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.

Most of them are predicting 0.25% rise in August and then a couple more small rises peaking at 5.8 -6% base rate around February 2024.

After that base rates are expected to start falling again so that is why some fixed term mortgages are tentatively starting to be reduced.

The only way to really get around inflation in terms of your wage is to constantly get promotions or change job.

Long term there are exceptionally few employers who offer a year on year wage increase in line with inflation.

It just doesn't happen.

There's talk of two things - one whether they over cooked the interest rates and how much the economy can withstand and two whether there will be a dip and then an increase again later in the year.

The overcooking is a fear that people won't be able to afford the jump in interest rates and that will provoke either mortgage crisis or drive wages up again which was unnecessary - the feeling was 5.5% was the ceiling and the BoE went too far.

The dip and increase sort of follows on from that - and is driven by wage increases pushing up prices again at a later point.

So I think it's a wait and see at this point and hope we've hit a peak.

If we have hit the peak, then it's potentially earlier than expected and that might be good news for people who are still on fix rates until next year as there's more time for a reduction in rates to happen. Assuming of course that it's a peak not a plateau.

I haven’t heard of anyone saying that we have hit the peak already? Everyone seems to think we won’t hit the base rate peak for a few months but the peak won’t be as high as once looked likely, it won’t go beyond 6%.

Agreed I would actually say the reality of the situation is the only way to get a pay rise to change jobs. I have gone to hand in my notice and told my employer that I’m gonna get a 20% pay rise and they’ve counter offered with a 10% pay rise seriously thinking that that would be enough to keep me. Those days are long gone busters. We saw how loyal employers were when lockdown was announced before furlough was announced. Employer’s behaviour in those short few days wont be forgotten for a long time

Following HSBC cutting mortgage rates earlier this week, other lenders have followed.

Nationwide will be reducing its fixed mortgage rates by up to 0.35 percentage points today.
TSB announced a drop of up to 0.55 points on its two-year purchase and remortgage products from today, while Barclays lowered its rates by up to 0.15 points yesterday.

Coventry Building Society and Skipton Building Society also cut rates.

I'm 46. Most of my school friends have started their families in their 30s. Me included. We can all do anecdata!

They have but unless rates reduce by another 2-3% at least, current house prices are simply too out of reach for most FTB or those with large LTV.

Not denying that, and I don't think we will be seeing reductions of around 2% until the end of 2024. My post was simply to make people aware (if they aren't already) that there is tentative cause for optimism that fixed term mortgage rates are starting to slowly fall at last.

Worth pointing out as there has been some talk in the past about whether we need another thread for 7% mortgage rates. But it may be that we have already seen the peak in mortgage rates.

Markets are now pricing in a peak Bank of England base rate of between 5.75 - 6% - down from previous predictions of 6.75pc. Swap rates (a leading indicator of mortgage rates), have fallen by 0.62 percentage points since July 6.

https://www.telegraph.co.uk/personal-banking/mortgages/mortgage-rates-fall-across-board-hsbc-nationwide/

Thanks for the links @Twiglets1

Let's hope that's the the worst of it over.

Thank you. I should have said that we may have already seen the peak in fixed term mortgage rates. Because obviously the standard variable rate could still rise a bit further following the Bank of England base rate rises to 5.75-6%.

🙏 Praying this is the case as all this has honestly made me unwell .

Sorry to hear that @mortgagequandary

I hope things work out for you.

Fingers crossed we have seen the peak of the rates!

I know this is gonna sound very trite, and easy for me to say, but honestly it’s only money at the end of the day. I was in a position where I literally lost everything but the kids and I are healthy and you know what ten years later I’m back in a better position than I was. It always always works out in the end. You just gotta stick around and make sure that you’re there to see the end.

Interestingly, I was having a conversation earlier, with a mortgage advisor about a product that would definitely work for me, and you know what nobody has suggested this at all, I think it might work for other people.
It’s a capped interest rate where as you pay off the equity and you climb down the loan to value bands. The mortgage reduces in terms of rates because the risk reduces. What it will never do is go over the rate you’ve set it at. That sounds perfect for me. I’m sure it will other people.

I know you are trying to be helpful but it doesn't always work out in the end and people know that they can lose everything.

I suppose rates reducing as capital is repaid is similar to people moving from a flat to a house ie getting a new mortgage and at that point having paid off some equity. ]

I was certainly not suggesting above everyone should buy one house for life. My advice is buy first before babies come with two professonal salaries using all your savings and buy the most expensive place you can and keep doing that (subject to stamp duty meaning too many intermediate moves are not wise).

May I ask how you know this? I'm interested because we secured a fixed term mortgage with Nationwide a couple of weeks ago and if there's any chance of bettering it we want to do that.

Possibly the most unhelpful and trite post on this thread. Things don’t always work out (do you have any solid evidence to back this up?); it isn’t “just money” when your family’s security is at stake.

Was this a fixed term mortgage? How long was it for?

I can see that it makes sense for a 5 or 10 year fix but I'm not sure many people move through many LVT bands on a 2 or 3 year fix.

why buy the most expensive house. Surely its more prudent to buy a functional home for the number of children you plan. DH wants the option of sending our child private and would rather live in our 2 bed flat for the rest of our lives if it meant that our child can go to the best school. We aren't fixated on private but it would be nice to have that option. In truth, if we only had one child, a third bedroom would be a guest room (we never have guests) or a study (nice to have but surely not more important than education).

With Labour imposing VAT on school fees (and i say this as a left wing voter), it would only get more expensive but if you have the money due to not overstretching on property, then its less of an issue

@rosetintedmemories2023

I think @Xenia is advising people to minimise moves but perhaps saying buy the 'best long-term home' would be better than 'most expensive'.

Your situation aside, for most couples who want children, they tend to be after a 3+ bed house near decent schools. I assume @Xenia is saying that it's best to save a bit more and stretch to get that instead of getting a 2 bed flat first.

Do you know what you can take the comment or leave it it’s no skin off my nose.

It is only money at the end of the day it comes and it goes. As long as nobody has died your family security literally stems from mum and dads ability to get through these situations. Nothing else.

I’m honestly not trying to be snappy here but it does actually say it in the post it’s called a capped mortgage. It’s not a fixed.