6% mortgage rates; trouble a'ht Mill

[Twiglets1]

This is a new 6% mortgage rates thread as the last one is almost full.

Thanks to KievLoverTwo for suggesting the second part of the title to reflect all the squabbling these threads are causing. Which could be a thing of the past of course. But realistically, it won't be.

The demand doesn’t disappear just because people choose to pause their house buying until they are reassured that the interest rate has peaked or until mortgage rates fall to a more manageable level. The demand is still there, it’s just the timing that is wrong for some people at the moment. In fact there is pent up demand now.

Demand without the means to pay is meaningless, it is the other side of the coin from trying to hold out for an asking price that no one wants to pay, people are not choosing to pause their house buying in many cases, their lender is telling them that they can no longer afford the house debt. Basic arithmetic tells us that either rates go back to zero or house prices drop to an appropriate level for the prevailing interest rate. All the people "pausing" their house buying still live somewhere.

Demand is also a feeling and some people who could afford to buy have chosen not to because they haven’t wanted to buy while interest rates are at the peak or while the media is telling them prices are falling or “crashing” as the more hysterical headlines suggested.

I don’t think anyone in mainstream media is talking about prices crashing anymore, the language used is much softer. And it seems generally accepted that the base rate has peaked now at 5.25% which won’t seem incredibly high when looked back on. They won’t go back to zero but they don’t need to for sentiment to change.

The mainstream media didn`t see the 2007/8 crash, they missed the fastest rate rising cycle in 40 years, and you think they can predict where interest rates will be next year? That is optimistic in the extreme IMO, the job of the MSM is to keep the wheels turning by encouraging people to borrow money and consume goods, not to protect your financial well-being by predicting housing market crashes, you have to DYOR not rely on the MSM IMO (BTW the MSM is now saying that global inflation is set to rise due to attacks on shipping lanes, that would mean interest rates staying the same or rising?)

So do you trust what MSM say or not? It would seem not so why are you quoting what they are saying?

And seeing as even in the 2008 crash prices only went down 20%, what makes you think they will go down 30-35% this time? Despite the banking industry being much better regulated now regarding not allowing people to borrow more than they can afford?

And seeing as following the 2008 crash property prices started rising again a few years later, what makes you think they will never rise again following this correction? The property market is cyclical as graphs show.

Some of your points make sense like I agree with people doing their own research not just trusting one or two sources but you always seem to go too far.

Rate of inflation set to fall tomorrow.

Headline consumer prices index (CPI) inflation sat at 4.6% in the year to October, a fall from 6.7% in September.

But forecasters expect a far less dramatic decrease this time, with Capital Economics expecting the rate to drop to 4.5% and Deutsche Bank expecting a fall to 4.3%.

The Bank of England has forecast that inflation will be around 4.4% on average across the first quarter of 2024 before falling to 3.6% in the second quarter.

https://inews.co.uk/inews-lifestyle/money/bills/inflation-fall-4-3-what-means-money-2814195?ito=push-notification&ci=5gYMpIxmnB&cri=2MET8YrROP&si=cssdIvAnxCT_&xi=56861e79-4094-4d03-8095-220d61ca36ad&ai=2814195

Inflation fell by more than expected in November.

Official figures released today show that it fell from 4.6% to 3.9% which makes it more likely that the BoE base rate will begin to fall from May 24.

Many economists are predicting four small cuts in 2024 taking the BoE base rate to 4.25% by the end of next year.

All looks promising. Moving in the right direction. Albeit slowly.

That's really good news.

I see all the people frothing at the mouth for 10% mortgage rates have stopped posting.

I thought the same 🙊🙊

We’re due to remortgage this year and at the moment looking at 4.5% deals. Even 3.5% only works out as £100 less a month, and it seems unlikely that’s where we’ll be at next year anyway. I’ve been anxiously checking rates for so long now, but it seems that as long as rates aren’t returning to their previous level, we’ll still be paying so much more, despite overpaying hard for the last 3 years.

Really glad that they shouldn’t be going up further, but if only they could come down as quick as they go up!

Yes this thread is noticeably quieter than the previous ones when rates were going up and @CrashyTime & Co were enjoying speculating about how high they could go.

I wonder what this will do to inflation.
https://www.bbc.co.uk/news/business-67758126

It would indeed be good for mortgage holders if interest rates would fall as quickly as they rose but they won't.

For the first time in over 30 years I've got money in savings and not much of a mortgage so on a personal level, I would be better off if interest rates stay high. But I do feel sorry for people trying to remortgage or buy a property while rates are relatively high so on the whole I'm pleased rates are falling.

Name change?

No, had the same name for yonks.

You could use Advanced search and see how many posts I've had up.

I am genuinely wondering what an increase in fuel prices will do. Given what the start of the Russia - Ukraine war did in terms of fuel prices and inflation, what effect will tankers having to go round the Cape instead of using the Suez Canal have?

Also, any increase in the cost of consumer gods and its effect on inflation.
https://www.bbc.co.uk/news/business-67759593

Article in i today:

Inflation falling more than expected today is the “best news” for mortgage holders for some time, according to experts.
The headline rate fell from 4.6 per cent in October to 3.9 per cent in November, sparking good news for homeowners who could see mortgage rates drop even further in the coming weeks as a result, as pressure mounts on the Bank of England to cut interest rates.
Swap rates, a measure that indicates what the market thinks interest rates will be in future, have fallen by 0.2 points on both two and five year fixed rates in the past few hours alone.

https://inews.co.uk/inews-lifestyle/money/property-and-mortgages/mortgage-rates-below-4-per-cent-imminent-surprise-inflation-2817827?ito=push-notification&ci=LGeSIVLaUc&cri=v5IsODYAU6&si=cssdIvAnxCT_&xi=56861e79-4094-4d03-8095-220d61ca36ad&ai=2817827

Price didn’t move one bit when interest rates went up 5 fold, I don’t expect them to make any difference if they drop by a third versus peak. Irrelevant metric. Best to look at wage growth, unemployment, arrear and bankruptcy.

I agree we have already seen record inflation fail to cause major property price reduction. Its a complex and extremely resilent asset

This is very good news for those trying to remortgage although still twice what many were paying before in interest.
On the negative side, we are likely to be in recession next year with the concomitant rise in unemployment and insolvencies. That would cause house prices to fall despite falling base rates.
Longer term, it's uncertain. There are both potential deflationary and inflationary risks around with the uncertain geopolitical situation. It will also depend on responses too eg will QE be started up again and will that lead to a massive, debt based collapse in the end?

I'm happy things are looking more positive as I have to renew my mortgage next year

But I'm aggrieved about all the speculation and scaremongering in the media and people just in general saying the interest rates could go to like 10-15%. And it seemed like some spiteful people were hoping that us mortgage holders would be fucked over

Since last summer when it all started it has completely fucked with my mental health and well-being and I absolutely skinted myself to over pay. Every spare penny would get paid off the mortgage I was a bit obsessed tbh. Like most people a secure home is everything to me and we work so hard to have a roof over our heads so the thought of it being at risk was awful.

I mean I'm glad I overpaid as can only be a good thing

But the situation seems no where near as dire as the doomsday predictions

Does anyone else feel like this ?

@janicegarvey I agree that the scaremongering is nasty. Its like the people desperate to tell pregant new mums childbirth horror stories. It goes against all long term trends as well as factors such as net migration and climate change especially flood risk for residential property prices to tank. That doesn't mean you don't sympathise with affordability issues but having a go at/ even sneering at homeowners in a cost of living crisis isn't helpful or reasonable. A crashing market would not be somewhere anyone who isn't cash rich enough to buy now would be any better off as lending would retract. It is massively unrealistic that homeowners will be in negative equity and forcasts of future doom and gloom are nothing more than forcasts no one has a reliable crystal ball. I would take them with a big pinch of salt