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.

Possible, but I think they will want to hold rates steady now for as long as they can, the cheap money experiment is not going to be willingly repeated IMO, there are far too many problems that arise from it, a basic one is that announcing rate hikes no longer has the more or less immediate effect that it would have had 30 or 40 years ago, people have far too much access to credit and are far too indoctrinated in the ways of spend spend spend on cheap debt, that is problematic if the PTB are trying to control inflation?

Yes, the cheap money experiment has been an extremely destructive one. I don't think that means that the PTB won't return to it when things get desperate though. Whatever happens, it's not going to be good imo.

Guess what? I just transferred out of FD after 20 years. Their CS is a shadow of their former self, e.g. used to get through within 2 rings but not now.
The final straw was the introduction of the new online banking app around 5 years ago or so. It was claimed to be more adaptable than the old app (which worked perfectly well). However the design was hideous combining unrelated data like dates/names in one column and credits or debit in another mixed in with the balance. The most requested feature was the ability to name savings accounts. It was never delivered even after 5 years of asking. Lastly the interest on savings was woeful.

I've moved to Nationwide, which has a really bad TrustPilot score - I know. I get far superior interest on savings. I can rename the savings accounts to something meaningful and so far I haven't had any issues apart from being given the third degree by their Fraud dept. about some new payees I set up.

No one can really answer that question without knowing your circumstances. The answer will depend on factors such as location, home type, job and job prospects, salary, LTV, age, etc.

Sorry it doesn't help you much.

I agree, cannot answer that question as it depends so much on individual circumstances.

Obviously the banks aren’t expecting rates to increase to that level @CrashyTime or they wouldn’t be offering the rates they are now. Anything is possible but all the waiting game arguments seem to downplay the fact that time not spent paying down a mortgage if you expect to get one is a massive opportunity cost of waiting.

As others have said, it depends on your individual circumstances.
Personally, I think house prices still have a significant distance to fall (others on here disagree). However, it doesn't necessarily mean that you should hold off as if this happens you may struggle to get a mortgage or even, worst case scenario, lose your job in a recession. Think about what sector you are in and how likely this might be in a recession, ditto if you have a partner. What are your current living circumstances? If, for example, you are living with parents and are able to save a significant amount towards a deposit, I would consider waiting and saving. If, on the other hand, you are paying a very high rent or are living in an unsuitable rent, you may want to buy soon but negotiate as hard as possible on price. What area are you in and what is the market doing there? Take lots of time to research the housing market in general and your particular market too.

This is a bit complex and it’s just a projection anything might change but I saw this on a Facebook page. With the comment ‘This is a graph of the market's current expectation of GBP swap rates, basically BoE rate, in the future. It expects it to settle just above 3% in 2 years time (this was around 2.8% just a few days ago).
Sure this can still move, but assuming its somewhat accurate prediction of the future, what do you think house prices would do in the next few years?
I think its worth noting how small the spread now is on residential tracker rates to the BoE rate, and fixed rates to the equivalent swap rates - tracker rates are around +0.3% whereas before this recent rate spike that was more like +1.3% for the same. So according to this prediction, and assuming that spread stays where it is, we could see real resi mortgage rates at around 3.5% again soon, which is really not much higher than where they were for much of the low rates period, and just generally much more afforable vs now.
Additionally, if house prices in real terms are down around 20%+ during that time (altho stagnant in nominal terms), and on average wages have increased 10%+, coupled with rates normalising, these all seem like bullish signs for the housing market generally?’

The attached graph is within the analysis written below:

https://www.chathamfinancial.com/technology/european-forward-curves?fbclid=IwAR2hzF16wWP9Hagi9ykqDPJiFjVXDRNiXY6oTtG-lfP9RaZgKBhlOFiBA3Y_aem_AVrLiw-D0rkMAy8I7U61LPiFuBV-5iajeq33Twsg9GdFXyND4VnnmL2itWp8nNU37Yk

Thanks all 🙂 sometimes I tempted to take my EU passport and take off somewhere abroad as I have no ties or commitments here now, but also am not so young! The thought of what I could afford does not fill me with joy, that’s for sure

Investors bet on six rate cuts in 2024

According to bets on financial markets, the Bank of England will cut rates six times in 2024, taking them from a 15-year high of 5.25 per cent today to 3.75 per cent by Christmas. That would be a major boost for borrowers needing to remortgage and first-time buyers getting onto the housing ladder.

However, mortgage rates will still be far higher than they were before interest rates started rising at the end of 2021. And analysts warned rates may not fall as far as investors betting on the financial markets expect.

With the economy slowing and inflation expected to continue to fall, there is now a one-in-three chance the Bank will press ahead with the first rate cut as soon as March, according to financial markets. There is an 80% chance rates will have been cut to 5 per cent or lower in May. The Bank is then expected to cut rates at each of its last five meetings of 2024 – in June, August, September, November and December – taking them to 3.75%

The US Federal Reserve and the European Central Bank are also expected to cut rates in the coming months.

At last some good news for borrowers as investors bet on SIX rate cuts this year | This is Money

The banks get you signed up for 30 years then they put you on the prevailing rate when your fix ends, they don`t care how high the rate goes once you are signed up! (unless you default of course, but then you lose the house)

https://www.landlordtoday.co.uk/breaking-news/2024/1/analyst-warns-house-price-boost-like-a-dodgy-prawn-at-a-buffet

"Sales actually slowed for the third consecutive month in November, delivering the slowest November in a decade. It means that a rise on paper may not actually do sellers much good in reality if there’s nobody to buy their property."

Been saying this for a while now, headline price stats are meaningless if you can`t find a buyer!

IMO six rate cuts would be serious recession territory, that would mean house prices could crash harder than they would with rate rises! But of course no one can predict the future and bond/credit market "bets" will change at 30 seconds notice. People contemplating taking on large mortgage debt should think carefully about the future costs of this debt, or the loss in value to their property (debt stays the same) if we hit a serious recession, as well as thinking about the vested interest of the article writer, are they working for or funded by a mortgage lender at some level?

They are Business editor at the Daily Mail

Eh? They only get you signed up for 2,3 or 5 years normally then you can remortgage with a different lender without penalty

? You still have an outstanding debt though, and the new lender will be charging the prevailing interest rate. The danger is in paying a bubble price now and being at the mercy of inflation/interest rates for many years, far better to have a proper recession now, or keep rates at these levels and see house prices start to collapse than to jump at the sales pitch ads from banks desperate to sign up mortgage debtors for chunky loans.

So heavily motivated to get "clicks" by pandering to heavily indebted mortgage holders?

Most people will switch from one fixed rate mortgage to another fixed rate mortgage they will never pay the SVR. And they will switch to a different lender if their current lender doesn’t offer them a good deal so your lender hasn’t got you for 30 years.

As people get a few years into a mortgage the repayments become easier as salaries increase while the mortgage stays the same ( fixed rate). So then they can start overpaying to reduce the term or borrow more money to buy a better house, their choice.

They are hardly pandering just reporting what investors are betting on. The media will also report what happens to base rates over the next year whether they fall six times or three or whatever. They equally were reporting when the base rate was going up each meeting.

Nobody mentioned paying SVR, just think buying during the SDH and then coming off that fix about now, until recently there have been no meaningful wage rises in the UK, it was all a mirage based on cheap debt, people are no longer going to pay those bubble prices when the monthly payment is closer to the reality of their debt level. The situation right now is a classic example of what happens when too much debt meets more normal interest rates, but you still keep trying to pretend that getting into mortgage debt at these prices and in this volatile interest rate environment is somehow a great idea!

I don’t judge people for choosing to buy a property when the time may not be optimum because I understand from my own experience that most people buy according to their personal situation & nothing really to do with whether it’s the best time based on the economy. From my perspective I’ve bought in buyer’s markets & seller’s markets and I’ve made money overall but that’s just lucky timing which no one knows in advance.

I’m not pretending anything, people make up their own minds if and when they want to buy and most see it primarily as a home not an investment. You are the one who has been making claims for years about house price crashes that seem more wishful thinking than anything.

Not really wishful thinking, more the economic reality of a debt bubble meeting higher interest rates, cheap property is the number one best thing for ordinary workers, I can`t really get my head round the resistance there is to this from some people, and the baying for lower rates that is all over the media is just a sign of how this addiction to cheap debt has penetrated all levels of our society.

Cheap property … I feel that ship has sailed in the U.K.

I think the best thing for the largest number of people at this stage is probably price stagnation.

"addiction to cheap debt"

Is such bullshit, I've heard this trotted out in here before

Most of us just want a bloody roof over our heads - we're not vastly overstretching to have some sort of massive show off house

It isn't the fault of the average person that even normal family houses cost what they do

Honestly the same phrases get trotted out “addiction to cheap debt”, “debt junkies” etc … no, most people just want a house of their own to live in & have to participate in the system that exists 🤷🏼‍♀️