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.

The last serious run on the currency (ERM crisis) had rates hitting 15% or something over one weekend (they called an emergency rates meeting didnt they? Not had one of those for a while) IMO thinking of rates around 5% as "rates at their highest" is a mistake, the central banks very obviously want rates back to more normal ranges and around 5% isnt high by historical standards. The new mantra is Higher For Longer, people need to understand that the currency and the whole economy trumps bailing out mortgage holders this time, just fix and pay down your debt!

It is a great way to lower house prices, peoples biggest cost, and that would offset a lot of the imported inflation, I think that is their plan now, why else raise rates relentlessly like they have? A recession would also crash rents, but that isnt much good if you lose your job!

@CrashyTime you are forgetting that housing isn’t a discretionary cost, and that not all buyers are first time buyers. Also, that a surprisingly small proportion of properties are mortgaged. So where people have a choice — to upsize or downsize — they are increasingly choosing to do neither. That’s why, when the Government intervenes in the housing market, it’s usually with measures aimed at FTB to encourage everyone to move. Of course, that has other consequences too, and generally doesn’t lower prices because the supply of houses is still too low. As I’ve said before, the economy is a system: you can’t deal with individual markets in isolation. You’re not going to get a housing price crash without a whole-economy crash and that is something no one should be wishing for.

@CrashyTime you're the only poster I've ever seen has text turn wonky like this. What are you doing to do that?!

I think @KievLoverTwo is justified being cynical about mortgage advisors. I mean it was pretty obvious from about September 2021 that rates were going up. Not to the tune of 5%, but 3-4%, and yet there is so many people coming off 2 year mortgages.
If I could see the situation turning just because we were looking to remortgage, surely someone who arranges mortgages for a living should have been aware that 2 year mortgages were a bad idea!

You are probably both astute and cynical. In fact, I would say it is astute to be cynical!

Absolutely, people should do their own research and should try to understand a bit more about the macro economic situation, particularly if they are taking on lots of debt. Many don't though, egged on by talk of 'dream houses' and 'you deserve it', etc
This doesn't justify mortgage brokers giving patently incorrect advice in order to benefit themselves though.

Energy prices increased months before the war in Ukraine started. It only made the increases worse.
Raising rates more will undoubtedly cause problems (with time lag) but has been essential, none the less. Rates need to be ABOVE the current rate of inflation (which is already under-measured by CPI). QT also needs to continue.

@Callisto1 approx 20% are on two year fixed rates, 10% on SVR or tracker, 70% longer than two years. 20% is around 6.6 million.

200,000 are due to remortgage before the end of this year, 1.5 million throughout 2024. The poor b'stards.

I’ve actually never known a mortgage broker to “tell” their clients which product they should choose, they normally just tell you the cheapest rates they can find and ask whether you are looking for a 2 or 5 year fix, a tracker or whatever.

I appreciate that other people may have different experiences to myself. But it’s certainly not the case that it’s the job of a mortgage broker to tell you what sort of mortgage you should be getting. That is for you to work out for yourself based on individual circumstances & attitude to risk. I’ve never had a fixed rate mortgage until the last 5 years, for example. Brokers have told me about fixed rate deals over the years but I have previously preferred to take my chances with a Tracker or even SVR. The broker has never tried to talk me out of my decision.

Of course many people will ask their broker what do you suggest? But that is very much Buyer beware. The broker in that instance could be giving their personal opinion but it’s not necessarily the right one.

DeadHouseBounce uses the exact same font… I suspect they are visitors from HPC

I’m following as come off our fix in December but existing mortgage co offered us 5.58% 2 year fix through a broker back in July to start in October. I’m assuming we are not going to get much better but means a huge increase for us.

Should have said we are coming off a 5 year which started in 2018!

According to an article I read on the Guardian website, more lenders will be announcing cuts to mortgage rates next week.
They won’t be big cut’s however.

Yup they write in exactly the same way. Have a strong bias against property Sellers, especially anyone annoying enough to have made some profit out of owning a property.

Thanks @Twiglets1 we will have to hope. We have two children with special needs and while we are conscious we are lucky to be home owners etc cash is not massively plentiful right now so it’s tough to be faced with this huge rise.

What is HPC?

I’m sorry, it must be a really worrying time.

House Price Crash forum. Members have been discussing and expecting a major correction in house prices for almost 20 years. They recognised the damage being done by high house prices and hoped for a correction. But untimely predictions are as useful as chocolate teapots. They didn't forsee the emergency interest rates being rolled out across the world for 15 years.

Unfortunately, the central banks' action has simply delayed and magnified the pain to be suffered by us for the rest of the decade.

Not discretionary surely means MORE reason to make it cheaper? It is still people`s biggest cost, cheap property is the number one best thing for ordinary working people, it allows them to protect themselves against interest rate risk and to save for the future as well as spending into the real economy.

The UK government can make house prices cheaper by using the interest rate lever, they can`t control imported inflation or bond market reaction to the currency etc.

Whether people have a choice to move or not doesn`t affect the general market price, that is made "at the margins" by the property that actually sells,? As you say FTB are targeted because large numbers of chains need FTB at the bottom (basically a Ponzi scheme) borrowing large numbers so people further up the chain can get "their price", the brakes have now been put on this as the cost of mortgage debt rises., and as another poster alluded to QT is going to put further brakes on the housing market soon.

Not sure what you mean by "supply" stopping price falls, prices started dropping as soon as rates started rising (they were actually dropping before rates started rising) and as mortgage applications are down around 40% and those people still live somewhere I dont really buy the "supply" arguments TBH, the Lib Dems dont either because they have today backed off from their house building commitments with some waffle about "we will build some council houses" (they know developers are not going to build thousands of properties to sit unsold!)

It is all about the price of debt, but the MSM are going to try and continue with the fantasy that house prices are set in stone, there is massive demand and cheap debt has nothing to do with it at all Your Honour! LOL, sad and funny at the same time really?

"delayed and magnified the pain to be suffered by us for the rest of the decade."

So essentially they were right that when UK Gov lost control of rates and inflation it would be tears before bedtime if you had big mortgage debt?

That's what I said.

But they were not right in their forecast for house prices and thus a number of them sat on the sidelines while most people just got on with life (oblivious as to what was going on around them).

Pretty sure @CrashyTime /DHB has been open about this.

And what does it matter who they are or where else they post?

The derision and rudeness - all because the opinion isn't agreed with - really isn't in the spirit of the site. Yet the people with this attitude are very quick to jump on others they feel may have the same attitude towards somebody they agree with.

If you don't like an opinion, don't read it. There's no need to playground antics of rudeness towards them.

'The UK government can make house prices cheaper by using the interest rate lever, they cant control imported inflation or bond market reaction to the currency etc.'

Agreed. International investors could easily decide that they don't want to take the risk of investing in the UK with its huge deficit and low/ dubious likelihood of paying off its debts. A run on the £ would be catastrophic and frightening. We had a preview with Truss already. A run on the £ would force the BOE to raise rates further because we are a nation that imports far more than it exports.
There is also the (inevitable) recession, probably starting next year.

@NewFriendlyLadybird housing is a discretionary cost to the extent that a lot more people are choosing not to upsize/ FTB choosing not to buy, instead staying where they are, as evidenced by the huge fall in buyers. This is affordability related.

Totally agree. There isn't a ban on people with different opinions on here is there. The same few posters have a very bad habit of being rude and making totally unsubstantiated claims, such as @Twiglets1 's one which has been deleted. If it upsets you so much, don't read it!