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.

My concern is that as soon a rate cut is “in play”, the pound falls against the dollar. Realistically we can only follow the Fed and the US economy doesn’t seem to need much more stimulus.

It looks like they will still be held at the next one but we might be looking at a cut soon after that.

I do like the idea of a rate cut but I guess another side effect would be more movement and potentially rises in the housing market, which depending on how one sees is either good or bad. As a property owner already I am quite happy with low interest rates and higher house prices but I realise that doesn't work for everyone.

@Freetodowhatiwant

do you think now is a good time to buy? I’m finally in a position where I can and have seen something that I think is worth it. If prices go up, it’s out of my reach

It certainly sounds like now is the right time for you to buy @Chinhairsoftheworldunite given that if prices go up, what you want will be out of reach.

Reuters today: Sterling hovers near one-month low on rate cut bets

The pound was little changed on Monday, hovering near its lowest level in a month after investors last week ramped up their bets that the Bank of England will cut interest rates in June.

The pound dropped about 1% against the dollar last week after the Bank of England held interest rates at 5.25% on Thursday and Bailey said inflation is moving in the right direction for interest rate cuts. Bailey caused the pound to fall further on Friday after he told the Financial Times that rate cuts are "in play" this year.

Traders now see a roughly 75% chance the BoE cuts rates by June, up from about 35% at the start of last week, according to money market pricing. Those bets have been encouraged by data showing inflation is falling faster than expected.

Sterling hovers near one-month low on rate cut bets (msn.com)

@Twiglets1 so we can assume that if interest rates are cut, house prices will start to rise ?

No, you can't assume that at all. For starters, the rate cuts if/when they come will be small and very possibly only short term (ie they could well need to increase again in another year or two).
What is more concerning and more pertinent to the question of house prices is the whole economy. Wages are much more closely related to house prices and the increases here have tailed off, redundancies and business in insolvencies have started rising as have defaults in general. If this escalates, as expected, house prices will fall rather than rise. It looks v likely that we will have a global recession before too long (see @Lightscribe and @XVGN's posts too) and very possibly a depression or long period of stagflation after this.
Have a look at Moving home with Charlie on 'X' or YouTube. This will, no doubt, upset one poster here but have a look and make up your own mind. I think he gives some v useful advice to FTBs in particular. Do your research and don't make a snap decision.

https://www.bloomberg.com/news/articles/2024-03-20/-gloriously-wrong-dollar-bets-derailed-by-synced-central-banks

https://archive.ph/JK2UV

What this signifies (with Japan raising rates simultaneously) is that they’re coming to terms with the fact they won’t be able to get inflation down to 2%.

They’re trying to come to a new ‘elevated’ normal between them and will drop to that agreed amount (say 4%) which will cause havoc with existing treasury owners/funds having bought large swathes when rates were 0.5%.

This doesn’t signify that the economy is ‘all better’ and wouldn’t be for economic reasons rather than political.

It won’t do much for house values or the market as they are already at several times higher historical wage/price ratio, and people are still coming off sub 2% rates.

What it will do is make the secondary wave much worse compounding onto the first.

Thats why some analysts say that there will only be either no interest rate cuts or only one.

Make sure you use reputable sources to do your research, not YouTubers as suggested by a previous poster. In this article in the Times for example, they provide several predictions for how house prices will change in 2024:

• Property website Rightmove anticipates a modest 1% fall in house prices by the end of 2024.
• Property website Zoopla is also conservative with its forecast, estimating that house prices will fall by just 2% this year
• Estate agent Savills predicts that UK property prices will fall by 3% in 2024, before recovering in 2025 and rising by 3.5%
• Lloyds Bank has forecast a further 2.4% decrease in house prices over 2024. It expects prices to then recover slightly in 2025
• Global property consultancy Knight Frank expects house prices to rise by 3% this year, rather than a fall 4% as it previously forecast

They also point out that "interest rates may begin to fall soon, which could drive house prices up". Unfortunately, no one knows for sure what will happen when interest rates fall, but many analysts believe it will stimulate the housing market which is currently stagnant or falling in some areas as you know.

https://www.thetimes.co.uk/money-mentor/buying-home/will-house-prices-fall-uk

@Twiglets1 @Lightscribe @rainingsnoring

thank you all - this is really helpful. I have an aip and I guess as we don’t know what future decisions the banks could make, I wondered whether it’s best to jump in soon. A further dip in prices might change things with the banks although I am permanent now and in a secure role.

No problem. Do use reputable sources for your research. Rightmove and estate agents are not reputable sources as they will obviously be putting a very positive slant on their expectations for UK house prices as this is the best thing for their businesses. You need to look deeper.
There is definitely a risk that banks could restrict credit much further as prices fall. Your decision will depend on how secure you think your role is (some sectors are better protected than others during recessions), how much you are stretching to borrow, whether you have a partner too so hopefully at least one income in the family, how much you love the property vs whether there are lots of similar ones available over time, your attitude to risk.
I agree with @Lightscribe that we are v likely to see more inflation at some point so we are likely to see further rate rises in future and also that prices are likely to fall. Unfortunately, I expect this to be in the context of other economic problems so you need to think carefully.

Three of Britain’s biggest mortgage lenders are reducing several fixed-rate deals in a welcome boost for borrowers. Santander, HSBC and Barclays announced rate cuts yesterday in a wave that could trigger other lenders to slash rates over the coming weeks.

HSBC has reduced the rates on its two, three and five-year deals for borrowers with a deposit of less than 10%, but has hiked rates for those who own a greater share of their home.

Barclays has also cut a handful of its purchase and remortgage rates by up to 0.25%. For example, its two-year fixed-rate deal with a £999 fee for borrowers who own more than 25% of their home fell from 4.9% to 4.7%.
And Santander will cut several of its fixed-rate and buy-to-let deals by up to 0.21 percentage points from tomorrow.

Boost for borrowers as Santander, HSBC and Barclays slash mortgage rates (msn.com)

Following on from that @Twiglets1 it seems to be having an effect already on the housing market. I realise this is more 'House Price Thread' than interest rates thread but it is relevant just the same.

'UK home sellers are offering smaller discounts as rising expectations of interest-rate cuts this year boost demand.
Sellers accepted an average reduction of 3.9% to the asking price this month, the least since July and down from the 4.5% between November and January, according to property portal Zoopla. The narrowing gap is a sign of recovery from a slump that saw over 18 months of markdowns in prices as inflation, high mortgage rates and a cost-of-living crisis buffeted Britain’s cash-strapped home buyers'.

'Prospective home buyers are anticipating softer mortgage costs as the Bank of England prepares to lower its benchmark rate following the fastest hiking cycle in decades. Markets are pricing in three quarter-point reductions this year, starting in August'.

https://www.mpamag.com/uk/business-news/uk-home-sellers-trimming-deals-as-rate-cut-expectations-grow/483055?hsmemberId=1942651&tu=&utm_campaign=&utm_medium=20240328&_hsmi=300226981&hsenc=p2ANqtz--MCKFoo5RY-zAIa71BqvCGNUdLYzAFqevI5hYl6Jjr4eWUpLp__yInNDp8oEWtfnNAMkZ9Uy733NJTEyqhzx9kuIdCA&utm_content=&utm_source=

👍 I have seen some of the lower end ( flats, not great areas) come down a lot. Unfortunately that’s all I can afford so I watch with interest

This thread will finish soon as it is nearly at 1000 posts so I have started the next one to track & discuss mortgage rates going forward

https://www.mumsnet.com/talk/property/5038165-5-mortgage-rates-again?reply=134110336

https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=6f6788865718#

During the secondary inflationary wave, the US will have to raise higher.