| Mortgage question 14:37 - Oct 20 with 1406 views | GavTWTD |
This would all be entertaining if the mortgage situation wasn't desperate for a lot of people. I have to admit that I've got a couple of years before mine is up for renewal, but I'm still a little concerned that it won't be completely back to normal by then.
Anyway, my question. Is it possible to go to an interest only mortgage for a couple of years in the hope that the situation stabilises? |  |
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| Mortgage question on 14:40 - Oct 20 with 1377 views | Kieran_Knows |
I've still got 4 years left on mine (luckily), but having spoke with my mortgage advisor the other day on a separate issue, she said she would be very surprised that even in 4 years time that the rates will be similar to what I'm on now. |  |
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| Mortgage question on 14:41 - Oct 20 with 1367 views | Keno |
Ask Osborne One-Nil |  |
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| Mortgage question on 15:00 - Oct 20 with 1316 views | clive_baker |
I think the days of cheap debt are gone. I'm not saying 6%+ is going to be a new normal, I think the current products seem to have a lot of 'risk' baked into them when you consider the base rate is still only 2.25%. I think they'll normalise when we have some stability and inflation begins to cool, and rates become more competitive to attract customers. But I can't see a time where we see the sort of numbers we did until recently. Mine is currently <2% which I dare say I won't see again.
A couple of years before your fixed period ends isn't a bad place to be tbh, I'm firmly in the wrong place at the wrong time as mine is in the summer. When that time comes yes you can switch to something interest only for a period if that helps. The other thing I would add is if you can make any overpayments over the next 2 years that will all help when the time comes. |  |
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| Mortgage question on 15:07 - Oct 20 with 1291 views | usm |
When you take out a new mortgage or re-mortgage aren't you tested for affordability based on an assumed higher rate of interest. In other words anyone with a relatively recent mortgage should be able to cope with an interest rate rise. Of course the rate rises could be higher than counted for, but everyone should have a bit of wiggle room.
Peoples individual circumstance's and energy prices may dictate otherwise of course. |  |
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| Mortgage question on 15:10 - Oct 20 with 1272 views | hype313 |
| Mortgage question on 14:40 - Oct 20 by Kieran_Knows |
I've still got 4 years left on mine (luckily), but having spoke with my mortgage advisor the other day on a separate issue, she said she would be very surprised that even in 4 years time that the rates will be similar to what I'm on now. |
Likewise, I fixed mine last year for 5 years (Wish I had done 10 as I had the opportunity) My broker said at the time you will never see rates this low again.
I'm just hopeful by the time 2026 comes around things might have calmed down.... |  |
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| Mortgage question on 15:12 - Oct 20 with 1255 views | Radlett_blue |
| Mortgage question on 15:00 - Oct 20 by clive_baker |
I think the days of cheap debt are gone. I'm not saying 6%+ is going to be a new normal, I think the current products seem to have a lot of 'risk' baked into them when you consider the base rate is still only 2.25%. I think they'll normalise when we have some stability and inflation begins to cool, and rates become more competitive to attract customers. But I can't see a time where we see the sort of numbers we did until recently. Mine is currently <2% which I dare say I won't see again.
A couple of years before your fixed period ends isn't a bad place to be tbh, I'm firmly in the wrong place at the wrong time as mine is in the summer. When that time comes yes you can switch to something interest only for a period if that helps. The other thing I would add is if you can make any overpayments over the next 2 years that will all help when the time comes. |
No-one knows what is going to happen. UK lending rates were remarkably stable for 150 years until inflation after the oil shock of 1973 pushed them up to 16%. They only really returned to previous levels in the 1990s.
Then we had the ultra-low rates following the financial crisis & clearly borrowers have got used to them, although they still look unusually low. It all depends on how governments deal with the current problems of energy & commodity price inflation, caused largely by the Ukraine war. This is almost certainly going to involve a period of higher than average rates & a thumping recession. Much of this is a global problem, rather than something specific to the UK. Britain's current inflation rate is slightly below the European average.
The last position I would want to be in right now is owning a property on the back of a large amount of debt. I think the housing market is going down by 20-30% over the next couple of years. |  |
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| Mortgage question on 15:12 - Oct 20 with 1250 views | Kieran_Knows |
| Mortgage question on 15:10 - Oct 20 by hype313 |
Likewise, I fixed mine last year for 5 years (Wish I had done 10 as I had the opportunity) My broker said at the time you will never see rates this low again.
I'm just hopeful by the time 2026 comes around things might have calmed down.... |
I'm kicking myself for not even asking the question on a 10 year mortgage .... but a little comfort knowing mine still runs to October 2026! Just trying to overpay as much as I possibly can, so at least if the rates have gone up, my payment might not seem as bad in 4 years!
And yes, like you say. I'm hoping by then things have settled a little! [Post edited 20 Oct 2022 15:13]
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| Mortgage question on 15:18 - Oct 20 with 1208 views | geg1992 |
| Mortgage question on 15:12 - Oct 20 by Radlett_blue |
No-one knows what is going to happen. UK lending rates were remarkably stable for 150 years until inflation after the oil shock of 1973 pushed them up to 16%. They only really returned to previous levels in the 1990s.
Then we had the ultra-low rates following the financial crisis & clearly borrowers have got used to them, although they still look unusually low. It all depends on how governments deal with the current problems of energy & commodity price inflation, caused largely by the Ukraine war. This is almost certainly going to involve a period of higher than average rates & a thumping recession. Much of this is a global problem, rather than something specific to the UK. Britain's current inflation rate is slightly below the European average.
The last position I would want to be in right now is owning a property on the back of a large amount of debt. I think the housing market is going down by 20-30% over the next couple of years. |
I share similar views to you. I was actually looking to buy a house recently but done lots of research and I'm happy to wait. My rent is actually half of what a mortgage would be at the moment so I can still save decent amounts. I'm hoping the house prices drop a decent amount, but also as they say, don't try to time the market.
I'm kind of hoping that the house prices drop so I can get a bargain house. Then pay a higher rate for a few years, then re-mortgage once the rates eventually drop again and have a low monthly payment. Of course I'm just dreaming.
Also concerned for many of my friends. There was crazy advise that people should buy the best house they can afford. Of course, this was based on stupidly low interest rates. These same people are going to be screwed over when they have to re-mortgage and I fear that many will not be able to afford the increases leading to many people being forced to sell. Or, I assumt they can move to interest only mortgages to save themselves? |  |
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| Mortgage question on 17:26 - Oct 20 with 1042 views | greyhound |
So the problem is In recent years very few mainstream lenders have offered interest only unless you earn over 100k per year as an individual. This cuts access to product significantly.
Interest only may solve the issue of immediate need to keep a roof on our heads but leaves the issue of static capital that will need to be paid off over a shorter time resulting in higher payments or a later term increase to get payments down if that's an available option subject to age which then results in much more interest being paid.
Either way we are in an awful situation where low rates and increased max borrowing pushed people to max out lending in the false dawn that it was still "significantly cheaper than rent" something that was only incidental of historically low rates.
A tracker mortgage would seem the current best bet. Ride the market month on month, no limits on overpayment and most allow immediate release to be able to grab the deal that suits, rates will further increase as yet but medium turn will be sucked back down as it will force a recession due to inflation figures and I expect GDP will take a huge hit.
I fear worse however as these rates will stop house purchases, this will lead to a market crash from current high prices, not to mention another new build crisis where homes sit part finished. Its a really gloomy time to be a home owner. Thoughts of negative equity, or significantly reduced equity leading to even higher rates being forced are very real.
Strap in and survive.
May need to change cheddar to that new yellow label asda stuff. |  | | |
| Mortgage question on 17:30 - Oct 20 with 1035 views | StokieBlue |
Unfortunately this is relatively back to normal. Historically rates were never as low as they were and mortgages were usually around 5.5%.
The problem now is that rates were so low that people borrowed more as the rates were low and as they head back upwards it's going to be a huge problem for everyone.
You certainly can switch to interest only when you renew and I think the banks are going to be extremely helpful as they don't want mass repossessions some might allow changes now but it's important to try and limit it to a short time of a few years unless you have another source of capital to pay off the principle when you retire.
But don't expect rates to be 2% in a few years time, they might never be that again.
SB |  | | |
| Mortgage question on 17:31 - Oct 20 with 1030 views | HARRY10 |
err, normal ?
Historically this period as been the abnormal one. An aberration, that has ended. How high interest rates go before they fall back again is anyones guess. I doubt very much they will hit 15% as with the Tories in the early 90s (Black Monday), but I suspect the interest rate will continue to inch higher for some while yet
Worth a read of 'Blood on the Streets' by Rees-Moggs father, which highlights where these people are coming from, and points to the fact that those sort go into politics to better themselves, not the country. Mad and dangerous as the ideas patently are, the father had some semblance of intellect. Not something you could accuse his son of. Someone who seems determined to demonstrate his stupidity on a weekly basis.
No need to read the book. There are plenty of reviews that will point to what it is about.
And that is why talk of allowing the fat fraud anywhere number ten is risible, as the idea that the Tories have much hop over the next decade.
Mortgage misery/repossed homes will be with us for some while. Not yet as these things take time to play out, but it was that collapse in the early 90s that saw the Tories wiped out in 97.
And in this case, as before it was in part down to loony Tory that regulations protecting the economy were a handicap (to them getting rich), rather than any understanding were they are there - bankers bonuses.
The attempt at introducing brexit thinking (mini budget) had the money men screaming in fear.
Be warned. That nonsense may have been buried for now, but the lunacy will merely lie dormant, waiting to come back, like some malignant cancer. | | | |
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