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.

Always find the rightmove asking price index an odd one. 370k ish now
Average sold price is 280k... 25% lower

So either people take huge offers... which in reality they don't, or the houses don't sell and just sit there well overpriced skewing the righmove index, which also doesn't take into account any reductions in asking prices, only the original

A pretty useless index, maybe just showing added greed more than anything else

I think of it as a delusion index.

But it's not fair to compare. The "average" sold price (from ONS) is a GEOMETRIC mean with lots of other fiddly diddly involved. This removes the worst excesses of the few high priced homes being sold.

Personally, I just want to see the MEDIAN price by home type by region/town. That would be truly useful.

Haha. You're not going to trick me into a prediction on interest rates. But I'm ambivalent and happy to call the thread whatever you wish.

Joking aside, SVR's from the major lenders are ranging from 8% to 9%. It would be interesting to know how many people are trapped on these rates.

Haha thank you. I honestly wasn’t trying to trick you into making a prediction. I see 5% as more a reflection of where average fixed mortgage rates currently sit than a prediction of where they will go in the future.

Although you won’t be surprised if I admit that my personal prediction is that the next one after the 5% one will be reflecting 4% mortgage rates being the norm.

.... around 25% or 750,000. Ok, some will be nearly paid off but that's a world of pain for the rest.

It would be madness to stay on a SVR these days unless for a short period to suit personal circumstances

"Some borrowers in this group may be mortgage prisoners, borrowers who took out loan before 2004 and are now unable to secure a new mortgage deal despite being up to date with mortgage payments, due to changes in how lenders calculate affordability."

https://www.thisismoney.co.uk/money/mortgageshome/article-12194311/Mortgage-holders-suffer-silence-high-standard-variable-rates-options.html

hmmm that's "asking" prices though. not the actual sold prices. we all know that seller's are overpricing their homes, that's what the threads are mainly about. Asking prices don't mean anything in this market. Clearly no one is even paying asking, unless they're realistic, which the stats won't pick up.

this is terrible. I wouldn't be surprised if there is another round of this with anyone who bought in 2021-2022 and paid for an overpriced home because they thought the 1-2% interest rates would last. Banks are only going to get tighter over time.

It must be terrible for mortgage prisoners who bought before 2004 so bought before robust affordability checks as the article says. But that will be a very small number of people.

People buying in 2021/22 will not be in that same position as they will have been stress tested to mortgage rates significantly higher than the rate they procured.

@Twiglets1 i am looking forward to the thread titled 3% mortgage rates sometime in the future :) hopefully around this time next year when i have to change my current fix.

yes of course asking prices are different to achieved prices but it is a measurement nonetheless, even if it’s just a measurement of some vendors over optimism.

lol @Freetodowhatiwant that would be nice for people buying or remortgaging next year but possibly a trifle over optimistic.

Only a few more days until the next announcement. I know this sounds a bit sad but I get a bit excited about such things :) Anyone else get excited by the BoE announcements...? Although I reckon it's going to be a stick at 5.25 which really is a bit boring now.

Completely agree. It's frightening. There's reports out today that a large portion of households in the UK are in arrears and calling for debt advice.

@Twiglets1 I've noticed your comments in different threads. You seem to be in deniable that there is a real financial issue in the UK for many people. I might be wrong about that (maybe I am misreading), but it does feel you live a different reality. Perhaps you are better off in our society, not sure your background of course, but things are very bad in the UK. Not sure why people keep resisting this reality when it doesn't help those in need.

Yes I’m a bit sad too because I look forward to the announcement too even though I pretty much know it will stick at 5.25% on this occasion

There can’t be that many people who took out mortgages before 2004 and are still on the same deal! And those people’s mortgages must be minuscule by now….

I know you’re right about everything else going up & some people being in real financial trouble today.

My point was more about comparing people buying in recent years compèred to those buying before 2004. Those who bought back then could drastically overstretch themselves due to the very lax affordability checks. As the article points out, they are “mortgage prisoners” unable to take out a new fixed rate mortgage because they don’t fulfil the current affordability criteria.

I noticed you too @worriedftb when you were upsetting people on a thread yesterday by saying you would be ashamed of using inherited money for a deposit on a property. If you recall, it was the thread where a home buyer had lost both parents, one as recently as Christmas. So for this reason, I won't be responding to any more comments from you.

My thoughts exactly.

There are roughly 200000+ mortgage prisoners in the UK. Quite a few people took out interest only mortgages which were all the rage back then, not understanding/being ignorant that it wasn’t paying off any capital just because repayments were cheap.

https://www.telegraph.co.uk/money/property/mortgages/interest-only-mortgage-paid-36-years-still-lost-home/

BOJ have finally moved, NYCB still in serious trouble after 1 billion injection?

A spot of research cited here by Bloomberg including seven charts shaping the nine-member Monetary Policy Committee’s thinking on when to move:

The Bank of England this week is likely to resist signaling imminent interest rate cuts despite the arrival of new data that is expected to show inflation sinking to a 2 1/2 year low.
Governor Andrew Bailey and his colleagues are expected to leave the key rate at a 16-year high of 5.25% at their meeting on March 21. He’s been more cautious than the US Federal Reserve and European Central Bank in talking about a pivot to lower borrowing costs.
However, a drop in wage pressures coming from the labor market and a recession at the end of 2023 have left investors betting the BOE will cut rates before the end of summer. The latest reading on inflation due Wednesday could add fuel to those bets with the BOE’s 2% target now expected to be reached within months.
Following are seven charts shaping the nine-member Monetary Policy Committee’s thinking on when to move:

https://www.bloomberg.com/news/articles/2024-03-18/uk-interest-rate-outlook-2024-seven-charts-for-bank-of-england-decision-on-cuts?embedded-checkout=true

Article in i this morning reporting that inflation fell to 3.4% in February. It said that the consumer prices index (CPI) measure of inflation is down from 4% in January and is at its lowest rate for over two years.

The article went on to consider what does this mean for interest rates?

The Bank of England tends to cut interest rates as inflation comes down, though at its next meeting tomorrow, it’s predicted that the Bank will hold rates at 5.25%.
This is because Andrew Bailey, the Bank’s Governor has warned: “We need to see more evidence that inflation is set to fall all the way to the 2% target, and stay there, before we can lower interest rates.”
At the moment, evidence suggests inflation could rise again after falling below 2%.
Most forecasters therefore don’t expect a cut to rates before May at the earliest, with the majority suggesting a cut will come later in the summer – which could be June or August.

https://inews.co.uk/inews-lifestyle/money/inflation-fall-means-for-your-money-2963457?ito=push-notification&ci=NVykxfDfd6&cri=Yh5wBy6hGL&si=cssdIvAnxCT_&xi=56861e79-4094-4d03-8095-220d61ca36ad&ai=2963457