If 5% rate is here to stay

[JustAlice]

I've read yesterday that average 2-year interest rate is now 5.4%, and a 5-year rate is 5.9%, meaning that banks think the rates will be growing long-term.
As a FTB I'd like to stay optimistic - ME conflict without NATO support can't last forewer, right? The banks change their forecasts all the time. But I've made some calculations in another thread and still can't get over how jump from 1% to 5% interest rate in a relatively short time means we have now 100K less to spend on a property.
The properties we're looking at are fairly modest, and now I'm not sure we'll be able to afford them, even being high-earners.
Am I the only one who was unaware that higher interest rates impact borrowing power so badly?

This is the calculator I used, with 60 month fixed rates, and the term of 20 years. www.themoneycalculator.com/mortgages/calculators/mortgage-payment-predictor/#!/dealfinder/mortgages/

That we had nothing to spare narrative at the end of the month just makes me laugh out loud
As I’m a millennial that’s allowed
But nobody has anything spare at the end of the month after they’ve just bought a house, like that that’s an absolute given
It takes years to financially recover from moving even when you’re just moving between rentals.

I see the average rate is now closer to 6%. Thanks Uncle Donald.
It doesn't seem unlikely anymore that they could get to an average of 7% by the end of the year - if this conflict doesn't get sorted out quickly. Thats going to have a massive knock on effect to values. Great if your sitting it out to upsize or as a ftb buy later - but a bit of a disaster for those needing to move to something smaller or cash in a bit of equity. The numbers of amateur landlords trying to exit are through the roof intruding my area, adding to the problem. The mainstream media are deadly quiet about this possibility. Nobody wants to spook the horses.

The increasing rates are worrying for a me as a soon to be first time buyer (early next year) but prices are falling so the loan itself will be less than what it would be if I were to buy now.

I wish you luck and hope you manage to find a fair deal next year. I suspect you will have seen falls by then, as you say.

I’ve just agree to a 5 year fix at 5.99%
that's with an adverse lender
if it wasn’t adverse, 5.2% was possible

Sales are way down though, and people don"t want small ex-BTL flats or leasehold scams anymore, who will they sell to? "Ever growing demand" isn"t real world, that was sales patter from BTL mortgage lenders.

https://www.reuters.com/world/uk/uk-net-migration-drops-by-about-two-thirds-after-tougher-policies-2025-11-27/

I’ve always thought and said that flats are a very bad idea. I have the misfortune to live in one for 12 months. It’s not a situation. I would repeat willingly.

How much deposit required?

It’s a remortgage so none

Fair enough, I just think a lot of people who grabbed BTL loans and mortgage debt in general didn"t properly think through a slowdown or reversal in immigration numbers (Brexit should have been the red flag as to shifting public opinion) or the potential for rates to move up, or be forced up by a global event.

Ok.

Years to financially recover from moving rentals?

During my brief and unfortunate time of renting I had to move initially to the Rental that cost me 4.5 grand in removals, petrol, broken furniture, appliances etc.
After seven months they wanted me to move again and the only property I could find within a reasonable timeframe was too small. That meant put in 50% of my stuff into storage in addition to having to find the first months rent in advance. And the deposit.
Before the first deposit was returned, which took four months.
That experience alone cost me at least £6000 in just costs aside of the rent.
Appreciate that my experience might be unique so let’s halve that for a normal person
That’s still £250 a month for 12 months for somebody to recover or save up for to move between rental properties.
And I haven’t included in that unique to me cost such as taking down the trampoline and putting it back up again, having to buy a new shed because the other one fell apart when it was tried to be moved. Furniture not fitting and having to be sold at less than 10% of its original cost and then replaced by stuff that was more expensive.
It’s not a cheap business moving

Most people just rent a van and move to the new place, it takes maybe half a day if you have a few boxes, rentals are usually furnished so even less hassle required. No one is buying the memes and myths about "renting" anymore, it is cheaper and more convenient than mortgage debt.

Most people in fact don’t do that.
Most people do not want to sleep in somebody else’s bed.
Unless you are a renter long-term in which case you probably own very little and you’re at the beginning of your journey whilst you’re trying to find somewhere to move to long-term and put down roots.
But if you want to own nothing and be happy I’m not gonna say that’s wrong because owning tons of shit has not particularly served us well

Depends on the flat surely? I’ve been in mine for 20 years and find it no different to a house

It depends on the neighbours but you are of course right, you can have that problem anywhere

You are exaggerating the appeal of big mortgage debt, it really isn"t a gateway to the great life that you think it is.

It is different to a detached house, even with super well behaved and quiet neighbours.

different price ranges though! But I’ve got private parking and my own private garden so no different to a house
4 flats and no adjacent walls to me

I agree - it isn’t and if you arrive at shit creek then you’d better have provision to pay that debt back because any help from the government is limited and comes in the form of a loan.

Ok, sounds like a nice set up!

Exactly, making the "help" another loan is the final slap in the face after all their encouragement via Help To Borrow etc. to get people firmly stuck on the debt ladder.

I was not having a good experience when I was renting and now I’m having a good experience now I own we can all only speak for ourselves .
You don’t have the right to tell me that I’m not having a great life. My life is marvellous. I hope yours is too. Whatever you decide to do financially it really doesn’t affect me in any way shape or form what you spend your money on.

Don’t allow yourself ever to be dependent on the governments support is great advice whether you own or rent.
Difference is if I get into shit, I don’t suddenly have to downsize
If you’re under the age of 35 and you need to rent and you don’t have children you’re gonna find yourself in a HMO
In fact, people find themselves in a HMO and worse with children.
So if I have to choose my poison, mine is better