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.

You could have added plumplot to my list of buyer tools, Crashy! Nevermind, if a jobs worth doing .......

With Plumplot and PropertyLog you have enough tools in the kit to deal with most kite flying sellers and deluded EA`s.

That's true that you and I (and people like us) don't have much skin in the game personally. Apart from for our kids and other young people. I wouldn't want them to take on mortgages they can't afford but equally I wouldn't want them to rent for years and years because that's a trap to be avoided too (in my opinion). There's definitely such a thing as being too cautious so you miss opportunities as well as some people being not cautious enough. The mortgage market is very well regulated now though so it's far less likely that lenders would allow people to borrow amounts of money they can't afford.

To my mind, it's all about balancing the risks and there is no risk free option unless people are happy to live at home with parents forever. In some ways it's never a good time to buy as there's always a risk of the interest rate rising or prices rising or falling at the wrong time for your situation.

I wouldn't want people to take on mortgages they can't afford either but the difference is I believe that rates are at the peak or very close to it, that is mainstream thinking so I'm not unusual in my views. But obviously it's good advice to always think about could I still afford repayments if the rate went up? Stress test it yourself if your lender isn't doing it for you but I think most are. I also think that people who are more risk averse have the option of locking in fixed rates for longer periods.

The cheapest two-year fixed rate mortgages have dipped below 5% interest for the first time since June. Nationwide will reduce its mortgage rates by up to 0.38 percentage points across its two-year, three-year and five-year fixed rate product range. Home movers, first-time buyers and those needing to remortgage all stand to benefit from the latest wave of cuts.

New customers moving home with at least a 40 per cent deposit will now be able to secure a two-year fixed rate of 4.99 per cent with a £999 fee. Other notable rate cuts include Nationwide's five-year fix for first-time buyers which is at 4.67% with a £999 fee. There is also a three-year fixed rate of 4.94% for home movers buying with at least a 40% deposit.

Nicholas Mendes, mortgage technical manager at broker John Charcol, says: "'It's been a while since we've last seen a two-year fix coupled with a rate that starts with 4 per cent. There has been a fall in gilt yields over recent days which feeds through to swap rates. Lenders have acted quickly with a flurry of repricing between the high street lenders".

Nationwide cuts mortgage rates, offering first two-year fix below 5% since June (msn.com)

I compared the £999 fee, below 5%, products with ours, which is above 5%, but no fee and the difference over 5 years was tiny. So headline figures aren't all you need to look at.

That’s true.

It depends on the amount you are borrowing.

For a £1m mortgage the additional interest would be £2k vs the £1k fee.
If you were borrowing £100k the additional interest would be £200 vs the £1k fee so you would be better off taking the lower rate.

Yes, but if the lower rate isn't available due to LTV, you aren't necessarily actually missing out on a huge saving, depending on amount borrowed.

That depends on the deposit you have, you can have >40% deposit on a high value mortgage, or a low value mortgage.

Always worth doing the calculation, and you are right that for most who are borrowing a few 100k the difference will be minimal, which is why the banks have priced it in this way.

No, where rate is based on LTV, you don't get that rate unless you have that LTV. You're at cross purposes, I think.

Lets look at the following scenario.
£100k mortgage, £170k value house
£1m mortgage, £1.7m value house
Both would qualify for a 40% LTV mortgage.

For the £100k mortgage, for the two year term if they were to pay the fee they would pay £10,979 (£9,980 interest, £999 fee) if they were to go with the no fee they would pay £10,380. So they should go with the no fee as it is ~£600 less

For the £1m mortgage, for the two year term if they were to pay the fee they would pay £100,799 (£99,800 interest, £999 fee) if they were to go with the no fee they would pay £103,800. So they should go with the fee as it is ~£3,000 less

I have not included repayments in this (which could be relevant in the end years of a mortgage) and used rates of 4.99% with a £999 fee and 5.19% without fee.

I do agree that for most people, there is likely to be limited difference between the fee and no fee, but wanted to illustrate that there can be a difference.

My daughter got another rate drop! From 4.9 to 4.7. Every little counts!

Hooray 😃 that's great news

That’s great @Delphigirl

For many homeowners & FTBs it’s a relief that mortgage rates are trending downwards now.

Ah actually she has confirmed it is 4.77, so even more minimal. Still as you say trending downward.
Mind you it now looks like exchange before Christmas so she might get one more little drop before it fixes for 5 years… fingers crossed.

The Bank of England will cut interest rates from May, investment bank Morgan Stanley has said, in a boost to mortgage borrowers.

In a note to clients, the Wall Street giant predicted that policymakers will reduce rates to 4.25% by the end of next year as food and core goods prices ease.
Analysts also predicted that the UK will be in a technical recession by the end of the year, with the economy shrinking by 0.1% in 2024 before growing by 1% in 2025.

This week, Britain will find out the latest inflation figures for October, with the consumer prices index widely expected to fall below 5% in a boost for Rishi Sunak. The Prime Minister promised he would halve inflation by the end of the year, meaning it needed to fall below 5.3%.

https://www.telegraph.co.uk/business/2023/11/13/ftse-100-markets-news-interest-rate-housing-share-price-bae/

Oh god I so hope this is the case 🙏

My mortgage deal is up July 24 and I've had 18 months of being worried sick about rates absolutely spiralling to silly amounts 🌀

I've also skinted myself by overpaying by several thousand pounds

Major lenders have announced new mortgage rate cuts, widening the choice for borrowers searching for deals under the 5% mark.

Halifax announced cuts to its mortgage rates by up to 0.46 percentage points from Wednesday. This includes cutting a five-year fix for borrowers with a 10% deposit by 0.24 percentage points to reach 4.97%. The lending giant will also be reducing a five-year fix for borrowers with a 40% deposit by 0.20 percentage points, to 4.53%. Both Halifax deals have a £999 fee.

First Direct announced rate cuts of up to 0.40 percentage points and said it is the most substantial round of mortgage rate drops it has made since February this year. It has launched two new mortgages for borrowers with a 5% deposit.
First Direct is now offering a rate as low as 4.74%, for new and existing customers looking for a five-year fixed-rate deal, with a 40% deposit.

HSBC UK is also expected to make widespread reductions to its mortgage rates on Wednesday. The details have not yet been announced.

Halifax, First Direct and HSBC UK among lenders cutting mortgage rates (msn.com)

First Direct announced rate cuts of up to 0.40 percentage points and said it is the most substantial round of mortgage rate drops it has made since February this year. It has launched two new mortgages for borrowers with a 5% deposit.

That's virtually unheard of for First Direct. Crikey, this mortgage war is REALLY heating up.

I've noticed that quite a few lenders have taken away the 1k setup fees for 95% LTV recently, too. It's probably added to the rate, but for those who can't afford the fee, it's good news.

It's good if borrowers at least have the option of paying either the setup fees or a slightly higher rate throughout the term. As previously pointed out by @NoWordForFluffy the headline figures aren't all people need to look at but it's good news as you say for people who can't afford the fee.

Our broker made sure he applied for the cheapest mortgage (comparing those with and without fees), so as long as you've a decent broker, you'll be fine.

Our rate has dropped another 0.1%, but I'm holding fire for now. When I know we're near exchange, I'll go back to get the lower rate, but I'm playing chicken for now in case they drop again after last week's hold. Don't want to do it again twice!

I believe that people should also look at the APR as this takes account of total costs throughout the term of the mortgage including fees etc.

Which is what a good broker does.

This is really interesting and helpful for it as I'm looking to buy on shared ownership by the end of next year, I did consider just saving a larger deposit, but I can't stand renting any longer. I was playing with the numbers with different interest rates earlier and the prices for a 1bed hen interest rates were low versus now & it's actually really stark.