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.

Exactly @Twiglets1

I don't know why they say it !! It's ridiculous

That was true for the last 15 years but it was predicated on rising house prices and low interest rates.

The issue now - especially for people early in the mortgage - is they are being hit by a double whammy that may stop them from accessing good deals or new lenders. Firstly, because their mortgages have increased owing to rising mortgage rates, they may not pass affordability tests any more. Secondly, as the value of their home falls, it can send them into higher LTV rates and higher interest rates as a consequence.

It’s a fair point that they may not necessarily pass the affordability checks to switch to a new lender if interest rates have risen significantly from when the loan was taken out. But I have always been offered competitive rates by my existing lender when coming off a fixed rate, and staying with the same lender doesn’t require an affordability check.

It is logical that lenders would offer competitive rates to current customers wishing to remortgage as well as to new customers. They don’t want to lose business, especially from people who have proven over 2,3 or 5 years that they are reliable with repaying the loan.

It's one of those cases where we'll have to wait to see the number of headlines about cases before being able to establish whether this is fear or fact.

Stagnation is wishful thinking, without the cheap debt it has to crash, sales have already collapsed and we are seeing the start of developers going bust, the only hope for the HPI fanatics now is massive rate cuts back to zero, but at this stage that would mean massive incoming recession that will crash prices even harder than higher rates!

Exactly, people are hoping that the future will be like the past, big mistake to make in this climate IMO.

I used to hang out a bit on the Guardian comment sections and there was a poster who used to say things so exactly like you Crashy - it almost could be you.

I can't remember the guy's name but I recall lots of the content as it was in 2005 when I was looking to buy my first house. I posted that I was about to buy a 95% mortgaged house on a 10x multiple of my salary on the basis that even in a flat or even declining market I would be better off than renting (my rent was £800 a month and my mortgage on the new flat was £700).

He also thought stagnation was wishful thinking (which is why I thought of him after your post). Ignoring his wailing and buying that flat has set me up financially for life.

Different poster, early 2000s things looked a bit bubbly but my interest didnt really get triggered until the 2007/8 meltdown and the realisation that it was all based on cheap and loose lending. Do you think someone getting into mortgage debt now will be financially set up for life?

On a purely anecdotal level we are in limbo waiting for house move and our offer just dropped from 5.9% to 4.65% we are chuffed!! We had budgeted happily for the higher payment so going to keep it at that and will be making a £250 a month overpayment right from the off

Brill news ❤️👏🏻

That’s great 😀

Good news!

Where does the housing shortage fit into this picture?

Surely if there is a shortage and rents remain high the people will still buy? Perhaps habits will change? We just came back from Canada where there is a lot more multi-generational living across cultures. Newer housing estates are designed often to accommodate this.

It's the classic demand and ability to pay divide.

Demand will be high but it is irrelevant if people cannot afford to pay. Those people are condemned to rent, HMO's, living with parents, hostels, etc

As @XVGN said if you can't afford to buy a nice place you have to make do. It'll mean people buying more flats, kids sharing rooms, people living with parents or HMOs into their 30s and 40s or forever. Also people having fewer kids or no kids at all. Probably also more homelessness and even greater pressure on social housing.
At some point the lucky ones will inherit and so will be able to pay the extortionate prices of current housing. It's not a pretty picture.

Inflation will fall below 2pc by April or May this year, economists have said, in a boost to mortgage holders hoping for interest rates to fall. Economists at Deutsche Bank said that price rises could slow down sharply from the 3.9pc recorded for November, according to Deutsche Bank.

In a research note this morning, Deutsche Bank predicts that inflation will average 2.5pc in 2024, down from a previous forecast of 2.7pc. The bank said inflation will drop “a little below 2pc in April and May” before hovering around 2pc to 2.5pc for the remainder of the year.

The Bank of England has raised interest rates to 16-year highs of 5.25pc in an effort to reduce inflation back down to its target of 2pc. Prices were rising at a pace of 11.1pc a year in October 2022, which was a 41 year high. Governor Andrew Bailey told MPs today that Britain has not seen a jump in unemployment as a result, while household incomes have risen in recent months, limiting the blow from higher borrowing costs.

https://www.telegraph.co.uk/business/2024/01/10/ftse-100-markets-latest-news-water-pennon-deal-sewage/

This is something to keep an eye on. The banks use the SONIA swap rates to price fixed rate mortgages. If you look at these then you can see that they aren't making much money at the moment. They seem to be pricing their mortgages too low just to get market share. It feels desperate. Not a sign of a healthy market and not likely to continue for long.

A price war has erupted between Britain's largest mortgage lenders after several banks slashed rates to below 4 per cent, in a significant boost for homeowners.
Barclays and Santander were the latest to cut the cost of fixed-rate deals rates this week by up to 0.82%.

Santander cut some of its five-year fixed mortgage deals down to below 4 per cent, joining the Yorkshire Building Society, First Direct, Co-operative Bank, Virgin Money and HSBC.

Six of Britain’s seven largest mortgage lenders have now cut rates since the start of the year, including the country’s largest lender Halifax, which cut rates on Thursday.

https://www.independent.co.uk/news/uk/home-news/price-war-erupts-mortgage-lenders-b2476857.html

@XVGN do you mean that it's likely that this will lead to interest rates going up or down?

I can't see them being able to use these loss-leader rates forever if SONIA swap rates were to remain at current levels.

The longer term trend will depend on whether SWAP rates go up or down.I have no crystal ball for that I'm afraid. Wish I did.

Thank you, and also thanks for sharing about the Sonia swap. It wasn't something I'd come across. I'm watching the rates v closely atm, trying to work out how long to fix in for.

As someone at HPC said recently, they are struggling to sell debt, so they are having a "debt sale", pretty basic and easy to understand really but yet certain people are still cheerleading this debt sale as if it is somehow a good thing!

Mortgage rates coming down is a good thing @CrashyTime for FTBs trying to secure a decent fixed/tracker rate or for homeowners coming off fixed rates and trying to secure another one that won’t stretch their finances too far.

Of course if your agenda is hoping that more people can’t afford to get a mortgage and can’t buy or can’t afford the repayments & get repossessed then fixed mortgage rates falling will be considered a bad thing. So not surprised that the House Price Crash crew are disappointed by the falling mortgage rates we’re now seeing ahead of the widely expected base rate reductions in 2024.

Tbh twiglets I feel like certain people WANT mortgage payers to be struggling financially and worried

It's like they feel like they deserve it - for what I'm not sure. We're just ordinary people who bought a house when we could and made the best of the situation at the time. I mean I for one was not able to buy a place til I was 35 and my first house was a tiny little ex council on a bad estate in Leicester so nothing flash - far from it

They forget that these mortgage payers who they hate so much are actual human beings with families to support

I completely get that for those who haven't yet bought a house it must be very worrying and frustrating. but why wish bad on people ? I've said this before

@janicegarvey some people love to see carnage and suffering. I think people like Crashy don't realise that people can see both sides as they can't.

I can appreciate the 'debt sale 🙄' because I'm not using to debt for frivolous purchases but I'm really grateful that when I remortgage on my ex council semi next year I'll be paying less per month to keep a roof over my children's heads and will have more money to feed them. How silly of me.

I can also recognise the system is in crisis and our economy is not in a good place!!

Most of us are just trying to get by.

I think it must vary as well région to region.
Rentals here are terribly expensive and hard to come by although getting better! Crashy once mentioned that where they were renting was cheaper by far and they had a good experience private renting (something most of us have lacked) so I think that must alter the perspective of the relative benefit of buying a house.

I bought shortly after the previous crash. If I had listened then I would have spent tens of thousands on rent and be in the same place now. As it is I'm 10 years + of paying a mortgage and expect to be mortgage free in the next 10/15 years so will be rent/mortgage free by about 50 and it will be a big relief in old age