When do you think rates will come down?

[biggless]

No one has a crystal ball, but?

Some of us looked at the charts for the last 300 years and could see that virtually zero rates weren't normal. Imagine borrowing that much money just because a "mortgage advisor" told you rates wouldn't rise for 25 or 30 years, and believing them!

Just before the Tories can't wriggle out of a general election... yes the Bank is supposed to be independent but it's still run by and for devoted Tories....

I think they settle around 4-5% in 2025. I've got a 5 year fix that ends in 2027, so I've got a bit of time to save to plug the gap as my current rate is 1.99%.

How cute to think the Tories influence interest rates!

Fed interest rate is higher than us at 5.25% and their inflation is at about 3% while we're at 8%. Neither of those comparators point to our interest rates coming down. Up is the way to go.

Some of us looked at the charts for the last 300 years and could see that virtually zero rates weren't normal

🙄

Why would the come down? They've only just returned to normal?

Imagine getting your thrills from kicking people when they’re down because you think you’re so much better and smarter?

We’ll be ok with our mortgage because we’ve increased our earnings a lot since we bought our house 2 years ago, but there’s no need to be an arsehole to people who are worried

The average Interest rate since the 1970's is 7% so it's unlikely to return to the historical exceedingly low rates that existed over the last decade.
I'd reckon they'll go up more especially as pay increases to cover cost of living and the government (BOE) needs try to maintain inflation control.
I'd definitely think it will remain around 5%.

Why would the come down? They've only just returned to normal?

Why do people keep saying this. Yes it's normal historically to have higher interest rates. What isn't normal to have high house prices, high prices vs earnings & higher interest. And stagnant wages

Will we see future threads along the lines of

OP: "help, we are in negative equity, I'm unsure what to do".

poster: "historically houses were only 4 x average earnings so you should have expected them to drop by that much".

We've been using an excellent mortgage advisor for past 5 years and he says it will be like this for around 2 years

Some of us looked at the charts for the last 300 years and could see that virtually zero rates weren't normal.

Let's assume you really did this.

The average rate over 300 years is 4.7% - we're a bit above that now.

That is skewed a bit by the 70s and 80s - without which the average is 4.3%

Even if you then concluded the interest rates in Febrary 1815 probably had little influence on today and only looked at the last 100 years - 5.1%

Over the last 50 years: 6.4% and that's a mean average. If you were looking for mode (arguably a more relevant figure when looking at individual mortgages), it's 0.5%.

So they are currently just about on par with the last 50-100 years mean average. You could argue mode average is a better representation of what is normal. Over the last 50 years, that is 0.5%.

As much as it feels reassuring to say 'you've been idiots' - the reality is that most people have just been trying thier best for their families and have had the bad luck to the ones in this particular circumstance.

And even if they have beeen idiots, there will be plenty of 'innocent' people caught up in it, like children.

But, of course, that's a lot of words to really just say what pp did: there’s no need to be an arsehole to people who are worried.

I just wanted to say something nice to the people who are worried. I really think it will be alright. Rates may not go back to around 1% but they will come down to about 3.5 in the next couple of years or so. Then, wages do go up. Last year I got a small wage rise equaling of about £180 extra a month for me. It would have covered extra mortgage payment we were to face. So, slowly, maybe over 3-4 years wages will catch up with house prices that will stagnate for a bit.
Remember petrol last year? Went up almost to 2 quid a litre. It’s 1.40 now.
Remember Covid how it was supposed to mutate and kill us all? It didn’t.
It will be ok, guys.

I'd guess a reduction to 3% ish by 2025

Love that post.

The pain will be temporary for the vast majority of people.

I understand what you're trying to do but that's pretty dismissive of all those who did loose people to Covid.

A thread discussing mortgages and someone comes on to slate and rip apart Martin Lewis...why are people so full of bitterness and distain for everyone? Nasty comments say more about the poster than the person they're heaping vitriol onto.

I appreciate the sentiment but the govt are actively trying to suppress wages at the moment so if they do increase in line with higher costs, we won't be able to bring inflation down.

No it's not. It's just pointing out that most people were absolutely terrified of Covid at one point, when statistically we had little reason to be unless in the vulnerable category.

@Onegingerhead was not saying no one died from Covid but just that we got the risks out of proportion for young or youngish healthy people.

Ah OK, so the young and healthy were the only ones who mattered. You want to keep digging? 😆

I'll tell my DC who lost their father to something that probably wouldn't have killed him if the NHS hadn't been so restricted.

I’m not optimistic that we will see anything lower than 4% until at least 2028.

No I think most people got the risks out of proportion, including myself in my mid 50s at the time.

Bit weird to post a laughing emoji in a post talking about your children losing their father but ok.

Of course there were many personal tragedies, and I'm not denying that. But for most people, they did get through the Covid crisis without anything tragic happening to them personally. In the same way, most people will get through this current mortgage crisis, so a gentle reminder of that is good, in my opinion.

Saying that we got the risks out of proportion is not the same thing as saying Covid carried no risks.

Hypothetically speaking, how does one manage to pat themselves so heartily on the back when their head is so far up their own arse?

Glad others have pointed out how awful and unreasonable your response is.

Any predictions for the next few hundred years? I assume you work in the BOE where you’re able to put all this expertise in long term trend analysis to good use helping the country?

Personally I have enjoyed taking on university debt, graduating during a financial crisis, spending 15 years getting on the housing ladder due to inflation and quantities easing (moving 7 times because of insecure housing before that), brexit nonsense and covid only to experience the highest cost of living crisis and now mortgage interest going up on the smallest loan we could get, which is still eye watering, but normal for market trends a few years ago. Oh and blatant Tory corruption and mismanagement. Where was your expertise when all that was happening and screwing my generation out of having stability and families and local communities? What does your statistical insight tells you happens after you’ve said “I told you so”?

@meddysam some of us were paying attention though and could see what was about to happen. We broke out of a fix last year and paid an ERC of 5k in order to fix at 1.93% for ten years. Absolutely worth it for us as our mortgage is over 500k and if we hadn't our monthly payments would be up by £1000 right now.

I was responding to the fact that the poster seemed to be blaming mortgage advisors for telling them "that the rate would never go above 5%" and as a result "now our generation is in the shit". and pointing out that surely part of the blame is on them for not doing their own research as well.

"The nice mortgage man said rates would never go up" seems a bit of a cop out although I appreciate the need for scapegoats.

It's not like graphs of historical interest rates had been surpressed and weren't a 5-second google search away. Can't imagine buying the most expensive purchase of my life and not bothering to research whether rates might possibly go up again.

I feel for people it has happened to, but I'm fairly certain lenders point out that rates can go up as well as down over a 25/30 year span, before letting you sign your life away.

OK, that's fair. It was mean. I just found it hard to get my head around planning my life around a vague hope that rates would stay at 1%, but then I guess they did for nearly 15 years, so it's not really beyond the realms of possibility that they could have stayed very low for 25.

The main issue, apart from me being an obvious arsehole, is that house prices are way too high so 5% rates today are like 15% rates 40 years ago. Hopefully when prices drop about 30% or 40% in real terms over the next 2 or 3 years this might start to even out a bit so young people can buy a house at a reasonable rate with a reasonable expectation of being able to afford it. Which I think hasn't been the case for a long long time in this country.

I think base rate will be around 6.5 or 7% by next year and then maybe settle around 4 or 5% long term, so really the only give is for house prices to fall to a level that works for those numbers.