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.

But if mortgage applications just fell 40% and those people are obviously living somewhere it can`t be supply that is the problem? If we hit a recession the AirBnB/BTL sell off alone will fill any supply gaps that exist.

https://www.bbc.co.uk/news/business-66875739#
ill just leave that there.

i think this is the wrong decision and i say this as someone who is due to remortgage next year. inflation might increase off the back of this (and then the interest rate would have to spike), may be better if they increased and then they could decrease it again if it turned out they tightened too much.

How do you read this news for the housing market?

Yep, this will be seen as a mis-step I think, economist on Bloomberg just now summed it up for me - "Why are we seeing higher bond yields? Maybe the world is just returning to normal?" U.S "2 Year Yield" yesterday hit it`s highest point since 2006.

I hope it was a close vote, else far too many of them don't appear to know what they're doing, IMO.

Interest rates will not rise further, economists have predicted, after the Bank of England decided to hold borrowing costs at 5.25pc. The Monetary Policy Committee was split 5-4 as it voted to keep rates on hold after a surprise fall in inflation figures on Wednesday.

Paul Dales, chief UK economist at Capital Economics, said the decision indicates that the Bank of England has finished raising rates. He said: “The surprise decision by the Bank of England to leave interest rates unchanged at 5.25pc today probably means that rates are already at their peak.
“We think rates will stay at this peak of 5.25pc for longer than the Fed, the ECB and investors expect, but that when rates are cut in late 2024 they will be reduced further and faster than widely expected.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “It’s unlikely that CPI, GDP and labour market data will be pressuring the MPC to hike more in November than today. 5.25pc looks like the peak to me.”

https://www.telegraph.co.uk/business/2023/09/21/bank-england-interest-rate-live-ftse-100-market-news-latest/

As the BoE voted to hold interest rates at 5.25%, more big lenders have reduced mortgage costs.

NatWest has cut its two-year fixed rate mortgage from 6.12pc to 5.93pc for borrowers with a loan to value ratio of 60pc. Five-year deals have dropped from 5.35pc to 5.24pc.

TSB announced that it would cut some of its two-year fixed deals by up to 0.25 percentage points, and its five-year fixed deals by up to 0.2 percentage points, starting from Friday.

Inflation increased because energy prices increased as a result of the war in Ukraine. Raising interest rates was not the right response to that external inflationary pressure, but it was all the central banks had. Inflation is now showing signs of decreasing (though less in the UK than elsewhere). Continually raising interest rates for no good reason is as much a recipe for disaster as keeping them artificially low.

The £ has fallen on the back of the BoE decision, so the cost of imports, including oil and foodstuffs, will increase. This will mean a higher cost of living and a higher inflation rate.

It does seem to be a case of round and round we go.

What about the £400bn printed by the government during Covid (8tn globally) and the ongoing supply chain disruption?

Raising interest rates is a good way to slow down inflation caused by consumer spending.
But it’s not a great way to slow inflation caused by external pressures — although it’s an awesome way to slow the economy and bankrupt small businesses.
There are lots and lots of moving parts in an economy and thinking in terms of simple tools and direct causation is never going to explain it.

Apparently the government have changed the methodolgy to make GDP numbers look a lot better than they actually are.

Specifics from 4:30 to 6:45 - basically they are including overseas territories

Sacha is not an easy watch, dude barely takes a breath.

A couple of examples on how the press have been reporting on it:

https://www.spectator.co.uk/article/gdp-revisions-show-uk-economy-almost-2-larger-than-thought/

https://www.investorschronicle.co.uk/news/2023/09/12/the-uk-economy-is-no-longer-the-sick-man-of-the-g7/

What the government says it means in terms of how well we are doing:

https://www.ons.gov.uk/economy/grossdomesticproductgdp/articles/impactofbluebook2023changesongrossdomesticproduct/2023-09-01#main-impacts-of-our-changes

It’s such a mess I think that’s the one thing all of us can agree on

Interesting Guardian article for anyone considering what type of mortgage to choose. It considers 5 year v 2 year fixed rates, but for me the best option currently appears to be the Tracker Mortgage.

"David Hollingworth at the broker L&C Mortgages points to home loans from Nationwide building society and HSBC, which are priced at the base rate plus 0.14 percentage points (at the time of writing). That means they are cheaper than two-year fixed-rate mortgages, and there is scope for your monthly payments to go down.

They also come without early redemption charges, so you can switch to a fixed rate later if you change your mind. The Nationwide deal is for buyers and people remortgaging, while HSBC’s is a remortgage-only product."

https://www.theguardian.com/money/2023/sep/22/uk-mortgageinterest-rates-tracker-two-year-or-five-year-fix

"David Hollingworth at the broker L&C points to home loans from Nationwide building society and HSBC, which are priced at the base rate plus 0.14 percentage points (at the time of writing). That means they are cheaper than two-year fixed-rate mortgages, and there is scope for your monthly payments to go down."

...and scope for your payments to go up too!

Thats right, cant really see a line down the block for these products at the moment TBH, the article just sounds like a desperate mortgage ad, mortgage applications are down about 40% I think.

Funny how a broker at L&C mortgages gives the situation a positive spin. No self interest whatsoever there.

Of course L&C are trying to flog trackers ATM. They are probably figuring they can sell a bunch of those whilst the BoE base rate hasn't risen, and later on this year they can flog you a fixed rate when the base rate starts rising again and people are bricking it.

I dug out my old mortgage paperwork from May yesterday. They were getting a 1.6k referral fee from Nationwide for the house we did not buy.

Imagine getting that twice in a year? Happy days!

To be fair, they're mostly firefighting at the moment, and spending a great deal of time only to find people's mortgages are getting declined.

It's one way to keep the wolf from the door, I suppose.

How cynical 😂
The mortgage broker gets a cut no matter what the product is. Up to the Buyer to find the best product for them and brokers can help with that but it’s not like you’re forced to use a broker.
I can definitely see the advantages of a Tracker mortgage for many people right now, which was mainly why I posted the above. Better (in my opinion) than locking into a long Fix while rates are potentially at their highest.

You need to work on your paranoia Twigs! I'm sorry you find @CrashyTime and my posts triggering. Perhaps just don't read them in future?

@Twiglets1 unsure if cynical or astute. There's a reason so many people took out two year fixed terms in 2021 instead of five: brokers get paid twice.

I have mentioned on these boards before that I think it's unethical for brokers to be talking to folks about what they think will happen with mortgage rates whilst rubbing their hands together at the thought of a second commission. They are not financial advisers and I really don't think they should be offering up opinions on which mortgage term is best and which way rates will go unless specifically asked by the client.

Having spoken to many this year, almost all of them do it.

It’s fair enough they have opinions - we all do- but I agree they shouldn’t be pressuring people to take 2 year mortgages if they are doing that. Especially not just to get more commission.
But I do worry you are a bit too cynical to accept any advice even when it happens to be sensible because you are so worried about being scammed. I think a tracker mortgage is quite a sensible option at the moment for many.

They do actually make very clear at the beginning of every call that they aren’t financial advisors and legally cannot give you financial advice. If you then take financial advice from them, you’re a bit of a dimwit aren’t you?