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.

Not really, it is just two facts, demand has dropped dramatically (in past crashes prices soon followed?) and the less you borrow for the house at the start, the less debt you have and the more cushion you have against future interest rate rises because you have more scope to make meaningful overpayments that get the monthly debt maintenance payments to a more manageable level in the event of a rate spike.

Those low rates are the reason we are heading for sad times, they have encouraged a lot of people to over-borrow and leave themselves exposed to interest rate volatility which could cripple them financially for years.

@CrashyTime your hypothesis is an opinion, just because it is based on things you can evidence does not make the prices reductions you predict a fact

I agree, it just makes them very likely.

In your opinion.

If rates were still rising you would be happily predicting doom & gloom and now they are falling you still are.

Interest rates were held at the last meeting, and bond yields appear to be rising again today, you are confusing a "debt sale" by debt lenders spooked by lack of demand for their debt with an ongoing trend, that could be a costly mistake, but of course you are not buying a house are you?

And there are always potential shocks ahead, buyer beware, let the seller eat their own previous debt mistakes if they are overpricing their house.

https://www.msn.com/en-us/money/markets/how-donald-trump-risks-triggering-a-new-bond-crisis/ar-BB1i0NjG

Yes, gilt yields fell quite a bit in Nov/Dec 23, hence the falls in mortgage rates. Since January, however, the yields have increased back to around 4% again, which is why some lenders have started raising rates again.
https://www.barrons.com/market-data/bonds/tmbmkgb-05y?countrycode=bx
Well done to those who have managed to get sub 4% rates. It's definitely possible that yields go down more later in the year but by no means certain. Even if the BOE lowers base rates in March, although May looks much more likely, they will take them down slowly unless disaster strikes. The likelihood is that they may rise again in the fairly near future (perhaps '25 or '26) depending on the general economy. I think I already said that if I needed to re-mortgage, I would fix for the long term at current rates and choose the certainty for sure.

Yes, fixing now is a smart move I think, trying to game the bond markets by taking advice from people on forums with mortgages isnt going to end well. The only reason I see for serious rate cuts now would be quite a severe recession, I dont think FED/BOE etc. want to be seen cutting and then doing panicky back-steps in the event of a future inflation surge, they want to be seen as in control otherwise the panic and volatility gets worse. They might cut by .25 later in the year to encourage people to spend a bit, but I could still see more hikes if inflation requires it.

No I'm not buying a house right now but I have bought 6 properties in the past and then sold them to move onto the next purchase so at least have some experience of what I'm talking about when I give people advice about buying & selling

But you don`t give advice about buying and selling, you constantly post articles that are cheerleading rate cuts? Do a bit of googling on how many analysists are directly or indirectly compensated by banks and other entities that do good business from the masses borrowing too much, and maybe revisit some of the calls made during the Dot.Com bust where it came out later that certain "experts" were publicly recommending particular shares etc. but privately saying they were "junk" and "garbage" in e-mails and while talking to people "off the record".

I do give lots of advice about buying and selling on other threads from my own experience but this one is about mortgage rates?

Yes I do post articles about rate cuts, I guess I started as a balance to you and your house price crash chums constantly churning out stuff about how base rate rises were inevitable throughout 2023 and would go higher than 5.25% which in fact they didn't do in 23 as we now know. And also to counter your advice that we would definitely see mortgage rates well in increase of 6% so people better rush to lock in long fixes of 5 or preferably 10 years even when rates were at or close to their peak.

I wanted to warn people that it wasn't necessarily a good idea to get a fixed rate mortgage at around 6% when all the mainstream analysts were saying rates were about to fall. You have a distrust of mainstream advice which is your opinion but you often present your opinion as fact so someone needed to balance that with the more mainstream view.

Fair enough, but I still stand by the opinion that a "debt sale" by debt sellers is not the same as a "trend" in interest rates, I think the global trend is higher for longer (unless there is a severe downturn, then they will cut but far too late to do anything meaningful) with potential shocks to the upside for inflation (ME is reaching a new dangerous level at the moment)

It seems with mortgage rates available around and under 4% that this year might be a bit more interesting for the housing market. Certainly if your rate can start with a 3 it’s a lot more attractive to buy than when rates were around 6% last year.

I am lucky to have 1.5% for another 5 years. I have fingers crossed for around 3% when the time comes but 4% wouldn’t be a disaster. I think that’s the case for most people that 4% is not a disaster, although for some it will of course mean trouble.

You got a fantastic long term rate there. Well done.

If I was in that position then I'd like to overpay as much as practical. Perhaps after a few pay rises I'd work out how much mortgage was outstanding and what repayments would look like at around 5%, and then start paying that much so that I was more comfortable when my existing fixed term ended.

I like doing that kind of thing. Around 5 years before I retired, I worked out what my pension would be and then shrank my take home pay to that level so I was used to it. I put the rest in a SIPP and ISA.

As crashy said this discussion isn’t about buying and selling houses it’s about rates, and you’re constantly repeating mainstream media expectations that are based on data from a month or so ago. The window of the mortgage dip was always coming which I told you would happen last year on expectation of rate cuts.

Your buying and selling experience of the last couple of disinflationary decades (ZIRP policy) is irrelevant on the direction of future mortgage rates driven by swap rates and BoE interest rates.

Gilt/treasury yields are rising again. The Fed and the BoE will not cut rates (despite the newspapers and estate agents telling you so) whilst that is happening. The trouble starts when the yield curve inversion un-inverts (see China cutting rates now and current property crash for details)

We are now currently inverted for the longest period in history.

https://x.com/charliebilello/status/1755812622442619269?s=46

Meanwhile the arrears are ticking up.

https://www.thetimes.co.uk/article/more-than-100000-mortgage-borrowers-in-trouble-as-arrears-levels-rise-pddfh8d8d#:~:text=More%20than%20100%2C000%20mortgage%20borrowers%20are%20in%20serious%20difficulties%20after,cent%20on%20a%20year%20earlier

There is a thread about buying and selling, for those on the market, and @Twiglets1 is being very helpful on that. Unfortunately @CrashyTime is also on that thread, despite never having bought or sold a property, constantly giving their opinion on all houses being over-priced, trying to derail the thread

Some people are literally just here to gloat.

You seem to be on the wrong thread @GoingDownLikeBHS. This one is about interest rates.
@CrashyTime makes some valid points and also says some things that I don't agree with. However, one thing he/she never does, no matter how many people attack him/ her is make rude, personal remarks and use eye rolling emojis. Sadly, others do not manage even basic manners which is a negative reflection on them only.

Crashy makes quite a few rude comments about people who had low rates being ‘sucked in by cheap debt’/ gloats regularly about how they are sure people’s main asset will be cheaper in the future like they know that for a fact. They make overblown assertions such as excellent housing is notional and then when that is corrected attempt to gaslight that whether excellent housing exists is irrelevant. Telling anyone their experience is irrelevant is very rude. I don’t recognise your description of the narrative on this thread at all.

that's not true.
just renewed(existing customer) 2years deal with halifax 60%ltv.
first I've received 5.5%, then did product price check before 1st of Feb dropped to 4.90%, now the rate is 4.83%.

interest rates seem to be going back up. Using MoneySuperMarket to keep track

Feb 1st (60% LTV) - 2 years fixed rates:
Halifax 4.17%
Nationwide 4.2%
Lloyds 4.21%

Feb 11th (60% LTV) - 2 years fixed rates:
Santander 4.20%
The Cumberland 4.26%
Nationwide 4.26%
Halifax 4.42% <--- gone up significantly

Fixed rate products are priced based on SONIA swap rates, so you can track those here.

https://www.chathamfinancial.com/technology/european-market-rates

The actual mortgage product will include factors to cover costs and generate profit, i.e. swap rate + and booking fees. Prices will vary according to LTV.

"Your buying and selling experience of the last couple of disinflationary decades (ZIRP policy) is irrelevant on the direction of future mortgage rates driven by swap rates and BoE interest rates."

Exactly. In a nutshell.

Yes the "debt sale" might not last long, the banks won`t buck the bond market if things turn higher.