6% mortgage rates

[spring33]

Old thread https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates?page=1

New thread, let's hope the next one won't be 7% interest rates or higher.

Oh youre right we should all throw in the towel now, whats the point, im off to live in a hole in the ground who’s coming with me ?

That's up to you.
Some of us won't be as surprised if 'the plan' doesn't quite go to plan.

Yes, they have done that for the last 20++ years and never taken house price inflation into account. By government decree of course.

Don't think anyone was assuming that the inflation will all go away and not come back again.

Nevertheless, we have some cautiously good news that inflation has finally fallen a bit this month. For those of us who do see that as good news, of course. It feels like some people on this thread would have preferred another rise and future new threads headlining ever higher mortgage rates.

Because the only important inflation numbers that should matter in London is housing price, and those have suffered from decades of double digit inflation that only a high interest rate seem to help contain. What difference does it make when brocoli goes up from £1 to £1.40 when in the meantime the house priced 250k in London mid 90s is now for sale at 2.5m. None.

The whole country doesn't care about extortionate property prices in London, though I appreciate it is a concern for you.

For most people it is good news to see the first sign that inflation is starting to fall, as they are struggling with the cost of living and fear rising mortgage rates and rental prices.

This is at least an early sign that the rate rises might be having a small effect, at last. I think they are getting close to being able to slow down the rises. Maybe even do a brief pause in August.
A base rate of 6% now instead of a little higher is still forecast by markets by the end of this year. Unfortunately core inflation only moved down by 0.2% but at least it didn't go up again !
The chances of rates being less than they are now at any point in 2024 is still very small imo. It will take longer than that, maybe a year or so longer.
The idea that rates will go down to 2% is wildly optimistic. That's not to say that TPTB wouldn't like that to happen - I think some of them would - but its not possible unless we had a historically bad recession. A really bad one. If that occurs borrowing rates would be reduced to stimulate recovery. Let's hope that doesn't happen because a serious recession takes years to recover from and is most painful for those that can least afford.

Certainly, the news seems to have kept Sunak on track for his promise to halve inflation by the eoy. It seems quite a jump, though, to take it from 5.3% in Dec to 2% in March. We will see.

Shame he is failing so badly on his other promises. And, of course, as PP have said: core inflation is showing no such drop at the moment. The CPI is influenced by food and the change in Russia's stance of the grain agreement, plus them destroying 60,000 tonnes of grain - will mean food prices keep going up, I suspect.

What does the UK's falling inflation rate mean for borrowers?

The fact that inflation has dropped back a little is potentially good news for borrowers. If the rate had stayed above 8% then some economists had suggested the Bank may have gone for another half-point increase in interest rates next month. Instead, they are now betting that a quarter-point rise is more likely.
But with inflation still almost four times the Bank’s target there are likely to be further interest rate rises that will in turn lead to higher borrowing costs.
Mortgage rates linked to the base rate will go up if it is increased again. However, the latest inflation figures may mean that fixed-rate deals, which are tied to expectations of future rate rises, start to drop slightly.

https://www.theguardian.com/business/2023/jul/19/how-high-inflation-affects-everyone-from-borrowers-to-savers#:~:text=The%20UK%20inflation%20rate%20fell,Bank%20of%20England's%202%25%20target.

You are missing the point, it’s not a geographical divide but a generational one. Most under 40 will welcome inflation since, as a productive element of society, they are able to pass on this increase to their employers as the strong wage growth as shown. Meanwhile value of assets which they have little of, get eroded or fall, making them cheaper to acquire. This is obviously at the expense of the older generation who accumulated wealth and saw it growing at exponential rate across the country but has limited ability to take the tail wind of inflation.

I don't think I'm missing the point, I appreciate that there are always winners and losers whether inflation is rising or falling. But for the country as a whole, I think it's a good thing that rates are starting to fall.

I don't agree that most under 40s will welcome inflation as many of them are borrowers who are very worried about the rise in payments as interest rates increase. And Landlords generally pass on mortgage increases to their tenants so it affects the whole housing market.

Older people like myself in my late 50s don't have as much to worry about with high inflation as I've almost paid off my mortgage and high inflation means a decent return on my savings. Under 40s tend to have fewer savings and much more debt so they had more to worry about than me with regard to increases in mortgage and rent payments.

Food price inflation is still over 17% and that impacts everyone.

I think the BOE will increase the base rate by 0.25% in August bringing it to 5.25%.

But it seems more likely now that we will peak at under 6% - I've read predictions of about 5.8% by February 2024, followed by gradually falling rates. Though obviously no one knows for sure.

I do think rates could be less in the latter part of 2024 than they are right now but time will tell. Would hope to get mortgage rates back to about 5% by 2025.

Wonder if he's so confident now?

Cheeky. He said the markets, not him.

Omg, his last video. Fifty minutes of him and his mate basically having a pub chat. Drives me mad sometimes!

Lol - he'll take the credit when he's right but if he's wrong it's the markets.

Please stop torturing yourself with those videos 😂

Shan't!

Tbh, the most useful thing he does for me is break down what's not showing on publicly released data. I'll listen to his waffle for that alone.

Curious to know how your intense dislike of him developed, because you seem to know a lot about him. Did you get in a pub brawl once? Did he hex your firstborn?

Yeah we had a fight in a pub after he knocked over my pint.

Seriously though, I do think there are some people shilling for him on here because at one point his YouTube got mentioned on every property thread, it was ridiculous. I mean, he must speak some sense if you say so (I've not managed to get through a whole video) but I don't think he's as clever as he thinks he is, comes across quite narcissistic to me. He feeds into the pessimistic agenda that "we're all doomed" which I don't like. Plus I think he cynically drags out his videos to generate revenue. Don't quite know how that works but I know clickbait is a thing and he gets attention by his dramatic doom mongering. He also spins out YouTube videos to force people to be watching for longer than they need to when the basic message is short.

Does shilling mean is paying people to come and talk him up? I've only been on these boards for three or four months, but I wouldn't say there's enough recommendations to suggest that's happening, at least not right now anyway.

Narcassicm, for sure. He's quite open about the fact that him and his nearest co-hort both come from very privileged backgrounds (but his blog is hilarious, he's been sacked and had businesses taken away from him several times and that's all out there, no problems admitting to failure).

Selling stuff. Well, idk about duration of Youtube, there aren't any ads, and he can't get a sponsor because he swears so much, I just think he really likes to waffle, but it's often during the waffling that I get historic context on stuff that I never knew (so I have to FORCE myself to watch). However, some of the 'interviews' are with people who get paid for referrals through his own website: his conveyancers, his mortgage brokers. He's quite open that he gets paid for them, and always seems to preface flogging them with 'you really should spend the time finding the right conveyancer for you, but if you can't find anyone, you can use my guys [details here].' But even with the interviews with people who get referrals via him, I learn something. For example, you know how lenders keep pulling rates at the last minute? This is how I learned they get a pool of money at a certain rate and once that pool of money is used up, they pull those mortgage rates. I just thought all of the mortgage rate changes were in response to whatever the BoE are currently up to.

He also has a paid private chat offline where concerned buyers all group together for a private chat. Idk how much that costs.

He also charges something quite painful for an hour 1-2-1 with him, which I only discovered after going back many months of videos. He hasn't mentioned it in ages.

So, he's definitely making money. But, what he puts out there for free is really worthwhile for me.

It’s pretty weird having a youtube man recommended over and over and over on MN. If his videos are monetised then that’s a reason to spam here.
Odd how consumer finance, like so many other areas of life, is dominated by male voices insisting women listen to them.

@KievLoverTwo definition of shilling "a person who poses as a customer in order to decoy others into participating".

If what he puts out for free is useful to you, fair enough. I'm not accusing you of shilling for him as I hope you know, I just feel some people on Mumsnet probably have done in the past. His YouTube doesn't get mentioned as often now but I feel like at one point the number of posts inviting people to "check out this guy's channel" needed to be challenged.

You don't hear other property "experts" like Martin Lewis mentioned nearly as often as this guy, and he is much better known, with loads of free advice. Now I sound like I'm shilling for Martin Lewis 😂

We sold our last house at a loss in 1997 for £235,000 ( which is £440,000 after allowing for normal UK inflation - not house price inflation. This is the house where we paid 50% of our after tax income on the mortgage payments - interest only - in 1990+ when rates were high. last sold in 2016 £740k. Estimated £850k today. This is outer London. So that house has gone up about double 440k to 850k. I think in the calucations we do have to allow for normal inflation over that period as things like wages have gone up since 1997 too.

So I would say the price is double in this bit of outer London since then (not 10x) and that the cost of an 800k loan is probably 6% and if interest only which we had to risk then would be £48k today so about 24k for each person in the couple. If that were the 50% of net salary we had to pay in 1990 when we bought it that would probably 50% of two gross salaries of £60k. So the full time solicitor in London and full time head of dept teacher couple that we were probably could just about afford it. it is however very hard to compare different eras.

You’ll be very shocked to hear that as you get older, your stomach shrinks and you don’t want to eat processed crap any more. I’m a bit of an idiosyncrasy in that I had a child at 34 so I’ve still got a teenager at home but many many people my age are childfree and spending £30 a week on food shopping.

@3BSHKATS A percentage increase impacts on everyone regardless of how much they spend.

I don't know how shocked you expect me to be, but I'm 58.

Where on earth do you live that having a child at 34 is such an anomaly?!