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.

"Thousands" of posts, LOL, don"t be ridiculous. Looks like this thread has not turned out to be the cheerleading of lower rates event that you hoped so you are now posting more silly stuff about posters being "intrusive" etc. Not a good look I"m afraid.

Sorry you think it’s silly people not wanting to be grilled Crashy, despite being super sensitive about revealing personal information yourself. Anyway, seeing as you’ve changed the subject let’s leave it there.

Out of interest @CrashyTime what would you say was a fair house price?
And based on what metric?
Ie would you say prices were fair if they went back to 3+1 maximum mortgage lending on an average salary?
So circa 120k plus 10% deposit.

It's interesting as people talk a lot about house prices falling but I don't see London having a significant crash maybe a fall yes but not the crashes people are talking of. I do admire moving with Charlie but I don't think his prediction of a fall in 35% will happen in London.

Back to last time base rate was around 5% would sound like a good price point, can"t see anything preventing that TBH if rates don"t get cut dramatically.

What do you think will stop this happening?

So 2008. Approximate average was 160k?
Down from 280k currently
A 35% ish fall
Same as moving home with charlie

Ok, so he is looking at the reality of interest rates and borrowing costs as well, sounds good, he is just parroting the HPC songbook though, without the in depth technical detail of how banking and control of money supply/asset prices actually works.

And you have to remember that 2008 was a bubble big enough to bring down the global financial system (before they bailed it out with zero rates) those prices were built on "self-cert" and "Liar-Loans" etc. the averages in this new financial reality could go lower than that if rates stay put or rise. IMO of course, but I think a lot of people are underestimating the effects of cheap lending and QE etc. TBH.

I think either wages have to rise or house prices have to come down, house prices are not rising but I don't think they'll fall as far as his prediction maybe in some places but not London.

I think the ultimate answer though is to build more social housing

"I think the ultimate answer though is to build more social housing"

Never going to happen, demand fell off a cliff as soon as rates went up, there are plenty of housing units but they are too expensive due to too much cheap debt and too many houses are owned as AirBnB/ Holiday lets etc. we need nice high rates for a long time to crash house prices and bankrupt multiple owners who borrowed too much, that should free up loads of supply.

I agree re social housing and I speak as a home owner (well, mortgage payer!)

Because the private rental market is a shit show in every way and no one deserves to have to deal with it . Everyone should be entitled to an affordable and secure roof over their head whether owned or rented. X

What was the average salary in 2008 compared to now? House prices wouldn’t go down to 2008 prices as the average salary is higher. A couple with 2 x todays average salary would be able to afford more than in 2008.

Around 25k

So if you take todays average salary of 35k and times it by 8 you get 280k which is today's average house price... so seemingly fair value by that metric

Google suggests £25k in 2008 and £34k now so £9k difference, £18k for a couple. That’s £72k with 4 x borrowing making it £252k average house price compared to 2008. That’s a fall but not huge.

I think they are significant falls though. I am seeing reduction prices, negotiations on par with 2016 prices.

Yes, i’m def seeing slows reductions at the entry level ( studios/1 bed flats) in those parts of London that are the old working class areas - so Lewisham, for example, where the prices shot up but the high St is still poor but there are some great parks, trains etc

If the base rate does drop to 5%/4.75% by the end of this year, what do people think mortgage rates will go down to?
If the base rate drops to 3.5%-4% by the end of 2025 do you think mortgage rates will be lower than the base or will they be above the base?

@Jklmo59

I assume you must be asking about 5 year rates, as obviously if rates are not being cut very quickly at end of year 2025, it's likely the 2 year rates won't be significantly different to the current base rate, as the rate will just be creeping down.

Really, it is hard to say because the rates will depend on the forward SONIA rates, which reflects market expectations at that point.

Somewhere like capital economics was predicting 2% rates within the next 3-4 years quite recently, but that expectation has moved away and is not a mainstream market expectation now. Seems unlikely they will drop to the very low levels we are all used to!

imo, i don't think the base rate will change at all this year. the boE are feeling the heat from the public but also balancing that with the contradictory economics its facing. i think they will just stall and keep it as it is for the rest of the year. general banks are taking advantage and making people sign up for crappy rates while they can.

Thanks for responses. I just keep hearing that rates will definitely come down but nowhere seems to say what to. The main thing i hear is that they will never be the below 3% we've had in the last couple of years. So just wondering if fix for 2 years, whether rates could be much lower then or if theyre likely to be the same as now

The base rate is expected to be a bit lower than that by the end of the year but they don't expect mortgage rates to fall much at first because the market had already priced in the base rate falling with their recent mortgage rates. As I understand it, the reason some mortgage rates have started to rise again is because the BoE is now expected to not lower the rate until about June or even August whereas markets previously thought it would happen around March.

I'm confident that mortgage rates will be lower than they are now in 2 years time but as you say, they won't be THAT much lower as the BoE base rate is only expected to go down to 3.5% and that's not until 2027. There is no expectation that the BoE base rate will fall below 3% again, at least not for the foreseeable future.

I'll see if I can find a link I posted on another thread on this topic.

Thank you. Looking at historic date, mortgage rates are usually higher than the base rate (atleast 1% higher). So if the base rate settles around 3.5% for the foreseeable then will the average mortgage rates be around 4.5%?

I don't know more than you, but this is the article I was talking about which highlighted 3 main points:

• OBR reported average mortgage rate will hit peak of 4.2% in 2027
• Markets only forecasting base rate to fall to 3.5% in 2027 and no further
• Fixed-rate mortgage pricing has already factored in upcoming base rate cuts

In a section entitled "What next for mortgage rates?" the article noted that the OBR says the market is now expecting base rate to fall this year from its current peak of 5.25% to 4.2% by the end of 2024. However, looking further ahead markets are currently only pricing in for base rate to fall to 3.8% by the end of 2025 and eventually reaching 3.5% in 2027.

For mortgage borrowers, these market expectations are reflected in Sonia swap rates. If and when the base rate starts falling, this may trigger good signals to the industry meaning swaps could fall further. But it doesn't necessarily mean there will be significant rate cuts across fixed rate products straight away due to the fact lower rates have already been priced in because there is already an expectation rates will fall.

https://www.thisismoney.co.uk/money/mortgageshome/article-13173595/Mortgage-rates-wont-head-lower-despite-better-ONR-forecasts-heres-why.html

Thank you :)