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.

Nationwide to "slash" mortgage rates by up to 0.4% from Wednesday, August 23rd.

"For new customers moving into a home, rates are being slashed by up to 0.40 percent over two, three and five-year fixed products up to 95 percent LTV.
Five-year fixed rate at 60 percent LTV with no fee is now 5.39%. Three-year fixed rate at 75 percent LTV with a £999 fee is now 5.89 %. Two-year fixed rate at 60 percent LTV with a £999 fee is now 5.94%.

Homebuyers getting on the property ladder for the first time will see mortgage rates reduced by 0.35 percent across two, three and five-year products up to 95 percent LTV.

Those choosing to remortgage their home are being awarded a rate reduction of up to 0.15 percent across the building society's products of up to 90 percent LTV.
Five-year fixed rate at 60 percent LTV with a £999 fee is now 5.49 percent
Two-year fixed rate at 75 percent LTV with no fee is now 6.39 percent
Three-year fixed rate at 90 percent LTV with no fee is now 6.30 percent."

Nationwide Building Society announces mortgage rates to be slashed by 0.4 percent (msn.com)

I don't think that you can use the word "slash" until we reach the mythical 3.99%. 😜

I put “” round the term (used by the article I was referencing) to show I found it hyperbolic

Good to see rates start to creep down...!
Like some one say, until we can get sub 5%, its prob still not such a bargain

It's still going to have a massive impact on affordability at those rates. People just can't afford to borrow anywhere as much as they could before. As such, we either have a stagnated market where sellers refuse to reduce expectations accordingly and buyers can't afford to buy, or houses drop in price. I suspect it'll be a mix of the two, to an extent. Some will reduce and sell, others won't and won't!

Article in the Guardian today predicting that UK interest rates will peak in September at 5.5%
https://www.theguardian.com/business/2023/aug/24/uk-interest-rates-to-peak-at-55-in-september-economists-predict#:~:text=UK%20interest%20rates%20to%20peak%20at%205.5%25%20in%20September%2C%20economists%20predict

@Twiglets1 That could be why the 2 and 3 year fixed rate bonds from Recognise bank have been pulled.

Oh have they? That was quick.

Article on experts predicting mortgage rate rises set to end taken from i :

"Fears of up to three more interest rate rises this year have eased with economists saying the chances are now that there will be just the one, or even none. Earlier this summer, markets expected interest rates to peak at 6 per cent but this now appears less likely. Of six senior economists i spoke to about what rate rises can be expected for the remainder of this year, four said it is possible there will be no more and if there are it will likely be just the one."

Andrew Bailey, BOE Governor is also quoted as suggesting that rates are close to their peak. He told MPs on the Commons Treasury Committee that the period when it was “clear that rates needed to rise going forwards” was now over.
He added that he did not know whether he would vote to hike rates again at the next meeting of the Bank’s monetary policy committee on 21 September.
Pressed on the future path of rates, he said: “There was a period where it seemed to me to be clear that rates needed to rise going forwards, and the question for us was how much and over what time frame.
“But we’re not I think in that place anymore and that’s why we shifted our language to being much more evidence and data-driven.
“I think we are much nearer now to the top of the cycle. And I am not therefore saying that we are at the top of the cycle because we still have a meeting to come. But I think we are much nearer to it, on interest rates, based on the current evidence”

https://inews.co.uk/inews-lifestyle/money/uk-interest-hikes-set-end-experts-predict-2600623?ito=push-notification&ci=sS8iJnotAt&cri=CzroIFyauo&si=cssdIvAnxCT_&xi=4bdd16aa-017a-467a-b908-958a95031d37&ai=2600623

But then there’s this line …

”However, expectations that interest rates are peaking are by no means unanimous, with two of the economists i spoke to convinced that two or more rises will be needed to rein inflation in.

One of them, Willem Buiter, former external member of the MPC from 1997 to 2000 and ex-chief economist at Citigroup, says the UK is still likely to need to hit a base rate 6 per cent before increases can cease.

Difficulties in controlling both the headline and core inflation rates mean, he said, it is “very likely that we’ll see Bank Rate at 6 per cent by early 2024”

Yes @PeachesoutinGeorgia the forecast that UK interest rates are very close to the peak is not a unanimous view. Most economists seem to be predicting that UK interest rates will peak at 5.5% though, which will happen on September 21st.

When deciding who to trust in these situations, I always tend to go with the majority expert view. Not always right but normally right.

Mortgage "war" underway as lender offers 4.99% fixed rate.

UK lenders have been reducing their rates for several weeks, and the last few days have seen a flurry of reductions, with further cuts due to take effect on Friday courtesy of banks including the Halifax.

On Thursday, a five-year fixed-rate deal priced at 4.99% was launched by The Mortgage Works, a division of Nationwide building society. Unfortunately, the product is a buy to let deal not a standard residential mortgage.

Moneyfacts, the financial data provider, said the average rate on a new fixed-rate deal lasting for five years was now 6.14%, though there are best-buy deals cheaper than that: for residential mortgages, the cheapest five-year fix on Thursday was priced at 5.12%.

https://www.theguardian.com/money/2023/sep/14/uk-mortgage-war-underway-as-lender-offers-499-fixed-rate

for residential mortgages, the cheapest five-year fix on Thursday was priced at 5.12%

I'm not sure where they got this from, but that's not true. Coventry have been offering a five year fix of 5.10% for existing customers looking to remortgage for several weeks now. And that's the only lender I've checked, so there may be cheaper.

Maybe it’s the cheapest rate for new mortgages rather than remortgages, I don’t know 🤷🏼‍♀️

Anyway, it’s good news for many people that fixed term mortgages appear to be falling.

This is good news and bad. Its great that lenders are intensely competing for business. It's bad news, in that it shows they are becoming desperate to try and hold on to market share - because lending volumes are plummeting, suggesting more problems ahead...

Sub-5pc mortgage deals will be on the market within weeks, say brokers.

Falling expectations for future borrowing costs mean home buyers may be able to get five-year fixes at 4.5pc by the end of October.
The Bank of England is poised to announce what is expected to be its 15th consecutive interest rate rise on September 21, bringing the Bank Rate up to 5.5pc, up from 0.1pc at the end of 2021.
But increasing signs that the labour market is turning, coupled with weaker than expected July GDP data, mean that markets now expect this to be the peak in rates.
By contrast, two weeks ago, markets had priced in a Bank Rate peak at 5.75pc.

https://www.telegraph.co.uk/business/2023/09/14/sub-5pc-mortgage-deals-interest-rates-peak/

Not exactly difficult to predict.

https://www.mumsnet.com/talk/property/4669850-are-banks-taking-advantage-of-panic?reply=121266831&utm_campaign=reply&utm_medium=share

https://www.mumsnet.com/talk/property/4813815-5-mortgage-rates?reply=126957166&utm_campaign=reply&utm_medium=share

Question is what do they do when they have to raise again once the second wave on inflation hits at the consumer end of the pipe next year. Currently, oil prices are increasing on their way towards $100 a barrel again.

At present, I expect the upcoming recession to be deflationary for oil prices (less demand). But other factors such as further QE may have inflationary impacts. Regardless , the outlook is not great. I don’t see the markets allowing the BoE to slack on interest rates.

Yes less demand in the west, but not from the BRICS and developing nations as they are better placed to ‘grow’ their way out of it. BRICS have overtaken the G7 in terms of GDP and have the lions share of control of resources.

https://www.visualcapitalist.com/cp/animated-chart-g7-vs-brics-by-gdp-ppp/#:~:text=BRICS%20Total&text=By%20the%20IMF's%20projections%2C%20BRICS,)%20using%20PPP%2Dadjusted%20GDPs.

What that will cause in the west is stagflation (Growing recession/unemployment whilst inflation is increasing once again)

Yorkshire Building Society has launched a 4.99 per cent fixed-rate deal which is available to both home buyers and those remortgaging.

It's available at 75 per cent loan-to-value, meaning eligible customers can apply as long as they either have at least a 25 per cent deposit or 25 per cent equity within their home

The five-year deal comes with a £1,495 fee, however, and a mortgage with a higher rate but a lower fee may be a better deal for some customers.

Fixed mortgage rates drop below 5% for first time since July (msn.com)

our mortgage is ending in March 24. Been offered 5.94% 2 years fixed (that's £900 more in payment each month vs. current). Should we take it? or wait in the hope it will fall further? Will it? we will struggle with that rise.

I wouldn't be taking 5.94% fixed just yet. You have about 6 months before you need to fix a rate, and as you can see from Yorkshire Bank above and others, fixed rate mortgages are finally starting to fall a bit.

Is your lender one where you can fix up to 6 months ahead and then swap to a different deal if a better one comes along in that time? If not then I definitely wouldn't be fixing at 5.94%.

Also, are there any fees attached to moving to a new 2 year fix? If there are no fees, then it may work out cheaper to stick with your existing lender, even if you could get a slightly better rate elsewhere. If there are fees, however, I would be going on a mortgage comparison website to try to find a better deal elsewhere.

I am in the exact same position as you. My lender (Nationwide) allows me to cancel as long as it's before mid-February. So I have taken the 5.94% but keeping an eye on the rates in case they come lower. If they go lower, I will cancel and switch. If they go higher, I've locked in at today's rate.

You can take that offer for now and can cancel it. So I would lock it in in case rates rise but can look for a new one if they fall

Do what you think is best for you but trying to predict interest rates is a gamble, if they come down now IMO it will be for very bad reasons that will mean job losses etc. people wishing for rates to come down have to be careful what they wish for I think.

There was an interesting piece on Bloomberg today about climate change affecting crop prices and being inflationary, everything is interlinked, inflation is here to stay and I don`t really see a return to the super cheap mortgages of the past.

I would be inclined to take a longer fix at that rate and just focus on getting the debt paid off quickly rather than what interest rates might or might not do, and maybe online forums are not the best source of financial advice either, with one exception every forum I read got it wrong on inflation and interest rates spiking.