortable at a much lower rate.

None. Paid mine off last month. The higher the interest rate the more I’ll get on the money in the bank so bring it on - as high as it goes please.

We are pretty lucky and our mortgage payments are only around 10% of our take home pay. We have around 75% equity too as prices have risen so dramatically since we have been here. We could continue to afford 4 or 5 times what we pay at the moment but would have to tighten our belts. Our son was worried yesterday listening to the news so we had to reassure him we are likely to be ok. Several members of my family are sadly facing difficulty though, particularly my brother who, despite having a household income of c£100k, has a high mortgage, requires two cars for work and has two kids in early childcare.

@3BSHKATS wrote: my uncle had an absolutely ridiculous Sublime mortgage in 1990, something he should never of been allowed to borrow what he did, but even he came out of it relatively unscathed with a smaller but perfectly adequate home

Do you mean "subprime" mortgage?

We could probably cope with 10%, everything else being equal. We're currently in a 10 year fix at ~3.6%, so luckily won't need to worry for a while yet.

We fixed for 10 years at 3.05% last October. Payments are only £45 more per month than we were previously paying as first time buyers. If we’d not been able to do that it would have been £750 a month more at 6% which would have been manageable as we put more than that into savings each month. At 10% it would be a £1700 increase and we would have to make some big lifestyle changes to accommodate that.

BOGOF… brilliant 😂

We are basically up shit creek now. Out mortgage has gone from £1500 to £4800.
We are selling (or trying to) I'm gutted as it was our forever/dream home and I've put a lot into it over the last few years.
But we are incredibly fortunate that it's value has increased by over 600k so we will be able to sell and either have a tiny mortgage or be mortgage free and still have a nice house although it will be much smaller.
I just really hope we can actually sell it.

Our mortgage was 5% of our monthly income, now it's 17.5%
It's more than trebled. We could afford up to about 25% of monthly income before it became a problem. It's bloody annoying though

Currently fixed at 2% so anything over that would be a problem for me!

Technically, I could pay 15%, but wouldn't be able to afford anything other than necessities like bills, mortgage and food.

That's a lot. WHen did you last get it valued? as if its up by that much would seem like buyer needs a mortgage, and will want reduced price x

Is this now-ish? We have nearly 7 years left on our fix and would probably just plan to pay the balance off if things got really ridiculous- doable as it's only a 5 figure one now. If we were remortgaging now, could cope with 15% though it would be irritating.

We stretched ourselves to buy our home as we don't have great paying jobs. Sold our first at a £60k profit, bought our second (4 bed semi in a good area in South East, doer upper) 4 years ago for £450k with a £100k deposit. Should have been worth £550k easily. We've since been paying the mortgage quite aggressively - almost half our joint salary has gone on it each month!! Even when I was on mat leave my husband made the payments alone via overtime. Plus we've done a lot of work on it ourselves, so we've had a tight four years and now it might all be for nothing if the property prices drop!!
Luckily we fixed our two mortgages (one ported from the first house) for ten years so we have more time at 2%!!!

We could cope ok at 10%. It would get very tight at 15%

I made sure we would manage at those rates when we bought 5 years ago and both of us have bad promotions since. (We.are.fixed at 2.4% till summer 2028 though as I am risk averse and took a 10 year fix so we would know our outgoings till the children were all in their teens

currently at 2% til oct.
currently spending 30% of income, will go up to 40% from Nov.
Anything more than this will become critical. But hopefully can weather the storm for a bit.

Mortgage due for renewal end of August. Mt broker locked me in a deal 6 weeks ago at 3.8% 5 year fixed. At first I was optimistic it may go down, now 2 rises later I'm glad she got me that.

You know that saying that if you owe me £1 million it’s my problem and if I owe you £1 million it’s yours. If the rates hit 6% The bank will be phoning you to suggest solutions, not the other way round.

Fag packet exercise at current term is 15.45% which would then leave us on just one salary for everything else but it would be existing on value food and cutting back. if I double the term to 20 years it can go to just under 26%.

we sadly had to re-mortgage just after the awful budget the sparked massive rises so on 5.46% at the moment. Luckily we were overpaying so all its done is eat into our overpayments.

I understand i may be unique in the fact i purchased at 20 due to inheritance so only have 10 years left and no other debt. I feel super angry for those already struggling